(Alliance News) - Anglo Pacific Group PLC on Monday said it has agreed to pay USD50.3 million in cash upfront for a 1.525% net smelter return royalty on all copper from the Mantos Blancos copper mine in Chile.
The deal, which applies to copper from Mantos Blancos only, was signed with a subsidiary of Mantos Copper. Anglo Pacific expects royalty payments in the next two business days.
This is Anglo Pacific's "first significant exposure to a producing copper mine" and will be financed using internal resources, as well as being "accretive to earnings per share".
Copper from Mantos Blancos is at the premium end of the market, containing copper concentrates at a high grade.
Anglo Pacific Non-Executive Chair Patrick Meier said: "The Mantos Blancos royalty acquisition continues Anglo Pacific's growth trajectory; it is expected to be immediately accretive to earnings and is in-line with our stated strategy of diversifying the company's sources of income and commodity exposure.
"In addition to being located in an excellent mining jurisdiction, the Mantos Blancos mine produces a clean concentrate with very low levels of impurities and deleterious materials, further enhancing the company's exposure to premium commodity products.
"The bear market for commodities in the 2012-2016 period resulted in underinvestment by the capital-constrained mining sector into sources of new copper supply. Looking ahead, negligible supply growth and declining copper grades at existing operations are expected to drive a structural supply deficit based on industrial demand sources alone, with incremental copper demand resulting from new renewable energy power generation capacity, energy storage, and electric vehicle sales growth expected to create an even tighter supply environment."
Shares in Anglo Pacific were up 2.0% at 191.26 pence in London on Monday.