Resources Rising Stars20 Jan 2022 22:56
As #copper bulls make a stampeding start to 2022, growing Sandfire positions for a re-rating | Resources Rising Stars
Sandfire’s ever-bustling MD Karl Simich is about to head off to sunny Spain to collect the keys to the MATSA copper-zinc operation, acquired in a transformational $US1.865 billion deal first announced in September last year.
MATSA is an established low-cost producer of 100,000-120,000tpa of copper equivalent (the red metal accounts for about 66% of the value) and its acquisition builds Sandfire’s (SFR) group copper output to one of the biggest on the ASX.
Sandfire has long been a 70,000tpa copper (and gold) producer from its DeGrussa mine in WA. But that comes to an end later this year, with the treatment plant there likely to continue on as a gold producer.
MATSA obviously more than compensates for the end of copper output at DeGrussa. But Sandfire is not stopping there.
With its Botswana copper development underway (up to 60,000tpa from the second half of 2023), an expansion of MATSA, and the eventual 30,000tpa Black Butte copper development in the US, Sandfire is on its way to becoming a 200,000tpa-plus copper producer for the long run.
Trading at $7.37, Sandfire has yet to capture the sort of market premium that OZ Minerals commands for its copper growth profile, even if analyst price targets on the stock range from $8.50 up to $10.
But copper’s outlook means that a re-rating for the remarkable shift in Sandfire’s copper production profile from a disappearing 70,000tpa (DeGrussa) to more than 200,000tpa (MATSA, Botswana and the US) cannot be far off.
On copper’s outlook, Simich was obviously talking his own book at Thursday’s analyst briefing for Sandfire’s quarterly report when he said that in his 35 years in the business, he had never seen such unanimity on the direction of copper – onwards and upwards. more ..........
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