Nev Power-chaired MAC closes Cobar copper acquisition looks to ASX listing
The CSA copper mine in NSW could be floated back onto the Australian market within three months.
The CSA copper mine in NSW could be floated back onto the Australian market within three months, according to the boss of the mine’s new owner, New York-listed Metals Acquisition Corp.
MAC closed its long-running purchase of the mine from Glencore on Friday.
The US listed company paid $US775m and issued another $US100m worth of shares to close the deal, with another $75m due in a year and another $US150m in payments that could be triggered by high copper prices.
MAC will also pay a 1.5 per cent royalty on copper production to Glencore over the life of the mine.
The company, which is chaired by former Fortescue Metals Group boss Nev Power, has been working on the deal since March 2022, with the process complicated by volatile markets and commodity prices.
With the deal finally done, MAC chief executive Mick McMullen said the company was already working on an Australian listing, hoping to fill the gap in the market left by the disappearance of OZ Minerals.
“There‘s very strong pent up demand from Australian investors, the big super funds and the like, for an ASX listed domestic copper company and we intend to fill that demand,” he said.
MAC has also been tipped as one of the buyers interested in the Northparkes copper mine, put up for sale by owners China Molybdenum Company and Sumitomo in 2013, which bought the operation from Rio Tinto for $US820m in 2013.
Mr McMullen would not comment on specific projects of interest, but confirmed the company was on the hunt for other copper and base metals assets, as MAC – chaired by former Fortescue Metals Group boss Nev Power – looked to establish itself as a mid-tier base metals miner.
“When we set the business up we were very clear that we wanted to buy these sort of smaller assets inside bigger companies – ideally ones that are in a tier one jurisdiction like Australia, Canada, and bits of the US where we‘ve worked before,” he said.
“We see some other assets up and down the east coast of Australia that are potentially interesting for us. And we see some assets in North America that are interesting for us as well.”
CSA is one of Australia’s oldest copper mines, with production from the leases near Cobar in central NSW dating back more than a century. At almost 2km down, CSA – which stands for Cornish, Scottish and Australia‘, after the nationalities of its first owners – is also one of the deepest mines in Australia, and has been running almost continuously since 1965.
But Mr McMullen said that MAC is absolutely confident the mine has many years left, given Glencore recently spent significant sums of capital replacing the mine’s original mill – built in 1967 – and another $US130m on ventilation and cooling for the mine.
“The ore body we know continues on significantly deeper down there – and all the ore bodies are open. And it‘s phenomenally high grade – the resource grade is 5.6 per cent copper, and the reserve grade is about 4 per cent,” he said.
The mine is expected to produce about 45,000 tonnes of copper in 2023, but Mr McMullen said the company believed it could find a way to return production to levels closer to 50,000 to 55,000 tonnes a year over time.
“We see some opportunities to expand the reserve life and expand the production a bit. And then some other opportunities that we can see where you could bring in some additional feed material,” he said.
MAC raised about $US230m in equity at $US10 a share to close the deal with Glencore, with the company also taking on debt and royalty streaming arrangements to fund the acquisition.
Included is a $US205m syndicated term loan, plus a $US25m revolving credit facility and another $40m letter of credit to cover the mine’s rehabilitation liabilities. On top of that, MAC tapped Sprott for $US135m in debt, and issued the metals investor $US15m in shares.
It also closed out a group of copper and silver streaming deals with Osisko worth about $US150m, plus associated equity placements.
Mr McMullen said the company would move towards a joint Australian listing as soon as it could, and was likely to raise cash as part of its local float in order to underpin trading volumes on the local market, and to give Australian institutional investors a chance to buy into the copper company.
More Coverage
