Sandfire Resources (SFR) – Dependable

Sandfire Resources is a mining company that produces copper, gold, silver and zinc from projects in Australia, Spain and Botswana. The company was incorporated in 2003 and is based in West Perth, Australia.

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Sandfire Resources delivered a decent September-quarter result where slight variances against our estimates were driven by polymetallic variability that affected grades at its Minas de Aguas Teñidas (MATSA) copper project in Spain. The miner is tracking well to FY26 guidance, with production trading towards the mid-point of its target band at 157,000 tonnes of copper equivalent (CuEq) and costs to increase marginally at the Motheo operation in Botswana as A4 open pit operation ramps up across the year. Motheo is tracking slightly under cost guidance at US$42 a tonne currently but this should increase to circa US$44 per tonne as the ramp-up of A4 increases haulage and handling costs.

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The company is nearing net cash, a position we expect to be reached in the current quarter, which should free up future cash flows for capital returns. We assume a dividend in the very first instance given the current franking balance of US$262 million ($400 million). We have incorporated the September-quarter result into our model and adjusted our outlook to better align with FY26 company guidance. This included increasing our haulage and handling costs at Motheo slightly, which drives minor downgrades to our FY26 earnings estimates.

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Our Target Price increases marginally to $16.50 from $16.45 as we roll forward our model, and we retain our Accumulate recommendation.