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Key points
- Sandfire announces completion of its US$1.87 billion MATSA acquisition, making it one of the biggest ASX copper-focused miners
- Sandfire share price rises after the news, but lags its peers
- Management reassures investors that the integration is going well and that the company's balance sheet remains strong
The Sandfire Resources Ltd (ASX: SFR) share price is rallying today after the company announced it has finalised the acquisition of the MATSA mining complex in Spain.
The US$1.87 billion (AU$2.6 billion) transaction will transform Sandfire into one of the largest ASX copper-focused miners.
The Sandfire share price jumped 1.2% to $6.79 during lunchtime trade, although it's lagging behind its peers.
The OZ Minerals Limited (ASX: OZL) share price and Aeris Resources Ltd (ASX: AIS) share price gained around 3% each.
New era for the Sandfire share price
Nonetheless, the completion of the MATSA acquisition is a major milestone for Sandfire and the ASX miner has full operational control over the Spanish target as of yesterday.
The deal was finally consummated after the miner gained key approvals from relevant Spanish Government authorities. This included the Foreign Direct Investment and Competition Authority in late December 2021.
More significantly, management reported that the integration of MATSA is well progressed. Bedding down acquisitions is always challenging, especially such a large one.
How Sandfire's balance sheet looks post acquisition
The takeover was funded through existing cash reserves, last year's $1.3 billion capital raise, and a $1.1 billion debt.
However, Sandfire assured investors that it still holds a strong balance sheet. Post the transaction, Sandfire has $384 million for working capital, and that's not including the cash held by MATSA.
The acquisition, announced on 23 September last year, gives Sandfire control of an asset in the world-class Iberian Pyrite Belt in the Huelva Province of Andalusia in south-western Spain.
MATSA is a substantial polymetallic mining complex. It comprises three underground mines and a 4.7Mtpa central processing facility.
Exploration upside for the Sandfire share price
MATSA also includes exploration rights covering 2,450km square in Spain and neighbouring Portugal. Sandfire pointed out that this gives it long-term exploration upside and organic growth opportunities.
"Today marks the beginning of an exciting new era for Sandfire, with our business expanding to an organisation with a workforce of around 3,800 direct employees and contractors around the globe," said Sandfire's managing director, Karl Simich.
"Our vision for Sandfire is to become an international diversified and sustainable mining company, and the completion of this transaction represents a major step closer to realising this aspiration."
