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Mining
Your ASX large cap mining news for Thursday, September 29.
After 15 years at the helm of copper miner Sandfire Resources (ASX:SFR), managing director and CEO Karl Simich is moving on.
A good innings as well.
Known for having the gift of the gab, Simich walked the walk as well after Sandfire made the legendary DeGrussa discovery in 2009 going from 4c to $8 in just 18 months.
The company was famously looking for a tiny gold resource to help keep the lights on in the wake of the GFC, only to stumble on an RC hit of 22m grading 3.6 per cent copper, 3.8g/t gold, and 13.4g/t silver 100m below the ground when young geo Margaret Hawke decided to drill six extra holes at the tailend of an unsuccessful drill drive.
A later diamond drill hole struck an unimaginable 27% copper over 8m.
It’s now a $1.53 billion company which has been a producer for over a decade, and Simich is somewhat appropriately stepping aside as the DeGrussa mine in WA, where he made his fortune, is coming to the end of its own life.
He led the company into the US$1.865 billion acquisition of the MATSA copper complex in Spain last year and the construction of the Motheo copper-silver mine in Botswana, which will eventually be a 55,000tpa operation.
“After what has been an incredible journey over the past 15 years, I believe now is the right time to hand over the reins to a new CEO to take this company forward into the next decade,” he said.
“I am immensely proud of everything the Sandfire team has achieved during my tenure – which has seen the Company evolve from junior explorer to successful mid-tier
miner and now an emerging and globally significant copper mining company with a very exciting future across some of the world’s best copper belts.
“We have built up an incredible team of people, a strong culture, world-class systems and a business underpinned by quality assets.
“With the MATSA acquisition complete, Sandfire has a strong foundation for the next decade and with the Motheo development on track, is about to spread its wings as a growing copper producer in the Kalahari Copper Belt. As the company’s largest individual shareholder, I look forward to sharing in our continued success into the future.”
After a stronger than expected start to the 2023 financial year, Sandfire has lifted its production guidance from 81-89,000t of copper, 78-83,000t zinc, 6000-10,000t lead, 10-12,000oz gold and 2.2-3.2Moz silver to 83-91,000t copper and 12,000-14,000oz gold with the rest the same.
Copper production is expected to total 28,000t with zinc above guidance at 18,000t in the September quarter, while a decision has been made to keep processing of low grade stockpiles going for another three months at DeGrussa after sulphide processing finishes in October, one of the main contributors to the lift in copper and gold guidance.
The company also says it has made a scheduled US$118 million debt repayment on the MATSA acquisition (US$532m outstanding), with its ANZ Corporate Debt Facility to be reduced by US$98 million and US$33m ($50m) remaining.
The next repayment of US$80m on the MATSA deal is due in January, with the last repayment on the US$650m syndicated debt facility due in FY27.
A US$140m project finance facility for the Motheo development has also been signed with Nedbank and Societe Generale.
Just a day after it was revealed major Chinese investor Ganfeng was selling down its stake in Australia’s next lithium producer, Core Lithium (ASX:CXO), the emerging spodumene miner has rattled the tin for $100 million.
According to $2 billion capped Core, which boasts offtakes and term sheets for over 700,000t of lithium concentrate over four years with Ganfeng, Yahua and Tesla, the fully underwritten placement at a 6.8% discount of $1.03 a share will be used to strengthen its balance sheet and accelerate exploration and development at the Finniss mine in the Northern Territory.
The mine will be the first hard rock lithium mine in Australia outside of WA, but first concentrate production is not due until the first half of 2023.
In the meantime the cash will enable it to spent $25 million on resource definition, extensional and exploration drilling next year, while advancing early works on the BP33 underground deposit rather than funding that later out of cash flows and introducing a night shift to speed up commissioning of its concentrator.
A first sale of DSO spodumene is expected to take place soon, ahead of the concentrator’s completion.
“The Placement enables Core to pursue several new growth initiatives,” CEO Gareth Manderson said.
“We will be well-funded for a larger exploration campaign on our prospective landholding.
“Recent exploration success at BP33, Core’s proposed second lithium mine, supports the deployment of growth capital and project development, enabling Core to capitalise on the current strength in lithium prices.
“We are looking forward to delivering first production of lithium concentrate from Finniss in the first half of 2023 and thank our loyal shareholders for their continued support.”
Canaccord Genuity is on the ticket as lead manager, with Azure Capital as Core’s financial advisor and Allens as legal advisor.
The construction of Finniss comes at a time of record spodumene price at around US$6750/t, in the face of a market shortage few analysts expect to be resolved any time soon.
Expectations of policy support for construction in China made miners the standouts on the ASX, with blue chip iron ore and gold stocks taking the lead.
We’ve become accustomed to seeing battery metals and energy players prop up the sector of late.
But the 1.28% lift in the materials sector today was all down to the old stagers of the Aussie resources market.
Rio Tinto (ASX:RIO), BHP (ASX:BHP), Fortescue (ASX:FMG) and MinRes (ASX:MIN) gained 3.59%, 1.86%, 0.69% and 0.67% respectively, while Northern Star (ASX:NST) and Newcrest (ASX:NCM) rose 3.87% and 3.34%.
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