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MAC acquires CSA copper mine from Glencore

OZ

Metals Acquisition Corp. (MAC) has entered into a definitive sale and purchase agreement with Glencore to acquire the CSA copper mine in New South Wales for a total consideration of US$1.1 billion ($1.48 billion).

The transaction will be effected by MAC’s wholly-owned subsidiary, Metals Acquisition Corp. (Australia), of the issued share capital of Cobar Management, a 100 per cent owned Glencore subsidiary that owns CSA.

“The acquisition of CSA represents a strong strategic fit for MAC. Our management team’s operational expertise, understanding of regional operations and relationships with local stakeholders uniquely position us to identify and realise the full potential value of the asset,” MAC chief executive officer Mick McMullen said.

“CSA also provides us with an ideal cornerstone asset with which to establish a high-quality, mid-tier base metals portfolio.

“We believe that copper has favourable fundamentals that will continue to support an elevated copper price.”

CSA is an established, high-grade producing, long-life underground copper mine that is expected to produce more than 40,000 tonnes of copper in 2022 with an estimated current mine life of over 15 years, and MAC has identified opportunities to further extend it, subject to exploration success.

In 2021, CSA produced 41,000 tonnes of payable copper and 459,000 ounces of payable silver, with normalised C1 cash cost of US$1.72 ($2.32) per pound of copper.

“Copper is expected to play a key role in the global energy transition ‘megatrend’, with approximately one million tonnes per annum of new supply required from 2024 onwards in order to meet the surging demand forecast,” McMullen said.

“With few new projects globally in the pipeline, increasing permitting issues and jurisdictional risk, and declining copper grades across the industry, we believe that there are significant challenges ahead to close the projected supply deficit.”

During the due diligence process, MAC identified multiple opportunities to optimise the operation, which could improve payable copper production and reduce the C1 cash cost.

The US$1.1 billion purchase price implies a 4.5x multiple of 2022 EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation).

The transaction has been unanimously approved by the Board of Directors of MAC and is expected to be completed in 2022, subject to the approval of MAC’s shareholders and other customary closing conditions, including regulatory approvals.

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