SFR rallied +3.8% on Thursday, posting fresh 5-year highs ahead of today’s report, a very bullish move considering the lacklustre performance over the last year by both copper and Chinese economic growth. One aspect that is not getting a lot of airtime is commentary from BHP around Escondido copper grades, they’re falling which implies lower production in outer years. Being the world’s largest copper mine, this is another net negative for global supply which will become increasingly challenged over the coming years at the same time as a significant surge in demand due to an acceleration in the adoption of renewable energy, electric vehicles, and associated infrastructure.
This creates a very positive backdrop for high-quality copper companies with large / growing reserves, such as Sandfire. This morning they reported their 1H24 result that was slightly ahead of expectations with revenue of $417.9m ahead of $409m expected while underlying earnings (EBITDA) of $136m was ahead of the $127m forecast. They also maintained their FY24 production targets for Copper along with capital expenditure guidance.
- SFR is also noticeably outperforming copper ETFs like the Global X Copper (COPX US), and as we often say, don’t fight the tape – MM owns SFR in our Active Growth and Emerging Companies Portfolios.
MM is long and bullish towards SFR
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