SFR has released the annual reserve and resource estimate for MATSA. Reserve tonnes have grown 6%, outpacing mine depletion while resource tonnes have risen 9%. The average copper grade declined ~2% in both reserves and resources while zinc, lead and silver grades in reserves rose 1-4%. We have extended our mine life for MATSA by two years after incorporating the upgraded reserve and resource estimates. Earnings for SFR rise 5-10% due to adjustments in the grade profile at MATSA and lower annual depreciation expense. However, recent falls in copper and zinc prices have driven a 7% cut in our price target to A$11.20. SFR is generating strong cash flow from its MATSA and Motheo operations, which should enable a rapid de-gearing of the balance sheet over the next 18 months, and we are reiterating our BUY rating.
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