Brendan Harris

SHARES in Sandfire Resources hit a A$7/share high in April last year just as Brendan Harris took the baton from long-standing CEO Karl Simich. The reason was the first-quarter commissioning of the firm’s Motheo copper mine in Botswana. The mine’s success is key to Harris and Sandfire, especially an expansion now underway that will take Motheo’s output to about 55,000 tons of copper metal a year by 2025 from a current annual run-rate of around 34,000 tons. Sandfire posted a $45.3m loss for the 12 months ended June after absorbing a massive $270m amortisation and depreciation charge on the mineral reserves of MATSA, a 99,000 tons/year copper mine in Spain that Simich bought, partly financed with equity.

The acquisition also contributed towards year-end net debt of $430m, which had increased to $454m in the September quarter, some of which is due to a scaled-up financing facility aimed at supporting Motheo’s expansion. What this number-crunching amounts to is that Harris’s key task over the coming years is to translate some feverish M&A into returns. So far investors seem happy as the stock ended the year nearly a quarter higher. In the end, investment of the scale Sandfire has taken is a fundamental call on the long-term outlook for the copper.

The market seems balanced currently but Harris is adamant the outlook is bright. Shareholders will also be heartened by the recent takeover of Motheo’s neighbour Khoemacau by China’s MMG (for $1.6bn) suggesting the Kalahari copperbelt, where both mines are situated, remains a tasty long-term prospect. Harris has sanctioned budget for continued exploration in the region.