The Sandfire Resources Ltd (ASX: SFR) share price is wobbling in and out of the green today as the market digests conflicting news from the S&P/ASX 200 Index (ASX: XJO) copper giant.
The company revealed both disappointing quarterly production and a new copper-zinc zone at its MATSA operations in southwestern Spain.
After opening 0.2% higher at $6.26, the Sandfire share price dropped to a low of $6.15 – marking a 1.6% fall. It has since recovered somewhat to trade 0.32% lower at $6.23.
Sandfire share price wobbles despite MATSA 'breakthrough'
The Sandfire share price is hot and cold despite the company revealing its first exploration success at the MATSA copper operations following its $2.6 billion acquisition.
Drilling at the project has found a new zone of volcanic massive sulphide (VMS) copper-zinc-silver mineralisation, dubbed the San Pedro Zone. It's likely connected to the operation's Aguas Teñidas Deposit.
Sandfire acting CEO Jason Grace commented on "the first significant exploration breakthrough" since the project's acquisition, saying:
The identification of the San Pedro Zone shows what can be achieved through a disciplined, systematic, and technically sound approach to exploration – and highlights the enormous exploration opportunity in front of us.
ASX 200 copper share posts disappointing production
Here are the key takeaways from the company's December quarter production compared to that of the prior quarter:
- Total copper production fell 29% to 20,031 tonnes
- Zinc production increased 1% to 19.755 tonnes
- Production of lead slipped 22% to 1,921 tonnes
- Gold production dropped 44% to 4,562 ounces
- Silver production fell 14% to 600,000 ounces
- C1 unit cost came to US$1.73 per pound of copper
Over the half year, the company produced 48,088 tonnes of copper, 39,290 tonnes of zinc, 4,398 tonnes of lead, 12,777 ounces of gold, and 1.3 million ounces of silver.
Meanwhile, the construction of its Motheo Copper Mine remains on schedule and it has begun the process to sell its DeGrussa Copper Operations.
Sandfire ended the quarter with US$263.7 million of cash and US$378.3 million of net debt following a $200 million capital raise.
What did management say?
Grace commented on the quarterly update likely driving on the ASX 200 copper share today, saying:
The December quarter marked another positive and productive period for Sandfire, as we took further important steps to strengthen our balance sheet and de-risk our growth pathway against the backdrop of a strong outlook for the copper sector.
What's next?
While its December quarter may have disappointed the market, Sandfire is confident on its full-year production.
Its financial year 2023 production guidance remains at 83 kilotons to 91 kilotons of copper, 78 kilotons and 83 kilotons of zinc, 6 kilotons to 10 kilotons of lead, 12 thousand ounces to 14 thousand ounces of gold, and 2.2 million ounces to 3.2 million ounces of silver. Its C1 unit cost of copper is tipped to come in at US$1.74 a pound.
However, changes to the mine plan at MATSA's Magdalena Mine leave the company expecting the operation's copper production to come in at the lower end of its guided 60 kilotons to 65 kilotons. Meanwhile, production at Motheo is tipped to begin in the coming quarter.
Sandfire share price outperforms the ASX 200 in 2023
The Sandfire share price has posted a notable 14% gain in 2023 so far despite today's volatility. Meanwhile, the ASX 200 has risen 7%.
Looking further back, however, the stock has slumped 7% over the last 12 months. Meanwhile, the ASX 200 has gained 4%.
