Strategic D-Day approaches for Sandfire

WITH time ticking down on the bountiful DeGrussa copper-gold mine, investment bank Citigroup sees the board at Sandfire Resources having to soon make decisions on the strategic direction of the ASX-listed company.

Strategic D-Day approaches for Sandfire Strategic D-Day approaches for Sandfire Strategic D-Day approaches for Sandfire Strategic D-Day approaches for Sandfire Strategic D-Day approaches for Sandfire

Assuming a substantial exploration success doesn’t completely change the landscape, Citi estimates Sandfire could have A$811 million cash (plus franking credits) in four years as the current mine life moves toward a close at DeGrussa.

“History is not replete with instances of miners turning off the lights and returning cash to shareholders,” the Citi analyst team said.

“But in a few years’ time, if exploration has not yielded any major results, management will be faced with either potentially unfavourable M&A or a significant downsizing and capital return.”

Sandfire does have a new potential development in hand in the US, but Citi isn’t overly convinced as to the merits of Black Butte in Mon...