Sandfire Resources finished the year strongly with copper and gold production at DeGrussa at, or above, the top end of guidance. DeGrussa will enter its final 15 months of planned copper production and the focus is shifting to Botswana.
Credit Suisse notes the coronavirus outbreak in Botswana is at its most severe and appears to be worsening and vaccine supply is yet to be secured. Hence, the current timeline to production in early 2023 is tight.
There are also border restrictions in Australia. Accordingly, modelling is altered to allow for production to commence mid 2023 and the broker applies a 15% escalation in capital expenditure. Outperform rating retained. Target is $8.55.
Sector: Materials.
Target price is $8.55.Current Price is $6.83. Difference: $1.72 – (brackets indicate current price is over target). If SFR meets the Credit Suisse target it will return approximately 20% (excluding dividends, fees and charges – negative figures indicate an expected loss).
