Hedges are obliged by financiers to give certainty to their loan security. Expensive for miners, but the alternative is highly dilutive cap raises.
BH has said reconstructing the balance sheet is a core objective. I take that to mean a much lower debt/equity ratio by paying down debt or growing the business - in practice, a bit of both. If SFR can stay on the right side of its debt and gradually roll it and the hedges off, the 'jaws' will widen quite quickly.
Banks probably consider Matsa a quality asset while Motheo remains unproven.
SFR reports 1Q23 on 26 October. Holders want to hear Motheo has operated end-to-end at nameplate for the entire 3 months. This hot-start timeframe is unrealistic, though certainly BH & team's ultimate aim. Expect noise and ill-informed commentary after the quarterly.
SFR corporate will be actively considering next moves to strengthen and better balance the business - though copper mining is a crowded and feverish sector. I still consider Khoemacau in play for both SFR and S32.
Watching with interest.
Ash
SFR Price at posting:
$6.02 Sentiment: Buy Disclosure: Held
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