News

Leading fund manager names Boss as his pick of the uranium stocks. Plus, South32’s copper deal a boost for porphyry hunters such as Sunstone and Hot Chili.

World leaders - most of them anyway – will soon be heading to Glasgow for the United Nation’s Climate Conference, otherwise known as COP26. The idea is that there will be commitments to accelerated net zero emission targets to save us all from global warming through decarbonisation and the electrification of everything.

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The global energy crisis dominated headlines this week with fossil fuels defying the rush into renewables, feeding fear of an inflationary spiral which, in turn, sparked a jump in the price of gold.

A move back towards $US1800 an ounce by gold was a measure of the uncertainty in financial markets as government start to unwind post-pandemic economic stimulus spending just as the climate change debate heats up.The net result is a cocktail of confusion, and perfect conditions for gold to shine even if part of the stimulus unwinding is an increase in official U.S. interest rates.

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Sandfire Resources is set to net $97 million when it sells its entire 16 per cent stake in Adriatic Metals today ahead of a period of heavy capital spending by the copper miner (reports The West Australian).

The Karl Simich-led company announced this morning it would sell its 34.6 million shares in Adriatic at $2.80 as part of a broader $US244.5m funding package by the dual-listed company to develop its Vares silver project in Bosnia. The $97m represents a big windfall for Sandfire which invested $2m into the $10m float of Adriatic in 2018 at an issue price of just 20¢. Since then it has continued to accumulate shares in the company at prices well below $2.80.

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China’s power crisis boosted prices for all forms of energy this week, though Australia’s full hand of coal, oil, gas, uranium, and renewables helped suppress investor anxiety about the threat of stagflation, an unpleasant mix of value-destroying low growth and high inflation. Adding to the sense of a sea-change in underlying economic fundamentals was a fresh burst of concern about rising interest rates and the withdrawal of easy central bank money which has propped up global asset values.

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Plus, first assays for Sunstone’s porphyry play should be close, runaway mineral sands prices a big tailwind for Strandline and Chris Cairns’ new gold float E79 shakes off gold market weakness with strong demand for IPO

The copper stocks have not been spared from the broader market malaise. That’s despite the copper price remaining nice and strong at $US4.17/lb. Plug the spot price into the current earnings period and profits for the producers are going to be substantially higher than the pricing of copper equities would have you believe. If there was a feeling the copper price was about to tank, fair enough. But it is near-impossible to find a forecaster who thinks the copper price is headed for a dive like say, iron ore.

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The ever-bustling Karl Simich has fixed Sandfire’s looming production gap in grandioso style with the A$2.6 billion acquisition of the MATSA copper-zinc-lead complex in Spain (writes Barry FitzGerald on MiningNews).

It is grandioso all right, with the acquisition cost being more than twice Sandfire's pre-deal market cap for a 1.4 times uplift in copper equivalent production. On those simple metrics, it is clear Sandfire did not get a bargain, as might be expected in a UA$4.20/lb copper market and with stiff competition for MATSA from Grupo Mexico in particular. While not a bargain, the MATSA acquisition is nevertheless a great deal in the making.

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Sandfire Resources is understood to have been swamped with demand for a $1.25 billion equity raising to help fund the acquisition of an operating copper-zinc mine in Spain despite mixed reaction to the deal from analysts (reports The West Australian).

The Karl Simich-led company said it would spend $2.6b acquiring the MATSA mining complex near Seville from Swiss commodities trader Trafigura and Abu Dhabi state investment company Mubadala Investment Company, describing the deal as transformative.

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23rd September 2021

It’s Tempranillo all round as El Simich solves miner’s big problema with purchase of long-life copper asset on attractive terms

Sandfire Resources (SFR) has had a problem ever since an exploration hole in May 2009 overseen by a young geologist, Margaret Hawke, hit bonanza copper grades in WA’s Bryah Basin. It was nice problem to have as the near-6% copper hit – along with good gold values – at the DeGrussa prospect always meant the find would be developed quick smart. And it was, with first production in 2013, and the nearby Monty deposit discovery in 2015 chiming in with its high-grade feed from 2019.

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