The AFR names SFR as a possible suitor for the Northparkes Cu mine:
Sources said Northparkes, not long ago owned by Rio Tinto and sold for $US820 million to China Molybdenum Company and Sumitomo in 2013, had landed on the deal circuit, after an unsolicited approach that has opened China Moly’s eyes to a potential sale.
Citi and StanChart, the sell-side advisers, haven’t kicked off a formal auction process, but are understood to have been tending to the interested parties who have lobbed on the scene amid strong demand for copper as seen by BHP’s $9.6 billion bid for OZ Minerals.
Those to be circling are understood to include the same names that were eyeing Glencore’s CSA copper mine, also in country NSW, including listed players like Aeris Resources, AIC Mines and Sandfire.
Given the interest, it’s surprising there’s not an auction under way. However, others warn Northparkes’ geology means it is not for everyone: its formations force the use of more complex block-cave mining, which usually thins out the buyer pool.
Early bets were that Northparkes’ price would land anywhere between $500 million and $1 billion. It had forward sold its gold production to Triple Flag, meaning any suitor would be bidding for the copper asset.
The mine was expected to produce 30,000 tonnes of copper and 26,000 ounces of gold in 2021, with about 20-years of life left.
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Ash here
In my opinion, SFR needs another Cu mine to be regarded as a significant player, preferably located in Australia.
The existing owners of Northparkes will have spent the last decade digging the easiest stuff. If mining the remainder is, ahem, 'complex', this will have to be reflected in the price, even while there may be 20 years ore down there.
We welcome new CEO Brendan Harris, starting today. He already has plenty to do - commissioning Mateo, considering buying for-sale adjoining Khoemacau and restoring Matsa's fortunes after the Ukraine war disrupted electricity supply to its European smelter customers and likely ballooned its working capital held in concentrates.
There is room to take on Northparkes, but please, no fancy prices!
Ash
SFR Price at posting:
$6.33 Sentiment: Buy Disclosure: Held
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