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On Wednesday, Goldman Sachs adjusted its stance on Sandfire Resources NL (SFR:AU) (OTC:SNDFY), downgrading the stock from Buy to Neutral. The firm also revised its price target to AUD 9.60, a decrease from the previous AUD 10.20. The change reflects the analyst’s view that the company’s shares are trading at approximately one times net asset value (NAV), based on their long-term copper price estimate of about US$4.6 per pound in real terms, and around six times next twelve months (NTM) EBITDA, which is above the average of global copper peers trading at approximately five times.
Goldman Sachs’ analysis indicates that despite the downgrade, Sandfire Resources is expected to generate strong free cash flow (FCF), forecasting an average FCF yield greater than 10% from 2025 to 2027. Additionally, the firm anticipates that Sandfire will have a net cash position by the end of FY26 based on their projections.
The report also highlights the operational performance of Sandfire’s assets. The Motheo copper mine and plant has been operating at or above its nameplate capacity of 5.2 million tonnes per annum (Mtpa). Simultaneously, throughput at the Matsa mine has increased from 4.2Mt to 4.6Mtpa. Both mines have achieved steady state production, and improvements in metallurgical recoveries at Matsa are expected to continue.
Goldman Sachs has included optimistic assumptions in its analysis, such as a conversion rate of over 100% of resources to reserves at the Magdalena project, indicating potential for further resource growth. The firm also assumes a 13-year mine life at both the Matsa and Motheo projects, compared to Matsa’s current reserve life of around eight years.
Looking forward, the firm mentions the Black Butte copper project in the United States as a long-term prospect, with Goldman Sachs estimating the first production to occur in FY29. This project’s timeline suggests it may contribute to Sandfire’s growth in the more distant future.
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