Have just had a look at the Sandfire DFS and the Financials for...

Have just had a look at the Sandfire DFS and the Financials for the last year.

DFS Forecast: 77,000 tonnes Copper per annum per year
Actual: 62,000 tonnes Copper (15,000 tonne less than forecast)

DFS Forecast, Project Revenue: $730m
Actual: $507m ($223m less than DFS Forecast)

DFS Forecast, Pre-Tax Operating Cash Flow: $440m
Actual: $88m (report says "no tax paid")

Cash Balance at time of DFS Announcement: 31st June 2011 $83m no debt
Cash Balance at 30th June 2013: $77m + Bank Debt of $285m plus Trade Creditors of $42.9m. ( I assume the trade creditors have not been included in the profit.

Considering that the 140,000 tonnes of high grade chalcocite +30% has now been mined and is included in these figures, what will be the next year forecast considering that this has already been mined? Sandfire have used the forecast for next year at 65-75,000 tonnes of copper. The question begs: If the total tonnes for the year 2012 was only 62,000 tonnes and included 140,000 tonnes of +30% copper ore as Chalcocite which alone produced 42,000 of the total of 62,000 tonnes, HOW! can the same throughput of ore at 4.5%Cu produce the same amount of copper?

The recoveries are below expectations for the Copper and only 46% recovery for the Gold. Is it feasible without the 30% Cu ore to do more tonnes of copper?

The result is not all bad, at least they made a profit so that's a plus, but what it does highlight is the inadequacies of a DFS. The numbers in the DFS compared to actuals are on two different planets. The second question begs: why spend $30m on a DFS if the numbers aren't even close to actual? Where did they go wrong?

I understand that the market likes to see the DFS and the Banks like to see them, but this proves that if the darling of the ASX Copper Producers is miles away from the forecast then what is the point? These numbers are Sandfires own numbers. They are the comparisons from the DFS in 2011 and the actual from the Annual Report in 2013 for the year 2012.
I don't think I got anything wrong but if I did let me know. Do your own numbers, don't take my word for them.

This is not to knock SFR because they did get their project up in record time and met all the time frames. My estimations are that the tonnes and profit will fall due to the high grade already being mined and the recoveries less than forecast, with a mountain of debt they wont be paying any dividend soon.

Meeting time frames and budgets is one thing, just like the turtle and the hare. With $285m debt and an interest rate of $19m a year and a small mine life, maybe just an exercise for the banks. The grades are still good and well above industry standard, but keeping costs down is where some of these entrepreneurs, let themselves down.

This is my opinion and am happy for criticism, but there seems like to much spending money on DFS based on far too much hypothetical forecasting. I remember OZL at Prominent Hill budgeted $900m, actual $1.90b

Then again, this is the mining business.