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Sandfire gets licence for Motheo

Sandfire Resources has been granted a mining licence for its Motheo copper mine in Botswana, paving the way for full construction to begin.
Sandfire gets licence for Motheo Sandfire gets licence for Motheo Sandfire gets licence for Motheo Sandfire gets licence for Motheo Sandfire gets licence for Motheo

Sandfire's Motheo project in Botswana

Initial works, including sterilisation drilling, a 15km access road and construction of a 200-person camp, are already underway, but the licence grant allows construction of the processing plant and other infrastructure to kick off.

Orders have already been placed for all key process equipment and long-lead items.

"We are absolutely delighted to now be in a position to move to full-scale construction at Motheo, with our construction crews expected to mobilise to site over the next few days," Sandfire managing director Karl Simich said.

As part of the approval process, the Botswana government has a right to acquire up to a 15% fully contributing interest in the project, but has not yet notified Sandfire of its intention.

The grant of the mining licence was a condition of the recent award of the US$496 million T3 open pit mining contract to Perenti Global subsidiary African Mining Services.

The $279 million T3 project is one of the few copper projects being developed globally and comes as the price of the red metal sits near record highs.

It is expected to produce about 30,000 tonnes of copper and 1.2 million ounces of silver per annum over the initial 10 years from early 2023.

The base case 3.2 million tonne per annum project is projected to generate $664 million in pre-tax free cashflow and $987 million of EBITDA at a forecast all-in sustaining cost of $1.76 per pound over its first 10 years of operations.

However, the December feasibility study was based on a $3.16/lb copper price, while the price has since risen as high as $4.54/lb.

The average long-term broker price forecast for copper has increased to $3.43/lb and the spot price sits at $4.30/lb.

"Motheo is expected to generate approximately 1000 jobs during construction and 600 full-time jobs during operations and represents the foundation for Sandfire's long-term growth plans in Botswana," Simich said.

"Our vision is that Motheo will form the centre of a new, long-life copper production hub in in the central portion of the world-class Kalahari Copper Belt, where we hold an extensive ground-holding spanning Botswana and Namibia.

"Sandfire is looking forward to becoming a major long-term player in the Kalahari Copper Belt, which represents one of the last under-explored large-scale copper provinces anywhere in the world."

As part of those plans, Sandfire is working on an update to the A4 resource of 6.5Mt at 1.5% copper and 24gpt silver for 100,000t of copper and 4.9Moz of silver.

The updated resource will underpin a feasibility study on the development of A4, 8km from T3, which is part of Sandfire's strategy to expand production at the Motheo from the base case 3.2Mtpa to 5.2Mtpa.

Sandfire shares were 0.9% lower at A$6.76, valuing the company at just under $1.2 billion.