SFR’s FY24 earnings result was solid with Ebitda and Ebit within 5% of our estimates, while lower finance costs resulted in the small underlying loss of US$5.5m being smaller than we had expected. Cash flow numbers had been released with the 4QFY24 result, hence were in line with our estimates. Production guidance had been pre-released, with SFR providing FY25 operating cost and capital expenditure guidance for the first time. The bulk of operational guidance was in line with our estimates, and we have made only minor adjustments to our earnings forecasts. SFR’s ability to generate strong cash flow from its MATSA and Motheo operations that enable a rapid paydown of its US$396m net debt presents a key catalyst for the stock and we expect will drive an equity re-rating as the company starts to approach a net cash position. We are reiterating our BUY rating on SFR, upgrading our price target 5% to A$11.00 after incorporating the FY24 result, minor changes to our earnings forecasts and movements in copper and zinc prices.
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