(Alliance News) - Anglo Pacific Group PLC announced on Tuesday it had agreed to acquire a package of four base metals royalties from South32 Ltd for USD185 million, with further contingent consideration of up to USD15 million.
The acquisition by the London-based natural resources royalty company includes advanced development stage copper and nickel projects located in Western Australia, Chile and Ecuador.
South32, a Perth, Australia-based diversified miner, said in a separate statement there were no conditions attached to this transaction, expected to be completed within five business days.
"Today's sale of another non-core royalty package is a further step forward in unlocking latent value from our portfolio. The proposed transaction will realise an immediate cash payment, while also retaining long-term exposure to these royalties through our shareholding in Anglo Pacific," South32 Chief Executive Graham Kerr said.
In terms of the proposed deal, Anglo Pacific will make an initial payment of USD47.6 million in cash payment and an USD82.4 million share issuance on completion of the deal to South32, which will own 17% stake in the enlarged business.
Additionally, Anglo Pacific will make six quarterly cash payments totalling USD55 million to be paid in equal instalments over the next 18 months. These will be largely self-financed by cash flow generated from the group's current asset portfolio.
The package of 36 royalties incorporates Ecuacorriente SA's Mirador mine, Explorcobres SA's San Carlos-Panantza project and Solaris Resources INC's Warintza project, which are all located in Ecuador.
It also involves West Musgrave project in Western Australia, owned by OZ Minerals Ltd, and the Santo Domingo project in Chile, owned by Capstone Copper Corp.
"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. 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," Anglo Pacific Chief Executive Marc Bishop Lafleche said.
Shares in South32 were down 1.9% at 203.50 pence on Tuesday morning in London, while its Johannesburg shares were 2.1% lower at ZAR41.49.
But shares in Anglo Pacific rose by 0.6% to 145.67p in London.
By Artwell Dlamini; artwelldlamini@alliancenews.com
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South32 (S32)