Sandfire Resources (ASX:SFR) used its half-year FY26 earnings call to outline a record revenue performance driven by firming copper markets and contributions from its “two high-margin” operations in Spain (MATSA) and Botswana (Motheo), while also acknowledging operational challenges at Motheo and highlighting a new partnership with Havilah Resources around the Kalkaroo copper-gold project in South Australia.
Safety and operations: TRIF improvement, but production weighted to second half
Chief Executive Officer and Managing Director Brendan Harris said the group finished the period with a total recordable injury frequency rate (TRIF) of 1.3, down from 1.7 at the end of FY25. Harris said the number of high potential incidents remained a concern, while also noting that regular incident reporting was an indication employees and contractors felt safe to stop work and speak up.
Management reiterated annual guidance for underlying operating unit costs, production, and capital expenditure at both MATSA and Motheo. Harris also told analysts to expect the second half to be weighted to the fourth quarter, describing a “circa 47-53 production skew,” as access to higher grade ore at both operations is progressively established.
Financial results: record six-month revenue, higher EBITDA and profit
Chief Financial Officer Megan Stoddart reported revenue of AUD 672 million for the six months ended 31 December 2025, calling it a record for a six-month period. She said revenue would have been about AUD 23 million higher absent the impact of hedging associated with the MATSA acquisition. Stoddart said the hedging program was fully executed by the end of the period, leaving future sales “fully unhedged” and providing “pure exposure to commodity prices.”
The company reported underlying EBITDA of $304 million and underlying profit of $107 million, which Stoddart said had more than doubled since the prior half, for a statutory profit of $96 million.
- Motheo: Underlying operations EBITDA was largely unchanged at $161 million, with a 57% operating margin. Stoddart said strong commodity prices mitigated lower-than-expected production. Operating unit cost was $43 per tonne, marginally below annual guidance of $44 per tonne, reflecting mining contractor and labor costs and a previously advised 50% increase in power tariff.
- MATSA: Underlying operations EBITDA increased 37% to $184 million at a 47% margin, driven by higher commodity prices and lower treatment and refining charges (TCRC). Stoddart said this more than offset a 15% increase in underlying operating costs, which were impacted by euro-to-U.S. dollar exchange rates, recovery improvement initiatives, and a working capital release as run-of-mine stockpiles were consumed. Operating unit cost was $87 per tonne, broadly in line with guidance.
Depreciation and amortization expense was $144 million, including $113 million at MATSA and $30 million at Motheo, down 6% from the prior corresponding period due primarily to lower mining rates. Stoddart said D&A is expected to rise in the second half as throughput increases at both operations.
Underlying net finance expense was $11.4 million, down 58% from the prior half. Stoddart attributed this to lower interest and facility fee expenses following a $301 million injection into the balance sheet over the prior 12 months and the lower margin on the corporate revolving facility.
Underlying income tax expense rose to $42 million, with an effective tax rate of 28%. Stoddart said the rate continued to be impacted by limited ability to recognize benefits associated with tax losses in Australia and the U.S. She added that after period end, Sandfire made its inaugural Motheo tax installment payment of $11.6 million following utilization of carry-forward tax losses.
Balance sheet and capital allocation: net cash position, but no dividend
Stoddart said total group capital expenditure increased 14% from the prior half to $112 million, reflecting euro strength, the start of work on a new tailings storage facility at MATSA to support an optimized 5.6 million tonne per annum throughput rate, and investment tied to Motheo’s A1 drilling and pre-feasibility study costs.
She said the balance sheet had been “fundamentally transformed,” with $489 million added over the past two years, moving from peak net debt of $481 million around 21 months earlier to a net cash position of $13 million.
Despite this improvement, the company did not declare a dividend for the first half. Stoddart said excess capital would be deployed under a framework where discretionary investments must compete with dividends and buybacks, and she pointed to new commitments related to the Havilah partnership as an important factor in the board’s decision. She said an initial AUD 31.5 million cash payment to Havilah was made after period end as part of a stage one payment, along with a further AUD 15 million to fund exploration in the Curnamona Province.
Guidance updates, concentrate sales, and weather impacts
Sandfire retained annual guidance for unit costs, production, and capital expenditure at MATSA and Motheo, but Stoddart said group capital expenditure guidance was increased by AUD 10 million to AUD 240 million to capture the planned ramp-up of activity at Kalkaroo. Exploration and evaluation guidance was increased by AUD 5 million to AUD 51 million to reflect planned regional exploration in the Curnamona Province and additional work to keep the Black Butte project progressing following completion of a pre-feasibility study in December.
On marketing, Stoddart said a recent tender for Motheo concentrate secured about 75% of calendar 2026 and 2027 sales at TCRC terms reflecting prevailing market conditions. Asked for more detail, she noted recent market pricing had been in negative territory, “ranging from sort of -50s upwards to -100,” and said it was reasonable to assume results landed in that range for calendar 2026, while urging a more conservative approach for modeling 2027 given benchmark linkages.
In Q&A, the company also addressed heavy rainfall in southern Spain. Management said MATSA teams managed the event well, aided by investment in a south tailings or water storage dam. The main operational impact was saturated ore affecting crushing and conveying, resulting in reduced throughput in the first half of February, but management said it did not expect a material impact on the full year.
Growth and development: Kalkaroo drilling plans, Motheo solar, and Black Butte review
Harris highlighted the newly formed partnership with Havilah Resources, giving Sandfire an exclusive right to earn an 80% controlling interest in the Kalkaroo copper-gold project and establishing an exploration strategic alliance across the Curnamona Province. He said Sandfire expects to commence an extensive infill and extension drilling program after camp facilities are established and approvals are received, expected in the June quarter or earlier. In discussion, management emphasized that much of the early drilling focus is step-out drilling to test depth and strike extensions, with drill spacing expected to tighten over time.
Sandfire also said it expects to declare a maiden reserve at Motheo’s A1 in the fourth quarter and has commenced a second phase of drilling to test continuity of mineralization at depth. Separately, Harris said construction of a dedicated 21-megawatt solar facility at Motheo is expected to commence in coming months, providing up to 33% of stationary power requirements from mid-FY27. In response to a question, Harris described the arrangement as effectively a third-party lease agreement.
Finally, Harris said the company expects to complete a review of its 87% shareholding in Sandfire America—which owns 100% of the fully permitted Black Butte Copper Project—before reporting results in August, noting the review will consider project materiality and feasibility outcomes within the context of Sandfire’s growth since its initial investment.
About Sandfire Resources (ASX:SFR)
Sandfire Resources Limited, a mining company, engages in the exploration, evaluation, and development of mineral tenements and projects. It primarily explores for copper, gold, silver, lead, and zinc deposits. Sandfire Resources Limited was incorporated in 2003 and is based in West Perth, Australia.
