We own SFR in our Active Growth Portfolio for pure copper exposure while also holding BHP and Evolution Mining, which enjoy 45% and 25% of their revenue from the industrial metal, respectively. However, $5.8bn SFR has been the ASX’s go-to pure Cu play since BHP acquired Oz Minerals, and our concern as a holder is that it has been pushed too fast, too soon. The LME Copper price is languishing 10% below its 2024 high, while SFR has been pushed to fresh all-time highs.
- MM remains very bullish about the Cu theme over the coming years, so we don’t want to lose or reduce our exposure.
We now have an alternative emerging with the recently ASX-listed (December 2024) Capstone Copper (CSC), a $8.3bn Canadian copper miner. In the last three months, we have witnessed a precedent for overseas miners getting the bit between their teeth compared to ASX gold stocks: Newmont (NEM) has advanced +35.8% while Northern Star (NST) has fallen 8.3%. In this example, the ASX gold stocks rallied too far too fast, and we question if SFR has been similar. Year-to-date SFR is up +37% compared to CSC +11%.
Capstone Copper delivered a solid 2Q result this month, with guidance maintained, leading to minor upgrades for the Canadian copper miner. We expect CSC to track the LME copper price as it has over recent years, while SFR feels like it’s squeezed a touch high as the primary pure local copper miner on the ASX. CSC is trading in line with its valuation over the last 5 years, whereas SFR is trading significantly above its average.
- We are considering switching SFR into CSC on valuation grounds in the Active Growth Portfolio.
MM is weighing up the switch from SFR to CSC
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Sandfire Resources (SFR) v Capstone Copper (CSC)
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Sandfire Resources (SFR) v Capstone Copper (CSC)
