The DeGrussa mine in Western Australia produced a record 68,202 tonnes of copper for the 2016 financial year, above guidance of 65,000-68,000t.

The operation also produced 37,612 ounces of gold, in line with guidance of 35,000-40,000oz.

C1 costs are yet to be reported, but Sandfire expects them to come in below the lower end of its guidance range of US95c-$1.05 per pound of copper.

Sandfire sold 282,012t of concentrate containing 68,653t copper and 36,042oz gold for the year.

The company fully repaid its ANZ amortising facility 18 months ahead of schedule, with the final repayment of $A20 million made last month.

Just $50 million of the $380 million DeGrussa project finance facility is left to be repaid.

Sandfire closed June with cash of $A60 million, and net cash of $10 million for the first time since becoming a producer five years ago.

The company also has $60 million in undrawn debt facilities.

Sandfire managing director Karl Simich said the company’s balance sheet gave it greater flexibility and optionality for future growth.

“It also coincides with a period of reducing capital investment requirements at DeGrussa as the level of required underground mine development drops from a base level in FY16 of 7300m; by 23% in FY17 to 5600m; and by 74% in FY18 to 1900m,” he said.

“We will continue to assess the optimal financing structure for the organic growth options in front of us – such as the Monty copper-gold deposit, for which a feasibility study is underway.”

It comes after an initial study for the Monty deposit identified no “fatal flaws”.

Monty, 10km from DeGrussa, was discovered by Sandfire last year as part of a farm-in with Talisman Mining.

It has an initial resource of 1.05 million tonnes at 9.4% copper and 1.6 grams per tonne gold.

Simich said the company would keep up its large exploration spend in the region, as well as at other projects in Australia, “while continuing to balance a return of surplus cash to shareholders”.

Sandfire has issued of 469,092 performance rights to senior management, including 216,175 to Simich, which will require shareholder approval.
  
UBS yesterday reiterated Sandfire as its preferred pick in the copper space as it maintained a buy rating and upped its price target by 30c to $6.50.

“Our call is supported by organic growth opportunities, low-cost domestic production and balance sheet strength,” UBS analyst James Brennan-Chong said.

Sandfire shares were unchanged at $5.34.