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July 13, 2022

South32 to offload copper and nickel royalty portfolio to Anglo Pacific

Anglo Pacific will make a cash payment of $47.6m and issue $82.4m worth of shares to South32.

Diversified miner South32 has signed a deal to sell a portfolio of royalties over advanced development stage copper and nickel projects to UK-based Anglo Pacific Group for a consideration of $185m.

The transaction also includes further contingent considerations of up to $15m.

The royalty portfolio for sale includes a 2% net smelter return (NSR) royalty on the West Musgrave copper and nickel project in Australia along with a 2% NSR royalty on the Santo Domingo copper project in Chile.

It also includes a 1.5% realised value royalty on the Nifty copper mine in Western Australia and a 5.0% NSR royalty on the producing Carlota copper mine in Arizona, US.

Under the agreed terms, Anglo Pacific will make a cash payment of $47.6m and issue $82.4m worth of shares to South32.

This will result in the diversified miner owning a stake of 16.9% in Anglo Pacific.

Furthermore, Anglo Pacific will make six quarterly cash payments that will add up to $55m in total. These will largely be self-financed by cash flow generated from its current asset portfolio.

Anglo Pacific CEO Marc Bishop Lafleche said: “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. We believe this is an attractive copper and nickel entry point with substantial commodity price upside potential, all the while meeting our disciplined approach to acquisitions and robust sustainability criteria.

“This transaction transforms the Group’s medium-term income growth profile.”

The acquisition forms part of Anglo Pacific’s efforts to strengthen its position as the leading royalty and streaming company, with a focus on commodities that are critical to achieving energy transition.

South32 CEO Graham Kerr said: “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. Following the sale, we still retain an exciting package of 36 royalties at different stages of maturity, weighted towards base metals.”

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