Sandfire share price slides as profits turn to losses

Sandfire says it is a different looking company from what investors have come to know over the past decade.

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Key points

  • The Sandfire share price is down 3.5% on Tuesday morning
  • The ASX 200 mining stock reported record half-year sales, but still posted a net loss after tax
  • Sandfire maintained its production guidance for the full year

The Sandfire Resources Ltd (ASX: SFR) share price is in the red on Tuesday.

The S&P/ASX 200 Index (ASX: XJO) mining stock closed yesterday trading for $5.80 per share. Shares are currently trading for $5.60, down 3.45%.

This comes on the heels of Sandfire's half-year results for the six months ending 31 December (H1 FY23).

Here's what the copper miner reported.

Sandfire share price slides on net loss

What else happened during the half year?

The Sandfire share price is slipping this morning as the company labelled the six months a "transitional period".

The ASX 200 miner said it was focused on optimising the MATSA Copper Operations in Spain, a copper mining company it acquired in February 2022.

Sandfire was also busy during the half year with the wind-down of its DeGrussa Copper Mine, located in Western Australia.

While DeGrussa is winding down, the company's Motheo Copper Mine in Botswana is in the final stages of construction and is reported to be close to commissioning.

The miner achieved record half-year sales revenues despite a retrace in copper prices. The average received copper price came in at US$8,098 per tonne, inclusive of hedging. That was down from an average received copper price of US$9,600–US$10,600 in the prior corresponding period.

What did management say?

Commenting on the results that look to be sending the Sandfire share price lower today, acting CEO Jason Grace said:

With one mine winding down in Australia, a new mine ramping up in Botswana and MATSA now a mainstay of our operations, Sandfire begins 2023 as a very different looking company to the one that investors have come to know over the past decade…

The combination of rising inflation and input costs – notably the spike in European energy costs during the half-year – together with slightly weaker metal prices and a significant increase in depreciation and amortisation charges due to the capitalisation of the MATSA acquisition, resulted in a net loss after tax for the period.

Grace added that with energy prices coming down in Europe and copper prices up in 2023, the second half of the financial year "has started on a positive note with improved margins seen in the March 2023 quarter".

What's next?

Looking ahead to what could impact the Sandfire share price over the coming months, the miner maintained its production guidance of 83,000 to 91,000 tonnes of copper and 78,000 to 83,000 tonnes of zinc for FY23.

"The recently completed successful capital raising has also allowed us to further strengthen and de-risk our balance sheet," Grace said, "while also providing a strong platform to support our longer-term growth strategy."

Sandfire share price snapshot

As you can see on the chart below, the Sandfire share price remains up 3% in 2023, despite today's dip.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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