Copper Miners Ballooning on Exchange As Copper Surge Lifts Market Sentiments

Summary

• Copper prices have climbed swiftly on the international front with a price appreciation of ~ 44.38 per cent.
• Apart from copper, base metals such as nickel, are also witnessing a price uptick, prompting many ASX-listed copper mining companies and base metals companies to restart projects over favourable market conditions.
• Moreover, the surge in copper prices has lifted market sentiment concerning ASX-listed copper stocks with some such as IGO Group (ASX:IGO), Sandfire Resources NL (ASX:SFR) recovering briefly after a sell-off.
• Sandfire has reported a ~ 10.90 per cent jump in sales revenue for FY2020 while IGO Group has reported a twofold increase in NPAT.

Copper prices have moved up swiftly with the price of LME copper (near-future) climbing from the level of USD 4,617.5 per tonne (as on 23 March 2020) to the present high of USD 6,667 a tonne (as on 19 August 2020), marking a price appreciation of ~ 44.38 per cent.

The surge in copper prices is now prompting many ASX-listed copper mining companies to focus on exploration and restart copper prospect, which could now take a toll on supply disruptions, which coupled with strong demand from China is the price-deriving force for copper in the status quo.

To Know More, Do Read: Copper Rush Drawing Australian Titans; Australia To Climb the Supply Ladder?

Moreover, the surge in copper prices has uplifted market sentiment concerning ASX-listed copper stocks with some such as IGO Group (ASX:IGO), Sandfire Resources NL (ASX:SFR) recovering briefly after a sell-off.

ASX-listed Copper Stocks

Sandfire Resources NL (ASX:SFR)

Strong Financial Maintained Despite COVID-19 Hailstorms

The Company reported a ~ 10.90 per cent increase in sales revenue against the previous corresponding period (or pcp) for FY2020 at 656.8 million, ended 30 June 2020.

• The payable metal sales (copper) surged by ~ 6.94 per cent against pcp during the period to stand at 69,593 tonnes while the payable metal sales for gold was up by ~ 1.88 per cent against pcp.
• SFR generated cash of $273.6 million from operating activities, prior to payments for exploration and evaluation expenses, which marked a surge of ~ 30.28 per cent against pcp.
• The DeGrussa operations generated an EBITDA of $414.4 million, up by ~ 13.40 per cent against pcp.
• The profit before net finance and income tax expense stood at $113.8 million as compared to pcp ($153.1 million), including impairment of $23.6 million.
• The net profit attributable to members stood at $74.1 million while the net profit after tax for the Group stood at $72.3 million.

Furthermore, the Company distributed a final dividend of 14 cents a share, taking the FY2020 total dividend to 19 cents a share.

Also, during FY2020, SFR achieved a record operational performance at its DeGrussa operations with the production of 72,238 tonnes of contained copper, and 42,263 ounces of contained gold, at a cash cost or C1 cost of USD 0.72 per pound.

The cash cost for the period witnessed a ~ 13.25 per cent decline against pcp.

The stock of the Company closed at $4.64 (as on 28 August 2020), down by 3.9 per cent against its previous close on ASX.

IGO Group (ASX:IGO)

Profitability Reaches Record High

The Company reported record revenue of $892.4 million for FY2020, up by 13 per cent against pcp (ended 30 June 2020), generating an underlying EBITDA of $459.6 million at a margin of 52 per cent for the Group.

• The underlying EBITDA witnessed a growth of 35 per cent against pcp.
• Also, the higher revenue further translated into record profitability with the NPAT reached $155 million for the period, up by 104 per cent against pcp.
• IGO generated net cash of $397.5 million from operating activities, which remained 7 per cent up against pcp.
• The production at Nova operations surpassed the guidance for all metals at a cash cost or C1 of $2.41 per payable pound of nickel.
• The nickel production at the prospect reached 30,436 tonnes.
• The Tropicana operation met the production guidance; however, the production remained 11 per cent lower against pcp.
• The development of Boston Shaker Underground progressed toward completion during the period.

Furthermore, the Company strengthened its cash position with net cash reaching $453 million at the end of the period, post netting with an outstanding debt of $57 million.

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Future Guidance

• IGO plans to produce 27,000 tonnes to 29,000 tonnes of nickel (concentrate) in FY2021 from the Nova operation.
• The production guidance for copper at Nova is in the range of 11,000 onnes to 12,500 tonnes while the production guidance for cobalt is in the range of 850 tonnes to 950 tonnes.
• The cash cost guidance for Nova is in the range of $2.40 per pound of nickel to $2.80 per pound of nickel.
• Likewise, the production guidance for gold from Tropicana (30 per cent) is in the range of 380k to 430k ounces, on a 100 per cent basis.
• The all-in sustaining cost for the prospect is in the range of $1,730 to $1,860 per ounce while the cash cost guidance is in the range of $1,040 to $1,120 per ounce.

IGO last traded at $4.450 (as on 28 August 2020), down by 3.88 per cent against its previous close on ASX.

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