WITH the feasibility results for the high grade Monty copper deposit due this quarter, what is the chance of debt-free miner Sandfire Resources cleaning up the development’s ownership structure?
Sandfire, which owns the nearby DeGrussa operation (including processing plant), holds 70% of Monty, with ASX-listed junior Talisman Mining having the balance. According to Bell Potter, Sandfire should pursue ownership of 100%. “There has been no update on corporate developments, yet we see (Sandfire’s acquisition of the 30% stake), as a key potential catalyst in calendar 2017,” Bell Potter said. “No clear strategy has been outlined, but in previous statements it has been indicated that in an ideal scenario, Sandfire would at some stage move to 100% ownership of the project. “We note that a relative valuation window has opened up between Sandfire and Talisman, with Sandfire’s share price outperforming Talisman’s in excess of 50% over the last 12 months.” Bell Potter believes the use of scrip rather than cash alone would be a smart way to go, enabling sellers to retain exposure to “this highly prospective asset”. A maiden resource for Monty of 1.05 million tonnes grading 9.4% copper and 1.6 grams per tonne gold was estimated last April. Sandfire boss Karl Simich told investors yesterday that the company had received some encouraging hits from outside and below the existing resource. “It’s complicated geology so it will take some time to understand,” he said. Shares in Sandfire were up 5.1% to $6.64 in late trade, capitalising it at $1.05 billion. At the same time Talisman shares were up 1.5% to 34.5c, capitalising the junior at $64 million.
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