Dr Copper’s prognosis good: Simich SANDFIRE Resources boss Karl...

Dr Copper’s prognosis good: Simich

SANDFIRE Resources boss Karl Simich says the copper outlook is becoming more positive, as the company plans to continue its focus on consistency at DeGrussa, as well as making the next big discovery.

• Kristie Batten
• 29 Nov 2016

Speaking at the company’s annual general meeting in Perth yesterday, Simich said FY16 had been a “wonderful” year and shareholders could expect more of the same from the copper producer.
Copper has been on a run of late, up by 21% since the start of October.
The election of Donald Trump in the US earlier this month provided a boost for the red metal.
“There’s a bit of a sense of ‘there’s someone who’s going to write some cheques’,” Simich said of Trump.
“The prognosis, fundamentally in the world, looks ok.”
Copper supply was boosted by around 4.5% this year by MMG’s Las Bambas mine in Peru, but there aren’t any major projects of that size due to come online.
“We don’t see as much of that new growth coming on stream,” Simich said.
While supply growth will slow to an estimated 0.7% next year, demand has also started to pick up, along with sentiment.
That coincides with another year of expected consistency from the DeGrussa mine, which is set to produce 65,000-68,000 tonnes of copper and 35,000-40,000 ounces of gold at C1 costs of US95c-$1.05 per pound.
The mine produced 68,202t copper and 37,612oz gold at 95c/lb in FY16.
But the real value driver for Sandfire is exploration and discovery.
It was the discovery of DeGrussa in 2009 that took the share price from around A6c to as much as $8, and the discovery of Monty last year had a positive, albeit not as dramatic, effect on the share price.
Simich said Sandfire has the firepower to make discoveries in the region and its minority partner Talisman Mining was unlucky not to have found Monty.
Sandfire has committed around $20 million to exploration around the Doolgunna region in FY17.
The company has taken its Doolgunna landholding from 453sq.km to 4180sq.km.
“We continue to talk to other organisations in that area that we think are somewhat prospective,” Simich said.
Sandfire will spend another $8 million on its East Coast projects.
“The East Coast projects have the potential to yield tier one discoveries,” Simich said.
Simich said the company would continue to look for acquisition opportunities with a focus on operating mines.
But he said the company would be cautious and protect its strong balance sheet, which is in a net cash position.
Sandfire hasn’t raised equity since 2010.
“I suspect that would probably remain to be the case,” Simich said.
“There would have to be a good reason to issue shares.”
Sandfire shares opened 1c lower at $6.11.