One we own in both the Flagship Growth and Emerging Companies Portfolios, the copper company came out with a surprise $200m capital raise last week, with shareholders able to participate in the non-renounceable entitlement offer at $4.30/sh on a 1-for-8.8 share basis. Shares have held up well since the announcement, currently trading at a ~12% premium to the raise and we intend to take up our rights if a premium remains when the deal closes on December 8th. While the money was a ‘nice to have’ rather than a ‘must have’ scenario, the funds will go towards reducing debt and increasing working capital, providing more flexibility as they bring their Motheo project in WA online ahead of first production around the middle of next year. It also cleans up the business before the new CEO steps into the office in April, and we suspect this was another way for the board to entice such a high-quality operator in ex-Western Areas CEO Brendan Harris.
With Oz Minerals (OZL) under takeover from BHP, Sandfire will likely become the largest pure-play copper stock on the ASX, and we think it will find more buying support as a result.
MM is bullish and long SFR in the Emerging Companies Portfolio
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