Glencore PLC (LSE:GLEN) said it has agreed to sell its Cobar (CSA) copper mine in New South Wales, Australia for US$1.1bn and an ongoing 1.5% smelter royalty to Metals Acquisition Corp, a New York-listed special purpose acquisition company (SPAC).
The pair amended the timing of the payments compared to original terms announced in March, with the deal now expected to be completed in the first quarter of 2023.
Glencore will now receive at least US$775mln in cash upon the close of the deal, which could rise to US$875mln depending on the final demand in the private investment in public equity (PIPE).
On top of that the FTSE 100 group will get up to US$100mln of MAC shares and be entitled to appoint one director to the board of MAC for each 10% interest it holds in MAC.
MAC has also agreed to make a deferred US$75mln payment from a future fundraise, another US$75mln contingent on when copper from Cobar averages above US$4.25 per pound for 18 continuous months over the life of mine and another US$75mln when copper averages above US$4.50/lb for 24 continuous months.
In a statement, Mick McMullen, MAC chief executive, said: "We have worked closely with Glencore to arrive at a transaction structure that delivers value to both parties, and an increased certainty of completion.
"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 realize the full potential value of the asset. CSA also provides MAC with an ideal cornerstone asset with which to establish a high-quality, mid-tier base metals company.”
Once the deal closes, MAC will pay the royalty on a quarterly basis.
Glencore also noted that MAC director Patrice Merrin also sits on its board. She holds less than a 1% voting interest in MAC's shares and she is not seen as a related party of Glencore within the meaning of the UK listing rules.