SFR has secured a new Corporate Revolver Facility that will significantly improve financial flexibility for the company. Funds from the new facility will enable SFR to repay the remaining US$88m owing on the MATSA Facility A, which restricted cash distributions from MATSA while it remained drawn. Repaying this facility will enable SFR to potentially accelerate regional exploration spending at MATSA and provide optionality to use cash generated at MATSA on other projects. The new debt facility also reduces repayments in FY24 and FY25. We have incorporated the changes to SFR’s debt profile into our forecasts. Continued strength in copper and zinc prices has driven a 2% lift in our price target to A$8.40. However, with the stock trading at a slight premium to our price target we reiterate our HOLD rating on SFR. Importantly, stronger base metal prices should enable SFR to accelerate is balance sheet deleveraging. We note that our valuation for SFR at a flat US$4.50/lb copper price into perpetuity rises to A$10.00/share.
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