Monsters of Rock: Sandfire a true monster as copper, serendipity propels miner into ASX 200
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This was supposed to be a difficult period for Sandfire Resources (ASX:SFR), which has long dealt with uncertainty around the mortality of its DeGrussa copper-gold mine.
Since the start of mining at DeGrussa early in the last decade, Sandfire has grappled with concerns about its depleting mine life.
Instead it has spun profits generated from record copper prices over the last year into a step change for the company, bankrolling its $2.6 billion purchase of Trafigura and Mubadala’s MATSA mining complex in Spain.
The acquisition of the long-life, 100,000tpa-plus copper operations will, alongside the development of its more modest Motheo project in Botswana, ensure Sandfire remains a mid-tier force in copper for years to come.
Boss Karl Simich has expansion plans long-term that go well beyond that.
That has been reflected in the company’s share price, with Sandfire stock rising 10% this month to $6.31 for a market cap of $2.6 billion.
It is a well timed run which has earned Sandfire a rare out of season entry into the ASX 200 on account of the serendipitous exit of Spark Infrastructure following the electricity infrastructure company’s multi-billion dollar takeover.
Also in the copper space there was good news for South32 (ASX:S32), which itself has launched a major buy in the US$1.5 billion purchase of Sumitomo’s 45% stake in Chile’s Sierra Gorda mine.
The mine’s primary owner, Poland’s KGHM, will not be exercising its pre-emptive right over the Sumitomo stake, paving the way for South32 to become a copper producer.
$775 million high grade Tasmanian iron ore producer Grange Resources (ASX:GRR) soared almost 15% to a three month high of 67c as iron ore prices rose above US$100/t on Wednesday.