Sandfire to repay DeGrussa debt ahead of schedule

Image: Sandfire Resources

Sandfire Resources will use a strong cash position to repay what it still owes of a $380 million facility that was secured to develop the DeGrussa copper-gold project in Western Australia.

The Perth-based company plans to repay the remaining $50 million of the 2011 facility almost 12 months ahead of schedule, it outlined in an ASX announcement.

Sandfire managing director and chief executive Karl Simich said the strong cash flow being generated by the DeGrussa mine in the current rising copper price environment had enabled the company to fully repay its debt.

“With the DeGrussa operation continuing to deliver consistent, strong production and robust margins, the company is now ideally placed to take full advantage of stronger copper prices, with the elimination of our remaining debt also freeing up significant cash-flow to pursue new growth initiatives and maximise shareholder returns,” Simich said.

“Sandfire enters the New Year in a great position with a strong balance sheet, a world-class mine which continues to deliver consistently impressive results and a quality growth pipeline both in Australia and North America.”

Simich said Sandfire’s focus for the next 12 months was to leverage off those foundations by delivering continued growth, both organically through ongoing exploration at the Doolgunna project and further afield at its growth projects, such as the Black Butte copper prospect in the United States.

“A key focus for the year will also be to bring the ultra-high grade Monty deposit, located 10km east of DeGrussa, into production as quickly and seamlessly as possible,” Simich added.

“The Monty feasibility study is now well advanced and on track for completion this quarter. This will allow us, in conjunction with our joint venture partner Talisman Mining, to assess the optimum pathway to bring this high-quality deposit into production.”

Sandfire plans to retain the undrawn $85 million Revolver and $25 million working capital facilities to provide flexibility to fund future growth initiatives, including the proposed development of the Monty deposit.

Meanwhile, Sandfire reported that copper and gold production were higher in the December 2016 quarter at 18,130 tonnes and 10,183 ounces, respectively. The company has maintained its guidance for the 2017 financial year at 65,000-68,000t of copper and 35,000-40,000oz of gold.