Shares in Sandfire Resources (SFR) soared to a 10-month high yesterday after reporting high copper assay results from a promising new find in Western Australia, and then came back to earth.
The company’s shares jumped nearly 10% to a high of $6.53 on the news which appears to confirm the presence of a major metal deposit only 10 kilometres away from Sandfire’s DeGrussa mine.
But they then faded to be up 3% at $6.10 at the close as the market’s early weakness impacted most stocks yesterday – it seems fears about Greece’s financial position outweighed news of a big potential metal find.
Sandfire’s discovery is actually on ground it is exploring in partnership with Talisman Mining (TLM). Sandfire can earn a 70% interest in the area once it has spent $15 million on exploration.
After the latest figures you can bet that $15 million will be consumed pretty quickly, such is the promise they show. Sandfire said assays from the “Springfield project” had found copper grades as high as 18.9%.
Sandfire said it had found 16.5 metres at 18.9% copper and 2.1grams of gold to the tonne from 409.5 metres at the Monty Prospect, which is located within the Springfield Project.
Sandfire said that the hole is still in progress and is currently at a depth of 745 metres.
Sandfire said the results were similar to the massive sulphides originally found at DeGrussa.
SFR 1Y – Sandfire shares spike on copper find
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Earlier this month Sandfire said it had found ‘massive sulphides’ on the Springfield prospect – that’s sometimes a precursor to a high grade metal prospect being discovered – metals such as copper or nickel (with gold, cobalt and other minor minerals).
“While exploration of this emerging VMS [volcanogenic massive sulphide] prospect is still at an early stage, the width, exceptional grade and tenor of the copper-gold mineralisation intersected is considered to be very encouraging,” said Sandfire in its statement yesterday.
Talisman shares were also boosted by the good drilling results, with the stock rising 25% at one stage yesterday to touch 60 cents. Eight days ago they were trading at 17 cents, but the news of the discovery of massive sulphides put something of a rocket under them last week. They closed up 23% at 56 cents yesterday.
While extremely promising, metal discoveries at the moment don’t really raise the temperature for very long among investors. Mining is in the doldrums, cost cutting is still the mantra and new discoveries will have to await the availability of limited capital to come into production.
And while a copper discovery (with the bonus of some gold) is better than finding more coal or iron ore, it is losing its attraction with no sign the current oversupply is fading, as many experts had forecast in 2014 and earlier this year.
That’s because Chinese copper imports have slowed sharply this year, which in turn has helped prices fall from more than $US3 a pound on Comex in New York to $US2.61 overnight Wednesday.
But this new prospect, called Monty, has a better chance than most of being developed because of its proximity to Sandfire’s existing mine.
Sandfire’s DeGrussa mine started production in 2012 with an initial seven-year mine life. The mine is now expected to be in operation until mid-2021. This discovery should lengthen the life of the project.
