Materials

Sandfire morphs into ASX-listed copper-focused heavyweight following Spanish acquisition

Wed 02 Feb 22, 5:53pm (AEST)
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Key Points

  • Sandfire plans to raise $1.28bn to help fund MATSA purchase
  • MATSA has three underground mining operations
  • Sandfire becomes one of the largest copper-focused producers on the ASX

Sandfire Resources (ASX: SFR) share price finished today’s trading session around 2% higher followings today’s revelations the copper-focused large-cap miner had completed a $2.60bn acquisition of MATSA Mining Complex.

As originally announced mid-September 2021, Sandfire plans to raise $1.28bn to help fund the purchase of MATSA’s large-scale, long-life underground copper operation - comprising three underground mining operations - in the Iberian Pyrite Belt of Spain.

The completion of the acquisition follows the satisfaction of outstanding conditions including Foreign Investment Authority (FIRB) approval and the completion of authority approval.

New era for Sandfire

Comprising 2450 square kilometre portfolio of mineral rights in exploration in Spain and neighbouring Portugal, MATSA’s three underground mining operations feed into a 4.7m tonne per annum central processing facility.

CEO and Managing Director Karl Simich believes today’s announcement marks the beginning of an exciting new era for Sandfire, with the workforce expanding to around 3,800 direct employees and contractors globally.

“With the acquisition of MATSA, Sandfire immediately becomes one of the largest copper-focused producers on the ASX, with high-quality operations in Spain and Australia and an impressive growth pipeline and exploration portfolio that we believe will continue to drive our growth for many years to come.”

SFR

 

Six month snapshot of Sandfire's share price movement versus the materials sector.

 

What brokers think

While production volumes for Q4 were higher-than-anticipated, Sandfire Resources' market update disappointed Ord Minnett through higher-than-expected costs. The broker lifted its target price to $5.60 from $5.50 but downgraded the stock to Sell from Hold on the back of a rallying share price (21/01/22).

  • Having incorporated MATSA in the broker’s forecasts, together with higher price forecasts for metals, Morgan’s price target has lifted to $7.81 from $6.85, and the Add rating is retained.

  • UBS expects MATSA to be a potential key driver for Sandfire. While the UBS Buy rating was retained and target price lowered to $7.95 (24/01/22), investors can expect further updates from the broker going forward.

  • Citi sees Sandfire as an alternate way to play the copper thematic on the local exchange, and on 21/01/22 retained a Buy rating and target price of $7.40.

Consensus on Sandfire is Moderate Buy.

Based on Morningstar’s fair value of $7.33 the stock looks undervalued.

 

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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