Ecora Resources PLC (LSE:ECOR, TSX:ECOR, OTCQX:ECRAF) has acquired a copper stream from Moxico Resources' Mimbula copper mine in Zambia for $50 million.
The stream covers the mine's 11-year Life of Mine (LOM) with potential for extension.
Last year, Mimbula produced 14,000 tonnes of copper. A Phase II brownfield expansion, currently under construction, is expected to increase output to 56,000 tonnes per annum by mid-2026.
The stream's structure frontloads copper entitlements for the first 7-8 years, targeting earnings growth and debt reduction within 12-24 months.
"Mimbula has everything we look for in an investment; it is a high-quality ore body, with low operating costs, and with an exceptional management team who have developed the project from concept to a high-margin operation currently undergoing a brownfield expansion to increase production capacity,” Ecora chief executive Marc Bishop Lafleche said in a statement.
He added: “[the stream] will cement copper at the core of our commodity exposure and be immediately accretive to earnings and free cash flow.”
"The acquisition of a producing copper stream enhances Ecora's strong organic copper growth profile across the short, medium and long term.
“Following the transaction, Ecora's copper and base metal exposure as a percentage of NAV will be approximately 45% and 75% respectively, with approximately 80% of the royalties and streams in Ecora's wider portfolio over mines and projects within the lower half of their respective cost curves."
Ecora will fund the transaction using a mix of cash-on-hand and debt financing, drawing $30 million from its $75 million revolving credit facility.
In a note, analysts at stockbroker Peel Hunt noted that (by expanding rolling-credit, and amend debt covenants to enable the transaction) the company’s lenders are clearly supportive of Ecora and its growth plans.
“This looks a cash flowing transaction that adds to Ecora's income immediately. Further it increases copper exposure for the group and the potential for increasing income into rising copper prices as the decarbonisation theme continues,” analysts at Peel Hunt commented in a note.