Report by Global Mining Research

With copper trading above US$4.00/lb the ability for copper miners to fund initiatives is strong, providing a boon especially for small capitalisation base metals companies. In such a group, David Radclyffe’s preferred exposure is through BUY-rated Capstone Mining and Sandfire Resources, both offering a blend of value and growth, and which have benefited from M&A accelerated growth. Tony Robson considers Ero Copper after its massive underperformance; it is now more attractively priced and the company is pushing exploration hard, but growth is some time out, so he maintains his HOLD rating.

Materials

Report by Global Mining Research

There is a lot to like regarding Capstone's proposed US$1.3bn merger with Mantos Copper - it delivers meaningful scale and makes the new group very much a Chilean-focussed copper producer (Mantos Blancos and Mantoverde projects add ~100kt/yr of copper). There are also clear district level synergies with Mantoverde and the Santo Domingo development project only ~30km apart. The deal appears accretive to NPV (+9%) and 2023E EPS (+19%) and CFPS (+25%). CS at 1.0x P/NPV is attractively priced vs. midcap peers.