Anglo Pacific Group PLC (LSE:APF, TSX:APY, OTC:AGPIF) said it agreed to buy a high-quality portfolio of royalties over advanced development stage copper and nickel projects from South32 Royalty Investments Pty Ltd for an initial US$185mln (£156mln) in cash and shares.
"Anglo Pacific is now firmly positioned as the leading, future-facing commodities royalty and streaming company with copper, nickel and cobalt at the core of its commodity exposure,” said Anglo Pacific chief executive Marc Bishop Lafleche.
“The decarbonisation of the global economy will be very metal intensive, with sizable copper and nickel supply deficits expected to emerge over the next decade. We believe this is an attractive copper and nickel entry point with substantial commodity price upside potential.”
Anglo Pacific will pay US$47.6mln in cash and US$82.4mln in shares, making South32 a 16.9% shareholder.
In addition, it will make six quarterly cash payments to South32 totalling US$55mln, to be paid in equal instalments over the next 18 months. The deferred consideration will allow Anglo Pacific to recycle record levels of metallurgical coal cash flows to fund the acquisition.
The group has agreed with its lending syndicate to maintain the facility at US$150mln, without the previously scheduled US$25mln facility step down which was due in August 2022, and has agreed on a US$50mln credit for future acquisitions.
“The modifications we have made to our borrowing facility, along with the deferred structure of the consideration, ensures the group remains well capitalised for further acquisitions,” said Bishop Lafleche.
The royalty portfolio acquired includes:
- a 2.0% net smelter return (NSR) royalty on the West Musgrave copper and nickel project in Australia
- a 2.0% NSR royalty on the Santo Domingo, fully permitted, copper project in Chile
- a 1.5% realised value royalty on the Nifty copper mine in Western Australia
- a 5.0% NSR royalty on the producing Carlota copper mine in Arizona
The acquisition is expected to close in the second half of this month.