MNN Awards4 Aug 2020 23:17
Courtesy of chrisjparrish
@chrisjparrish
#MTR backed $SFR hitting the headlines Down Under #Copper #Silver #Botswana
The asset was acquired in the takeover of MOD Resources last year.
Sandfire first sent MOD a non-binding indicative offer in January 2019 after a period of technical due diligence.
Sandfire proposed a one-for-17 scrip offer, valuing MOD shares at 38c each, a 72.7% premium to MOD's previous closing price, and valuing the company at $113 million.
However, the board of MOD said the offer undervalued the company.
Sandfire returned with a $167 million cash and scrip bid in late June 2019, which won over the MOD board.
MOD shareholders could choose to receive 0.0664 Sandfire shares for every MOD share held, or 45c per share cash, capped at an aggregate $41.6 million.
Sandfire said at the time MOD's T3 asset ticked all the boxes for the company in terms of returns, costs, scale, life and upside potential.
The acquisition added a second development project to Sandfire's portfolio, after Black Butte in Montana, and the opportunity for a third regional hub covering Europe, the Middle East and Africa.
There was a positive response to the deal from analysts, many of who said it would reduce the risk of a production gap due to permitting in the US and the looming end of the DeGrussa mine in Western Australia.
The acquisition of MOD was completed in late October 2019 and Sandfire got to work on optimising the feasibility study for the T3 deposit, which has a resource of 590,400 tonnes of copper and 26.9 million ounces of silver.
Under MOD's numbers, T3 has capital costs of $260 million for a 3 million tonne per annum operation to produce an average of 28,000 tonnes per annum of copper over 11 years.
But T3 was seen as the tip of the iceberg for Sandfire, which saw belt-scale potential across its 11,900sq.km holding.
That was immediately evident in its January 2020 Botswana update, its first since taking ownership of MOD.
The company intersected a significant new zone of copper mineralisation, just two months after starting drilling its land package, which it named the Tshukudu project, meaning rhino in the Setswana language.
The first five holes at the A4 Dome, 8km west of T3, hit shallow, vein-hosted copper mineralisation along a 250m strike length.
Results included 38m at 1.1% copper and 9 grams per tonne silver from 44m, including 13m at 1.8% copper and 6gpt silver; 32m at 1.3% copper and 21gpt silver from 56m, including 13.4m at 1.9% copper and 37gpt silver; 7.3m at 2.6% copper and 46gpt silver from 43m; and 5m at 3.3% copper and 76gpt silver from 84m.
Standout intercepts of 18m at 5.2% copper and 124gpt silver from 77m (uncut) and 20.5m at 3.6% copper and 88 grams per tonne silver from 78.5m, cut to 15% copper, have since been reported.
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