When Sandfire Resources Ltd goes shopping, it carries with it a big budget. This week saw the mining company splash out on a new copper asset - the Minas De Aguas Teñidas (MATSA) mining complex in Spain - costing it a whopping US$1.87bn, and boosting it to become one of the biggest copper producers in Australia.
Sandfire’s copper addition comes during the metal’s price boom
The deal was inked with MATSA co-owners Trafigura and Mabudala Investment Company, and will see Sandfire acquire MATSA’s promising underground copper operation. A valuable asset, MATSA boasts three mines, churning out a total of 100,000 to 120,000 tonnes a year of copper equivalent which feeds into a 4.7-million-tonnes-a-year processing facility. Its decade long mine life, and its additional capability to produce zinc and lead concentrate, makes Sandfire’s latest acquisition an enviable one.
“Base metal assets which offer this combination of scale, grade, mine life and exploration upside are extremely rare globally,” says Managing Director and CEO at Sandfire, Karl Simich. “The MATSA acquisition transforms Sandfire into a first quartile copper producer of global scale and allows us to leverage our skillset to deliver on our growth ambitions to create one of the highest quality and most compelling copper exposures on the ASX.”
The company is funding the acquisition through an equity raising, its own cash reserves, and a US$650mn syndicated and underwritten debt facility.
Ambitious production targets set following its latest mine acquisition
Detailed in the deal is the continued perk of Sandfire’s life-of-mine concentrate offtake agreement with Trafigura for MATSA’s total output. With MATSA now joining Sandfire’s growing mining assets, the company is targeting an FY’22 production rate of between 170,000 tonnes and 194,000 tonnes, in theory making it one of Australia’s biggest producers of copper. To put this ambition into perspective, Sandfire previously produced 70,845 tonnes of copper, shadowed in comparison to what it is now setting its sights on achieving.
And with 2021’s copper prices soaring to an impressive US$10,000 per tonne at the beginning of the year due to demand for the metal climbing, Sandfire is sure to be itching to begin churning out production and reaping the financial benefits of its newest mine addition.