Investors hunting for bargains among beaten down S&P/ASX 200 Index (Index:^AXJO) mining shares might want to put the Sandfire Resources…
The post Is this ASX 200 miner one of the best value shares to buy today appeared first on The Motley Fool Australia. –
This isn’t because the copper miner as tumbled more than its peers. If anything, the Sandfire share is outperforming the iron ore miners as it’s sitting on around a 7% gain over the past six months.
Merger news makes this ASX 200 miner a better buy
The excitement around Sandfire comes off its $2.6 billion takeover of Minas de Aguas Teñidas (MATSA) copper mine in Spain.
The transaction will transform Sandfire into a major global copper producer.
The analysts at Morgan Stanely reckons the takeover price is attractive at 4.8 times earnings before interest, tax, depreciation and amortisation (EBITDA).
What experts think of the MATSA acquisition
“Plus, the transaction would address near-term production reduction from Degrussa with Motheo (Botswana) ramping up from FY24 onwards,” said the broker who reiterated its “overweight” recommendation on the Sandfire share price.
“We find the current 6-year Reserve life shows extension potential.”
One of the best ASX 200 value buys in mining
But even before the MATSA deal, 麦格里银行 (ASX: MQG) was already tipping a circa 70% total return on the Sandfire share price.
Its optimism is due to Sandfire’s Motheo project. Motheo prompted the broker to significantly upgrade its earnings forecast for the miner on Wednesday, ahead of the MATSA news.
“SFR expects the addition of the A4 deposit to lift peak production at Motheo to ~60ktpa of copper in concentrate for FY27 and FY28,” said Macquarie.
“This was 25% above our forecast peak production of 48ktpa for FY27-FY29.
“We lift our FY23 copper production forecast by 21%, while our FY24 and FY25 forecasts rise 58% and 37%, respectively. We also lift FY26-FY28 copper production by ~25%.”
What is the Sandfire share price worth
Even before considering the big near-term production uplift from MATSA or the $1.2 billion capital raise, Macquarie 12-month price target on the Sandfire share price is $10.60 a share.
Further, given that many experts have a bullish outlook for copper over the next year or so, the Sandfire share price could play catch up with its bigger peer, the OZ Minerals Limited (ASX: OZL) share price.
The Sandfire share price is currently in a trading halt but has rallied 49% over the past year. In contrast, the OZ Minerals share price has advanced 64%.
The post Is this ASX 200 miner one of the best value shares to buy today appeared first on The Motley Fool Australia.
Wondering where you should invest $1,000 right now?
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.
*Returns as of August 16th 2021
The BHP (ASX:BHP) share price is down 17% in September so far. What’s next?
These were the worst performers on the ASX 200 last week