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Sandfire Resources (SFR) - September Q Results

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Sandfire Resources (SFR) released September Q results with 15.3kt copper and 10.7koz gold in concentrate, down 11% and up 10% respectively QoQ. Production was impacted by planned outages and elevated talc in ore which affected copper recoveries. C1 cash costs remained low at US$0.95/lb. During the Q, development commenced on the Monty underground with the first cut into the decline and first ore from this mine is expected in ~12 months. Cash declined $10m to $117m after a ~$20m dividend payment during the Q. While SFR has strong tailwinds from rising copper prices, negligible debt and low capital commitments, we remain concerned with the lack of exploration success in the Doolgunna region and the limited mine life. Due to share price gain we downgrade to HOLD (from BUY) with a $6.10 target.

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