New Sandfire boss says M&A must pass ‘very’ high bar

afr.com:

New Sandfire Resources managing director Brendan Harris says acquisitions would need to be extremely attractive to distract him from the task of getting the company’s two new mines performing to their full potential.

Delivering his first set of financial results since taking over the leadership of Sandfire in April, Mr Harris said the $US53.6 million ($82.7 million) statutory loss should not distract from the fact the company is at an “exciting juncture”.

Sandfire has been a single-mine company focused on Western Australia’s Degrussa copper asset for most of the past decade, but Degrussa’s retirement has triggered a rapid spend on growth over the past five years, with Sandfire now mining copper in Spain and Botswana.

There has been speculation Sandfire could emerge as a potential bidder for the privately owned Khoemacau copper mine in Botswana, which is located about 60 kilometres from the Motheo copper mine, where Sandfire declared first commercial production in July.

The timing of the Khoemacau auction is not ideal for Sandfire; the company is still carrying $US430 million of net debt from its ambitious acquisition of Spain’s Matsa mine in 2021, meaning a bid for the $US2 billion Khoemacau asset would probably require a dilutive equity raising.

Neither Matsa nor Motheo are operating to their full potential yet. Matsa chewed through lower grades over the past year on the way to a $US34.8 million loss before interest and tax. Motheo only achieved first commercial production in July, and Sandfire wants to rapidly expand it by 65 per cent.

Asked by analysts on Thursday whether he was keen to buy Khoemacau, Mr Harris did not rule it out. But he hinted it was unlikely given the company had a lot of “organic” value to unlock