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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Mkt cap ! $3.777B |
Open | High | Low | Value | Volume |
$8.35 | $8.46 | $8.26 | $17.55M | 2.110M |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
3 | 9479 | $8.25 |
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Price($) | Vol. | No. |
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$8.30 | 6416 | 5 |
View Market Depth
No. | Vol. | Price($) |
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3 | 5730 | 8.200 |
1 | 367 | 8.170 |
2 | 7500 | 8.160 |
1 | 700 | 8.150 |
2 | 350 | 8.120 |
Price($) | Vol. | No. |
---|---|---|
8.490 | 1900 | 1 |
8.500 | 5366 | 3 |
8.510 | 117 | 1 |
8.530 | 1000 | 1 |
8.580 | 1200 | 1 |
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