DeGrussa’s longevity weighs on Sandfire value
A fixation on the DeGrussa copper mine’s lifespan is affecting Sandfire Resources’ market value, managing director Karl Simich said yesterday, despite an improved outlook for the base metal.
Copper hit 21⁄2-year highs of $US3.07 a pound as Sandfire announced a record 13¢ per share, fully-franked dividend for the 2016-17 financial year.
But Mr Simich said questions about permits for the Black Butte project in Montana and an intense focus on its lack of discovery since the DeGrussa mine in the Mid West began in 2012 was weighing it down.
“(Sandfire) controls collectively today around two million tonnes of copper and four million ounces of gold . . . only 350,000t are sitting in a mine plan and I think that’s all the market has given us value for at $US3/lb copper,” he said.
“I would think in a blink for Sandfire to be trading at $6.50 should be of no great moment and we’re worth it every day of the week, if not more.”
Sandfire closed up 20¢, or 3.6 per cent, at $5.78 yesterday after posting a $77.5 million annual net profit, up 62 per cent.
It produced 67,088t of copper and 38,623oz of gold at cash operating costs of $US0.93/lb.
It has tipped 63,000-66,000t of copper and 35,000-38,000oz of gold this financial year at cash costs of $US1-1.05/lb.
DeGrussa is expected to run out of ore within five years without a new discovery.