OZ

MAC acquires CSA copper mine from Glencore

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.

Evolution

Evolution complete at Ernest Henry

Evolution Mining has completed its move to take full ownership of the Ernest Henry copper-gold mine near Cloncurry in Queensland, paying $800 million to Glencore.  

The purchase sets Evolution to become one of the lowest-cost gold producers in the world and the mine has generated immediate benefits by reducing the company’s all-in sustaining costs (AISC) by about 12 per cent on a full year basis.  

Evolution executive chairman Jake Klein said the deal was typical of such a successful company.  

“Acquiring full ownership of Ernest Henry is transformational for Evolution and again demonstrates our track record of identifying and securing opportunities that are both accretive and improve the quality of the portfolio,” Klein said.  

The deal was announced in November 2018 for a total value of $1 billion. The remaining $200 million will be due in the coming 12 months from the date of completion. 

Evolution initially bought into Ernest Henry in 2016, paying Glencore $880 million to acquire 100 per cent of the gold production and 30 per cent of the copper and silver production from the mine. 

With almost six years of operation under its belt at Ernest Henry, Evolution and Klein are confident in their ability to improve the mine’s operations.  

“I extend a warm welcome to our new colleagues that join Evolution today,” Klein said.  

“We look forward to continuing to build on our relationships with the local communities in Cloncurry and Mt Isa, and with the traditional custodians of the land, the Mitakoodi People.” 

In November, as the full acquisition was announced, Glencore chief executive officer Gary Nagle said Evolution had proven its ability to operate Ernest Henry since 2016. 

“Evolution has been a strong partner in the Ernest Henry mine for five years. They share our way of working and commitment to operating responsibly across all aspects of the business,” Nagle said. 

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