Sandfire Resources managing director Karl Simich said reports in Fairfax today that its major shareholder, South Korean steel giant Posco, was attempting to offload its 15 per cent stake were mischievous.
Sandfire Resources managing director Karl Simich said reports in Fairfax today that its major shareholder, South Korean steel giant Posco, was attempting to offload its 15 per cent stake were mischievous.
“For some reason someone’s regurgitating some old news. There’s been talk over a long time that at some point in time Posco may look at selling, I certainly don’t think they’d be selling at these levels,” he said.
“I think there’s something strange going on in terms of article being in the press today, it’s a weird thing. I almost think it’s mischief by some investment banker out there.”
Mr Simich said he met with Posco yesterday and no sale was discussed.
“If (Posco) were to divest we’d be doing it with them,” he said.
Sandfire’s share price has fallen since a peak in July of $6.75 to current levels closer to $5.
Mr Simich said the company was undervalued but that the Australian National University’s decision to devest of its very small Sandfire shareholding – based on a Centre for Australian Ethical Research report – was likely to have done more damage to the miner’s reputation than its share prices.
“It’s hard to quantify,” he said.
Mr Simich said it was more likely the share price fall was due to an overwhelming market malaise that had also affected the entire resources industry.
“Sandfire makes the money it makes, it’s got the cash flow, it’s commenced paying dividends, it’s almost ridiculous that it’s priced what it is at the moment,” he said.
“Generally speaking, look at our peers, we’re in the middle of where our peers are.
“You look at the impact of a halving of the iron ore price on the whole investment community, everyone is just bleeding.
Mr Simich said legal proceedings against the Centre for Australian Ethical Research, which ANU relied upon, were proceeding.
“The real question is, is the information that was prepared and given to (ANU) correct and the answer is no, and that’s our issue with CAER and we will pursue the matter vigorously,” he said.
Posco initially became a shareholder when Sandfire was looking for manganese, which can be used in steelmaking, but its copper discovery and later production at its DeGrussa mine, meant Posco uses its Daewoo trading arm to onsell copper through its offtake agreement.
Mr Simich said the partnership was still mutually agreeable.
“They’re still making a little extra money out of the whole thing because from our original arrangement there was a small discount they get because they paid double the share price when they invested a long time ago and we said if we ever find anything we’ll give you a discount to pay back the extra premium you took when you took the placement,” he said.
