STREET TALK Jun 4 2018 at 12:15 AM Updated Jun 4 2018 at 12:15...

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• Jun 4 2018 at 12:15 AM
• Updated Jun 4 2018 at 12:15 AM

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Sandfire Resources set to open chequebook

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• by
• Sarah Thompson
• Anthony Macdonald
• Julie-anne Sprague

Cashed up copper miner Sandfire Resources is ready to go shopping.
Street Talk understands the $1.38 billion Sandfire is set to write a cheque to take full control of copper-gold site the Monty Project, which is located 10km east of its main mine DeGrussa.
Sandfire already owns 70 per cent of Monty and is believed to be seeking to buy the other 30 per cent from joint venture partner and fellow ASX-listed copper play Talisman Mining.
The Monty stake is by far Talisman's most valuable asset.
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Interestingly, it is understood Sandfire is pushing for a deal at the asset level rather than corporate level because of the lower required acceptance threshold.

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Talisman would be required to put the asset sale to a shareholder vote, and require approval from more than 51 per cent of votes for the deal to go ahead. A Talisman takeover via a scheme of arrangement would require 75 per cent.
Sources said it meant Talisman's biggest shareholder, Kerry Harmanis with an 18 per cent stake, would be unlikely to stop the asset sale. It is understood Sandfire has previously sought to buy Talisman but was unable to get Harmanis' support.
It is understood the deal would be worth about $70 million, which is more than Talisman's market capitalisation.
Talisman recently told investors that the Monty project was backed by $US20 million pre-production finance and first production was targeted for later this year.
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The plans are expected to be announced as early as Monday.
It comes as Sandfire looks for expansion projects. The mine life at its DeGrussa project is only four years, which includes blending from Monty. Macquarie analysts recently told clients that a one year extension of DeGrussa's mine life would boost Sandfire's net present value by 23 per cent. A three year extension would be worth 51 per cent.
Sandfire was in a $220 million net cash position as at March 31 and Macquarie analysts expect its bank balance to hit $1 billion within 2½ years.
Sandfire boss Karl Simich recently told fund managers that he was ready to start spending some of the company's cash war chest, and would be looking at development projects and exploration.

Analysts expect Monty is only the beginning of a much larger spending spree.