SFR's incoming CEO will survey a fundamentally imbalanced business: a fully mature Cu Zn operation Matsa, the Moteo Cu mine in advanced development, while DeGrussa is mined out and I shrug at Black Butt.
That repayment schedule on the Matsa debt is quite tight, directing cash flows to debt retirement for the next few years.
SFR is trading near ten year lows for good reason.
Either the new CEO buys another mine or SFR will be taken over by one of the cruising predators. I think its fortunes are that stark. Yet SFR does have options. One possibility, perhaps among many, is this.
SFR owns ~9.5% of DRM, currently under offer by A1M. Combining the Eloise mine and concentrator with the adjacent Jericho deposit makes an attractive mid-size Australian Cu operation. Realising its potential will take capital A1M doesn't have.
SFR's equity stake in the combined A1M/DRM would be about 3% - not huge, but a beginning. The combined A1M/DRM unit would be worth ~$160m. Whether this is value is an open question.
A move like this would justify the Australian head office, which currently looks like a shag on a rock.
SFR's need for action is urgent. What will the new CEO do?
I hold both SFR and DRM.
Ash
SFR Price at posting:
$3.63 Sentiment: Buy Disclosure: Held
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