Morgans feels any upside will likely be due to higher metals pricing, operating improvements and life extensions, as the price paid for MATSA appears ‘full-ish’. However, the aquisition is thought strategically sound and attractive for production/cashflow continuity.
The company has agreed to acquire 100% of the “MATSA” mining complex in Andalusia, Spain for -$2,572m, funded by $1,248m in new equity (placement, entitlement at $5.40), $1.1bn in debt (new and existing) and around $300m in cash.
The broker retains its Add rating and reduces its target price to $6.85 from $7.61.
Sector: Materials.
Target price is $6.85.Current Price is $5.34. Difference: $1.51 – (brackets indicate current price is over target). If SFR meets the Morgans target it will return approximately 22% (excluding dividends, fees and charges – negative figures indicate an expected loss).
