Investors have become accustomed to consistent operating performance from Sandfire Resources (SFR), and the 1Q was no exception. SFR flags copper output of around 18kt in Q2 and Q3 driven by higher grade stopes, which should see C1 costs fall toward the bottom end, or possibly below guidance. We have made no changes to our physical forecasts. SFR enjoys robust cash generation from a stable production base. Stable production, diminishing debt servicing, and underground development obligations will enable SFR to accumulate a net cash buffer, sustain a modest dividend, pre-develop Monty and aggressively pursue regional exploration opportunities in FY17. Significant near-mine exploration potential offers strong potential to further extend the project life at Degrussa and is SFR's differentiator. This is a key attraction which would improve both SFR's growth and capital management options upon further exploratory success. Access our analyst recommendation here: (VIEW LINK)


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