ASX mining shares Sandfire Resources Ltd (ASX: SFR) and Perenti Global Ltd (ASX: PRN) are having an interesting day's trade following a market update provided by both companies. The companies come into focus after agreeing to a $650 million partnership on an African copper mine. Sandfire Resources is a mineral exploration company, focused on copper, and Perenti Global provides a range of diversified services up and down the mining value chain.
In morning trade, both Perenti and Sandfire shares were in the green, up by as much as 7.4% and 4.2%, respectively. However, at the time of writing, both companies have retreated, with Perenti shares now trading 1.47% lower for the day at 67 cents.
The Sandfire share price is, at least, still in the green, trading 2.67% higher at $7.32.
Let's take a closer look at today's news.
What's impacting these ASX mining shares?
In separate statements to the ASX, both companies confirmed Sandfire Resources will partner with Perenti and award it the $648 million, 7 years and 3-month contract for open pit mining services at Sandfire's Motheo Copper Project in Botswana.
The award of the contract is subject to the granting of the mining licence to Sandfire and then execution of the contract. The mine will begin operations sometime in 2022.
Management commentary
Sandfire managing director and CEO Karl Simich said:
By partnering with a group with deep roots and strong community and stakeholder relationships in Africa, we have a unique opportunity to work together to create a lasting, positive legacy in Botswana and deliver significant sustainability and [environmental, social, and governance] outcomes.
Perenti managing director and CEO Mark Nowell added:
Partnering with Sandfire is a great opportunity and collectively we share a strong commitment to the creation of shareholder value while demonstrating the highest standards of safety, responsibility and sustainability. We look forward to demonstrating our capabilities as we deliver on our commitments at the Motheo Project.
Growing our footprint in Botswana is aligned with our 2025 strategy, to further expand into stable mining jurisdictions and pursue quality projects. The benefit of adding Motheo to the Perenti project portfolio is the opportunity to leverage our existing in-region operational presence at Zone 5 as well as partnering with Sandfire to develop Botswana's next large-scale, highly productive, world-class copper mine.
Copper commodity price history
When the feasibility study for the Motheo project was completed, it assumed a standard price for copper of US$3.16 per pound. Currently, the reddish-gold metal is trading on the commodities market for US$4.55 per pound.
Despite the fact copper is much higher than originally forecast, the current price is down nearly 4% over the last month. According to the website Trading Economics, weak demand out of China is driving the price down. China is the largest importer of copper in the world.
Motley Fool has previously reported on copper's price rise over the past 14 months, due in part to a growing global economy and increasing demand for green technologies, in which copper is a vital component.
Share price snapshots
Over the past 12 months, Perenti shares have decreased by around 57% while the Sandfire share price has gained around 46%. Perenti reached a 12-month low late last month while Sandfire shares hit a 52-week high earlier in the same month.
Perenti and Sandfire Resources have market capitalisations of around $472 million and $1.3 billion, respectively.
