Sandfire eyes new investors
Two of the biggest stakes in Sandfire Resources are likely to change hands in the next 12 months, according to the copper miner's managing director, Karl Simich.
Speaking after the miner settled a farm-in deal with neighbouring copper minnow Ventnor Resources, Mr Simich said Sandfire's two biggest shareholders appeared to be more likely to divest than seek to increase their respective stakes.
OZ Minerals has owned about 19 per cent of Sandfire for more than three years, while Korean steel company Posco holds 15.23 per cent after first investing just $7.2 million more than five years ago. Both have other priorities for now, with OZ hoping to develop its wholly owned assets in South Australia. Posco is part of the Roy Hill joint venture with Gina Rinehart's Hancock Prospecting.
Mr Simich expected an opportunity for a new significant shareholder to open up soon.
"I've made indications to OZ Minerals that I would be very happy to buy their stake back for a fair price if they wanted to sell. So far they've declined my offer, but I will keep knocking on the door.
"I've got people who would love to buy meaningful stakes in the company but they just can't get hold of meaningful stakes."
The local market has already witnessed several "block trades" this year, with big shareholders in companies including Aurizon, BC Iron and Fortescue Metals Group exiting their stakes in a single transaction.
Patersons Securities analyst Simon Tonkin said Posco in particular had made "a motsa" on its original investment in Sandfire, which was then a minnow focused on finding manganese and lead.
At Monday's share price of $6.06, Mr Tonkin said Sandfire was approaching its fair value. "From an investment point of view, Sandfire is pretty fully valued, we've got a $6.32 target on it," he said. "The real upside for Sandfire is finding another deposit nearby. Whoever comes in would want some comfort that there is something else there."
Mr Simich said the region around Sandfire's DeGrussa mine had been under-explored, and he had no doubt more copper deposits would be found. "We will spend as much money as it takes to find more and more growth," he said.
Friday's $3 million farm-in with Ventnor gives Sandfire access to 35 per cent of Ventnor's 142,000 tonne copper resource, which is close enough to be trucked back to DeGrussa if developed. Sandfire retains an option to acquire an 80 per cent stake in the project for an extra $6 million.