Hartley's latest report
Sandfire Resources Ltd(SFR $6.86) Buy, Re-Initiation of Coverage
Analyst
Date
Price Target
1 Steven Clark
6thJuly 2021
$10.00/sh
Please see attached for full report.War-Chested for Life After DeGrussa
Key Points
- The copper bull run has continued subsequent to our cessation of coverage of SFR in Oct’20:
- Copper prices have appreciated by 41% from US$3.06/lb to US$4.30/lb;
- A record high of US$4.90/lb was reached in May’21;
- Limited ASX exposure to copper production has been magnified;
- We have lifted our LT copper price forecast to US$3.50/lb (prev. US$3.00/lb);
- SFR has adjacently progressed the development of its Tshukudu Operations:
- The Nov’20 DFS for the T3 Project outlines avg. annual Cu in concentrate production of 31kt over a >12 year mine life;
- A Maiden MRE for the A4 deposit has been delineated at 6.5Mt at 1.5% Cu for 100kt of contained Cu;
- Initial upfront investment has been approved for the planned expansion of Motheo Production Hub capacity to 5.2mtpa;
- We model the following on our current commodity price deck:
- An uplift in cash and liquid investments to $622m as at Jul’21 (implied EV of ~A$630m);
- FY22 free cash contribution of A$415m from DeGrussa on our assumed copper price of US$4.00/lb;
- NPV8of A$3.14/sh for Tshukudu, assuming an expansion in Motheo Production Hub capacity to 5.2mtpa from FY25;
- Our SOTP valuation increases by 36% to A$12.54/sh at spot commodity prices;
- We see multiple catalysts for a rerating of the stock in the near term:
- Award of the T3 Mining License;
- Jun’21 quarterly result and Annual Report;
- Maiden Indicated Resource for the A4 deposit;
- Motheo Expansion Project exploration results;
- Maiden Old Highway JORC Rsc and Scoping Study;
- Potential resolution of Black Butte legal challenges;
- M&A activity;
- We Re-Initiate Coverage with a Buy rating and Price Target of $10.00/sh.
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$8.42 |
Change
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Mkt cap ! $3.851B |
Open | High | Low | Value | Volume |
$8.41 | $8.50 | $8.30 | $14.67M | 1.747M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 6679 | $8.38 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$8.44 | 2750 | 2 |
View Market Depth
No. | Vol. | Price($) |
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1 | 6679 | 8.380 |
3 | 9429 | 8.370 |
2 | 20433 | 8.360 |
3 | 10665 | 8.350 |
1 | 4024 | 8.340 |
Price($) | Vol. | No. |
---|---|---|
8.440 | 2750 | 2 |
8.450 | 6679 | 1 |
8.460 | 7179 | 2 |
8.470 | 6679 | 1 |
8.480 | 7679 | 2 |
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