Altus Strategies plc has entered into an agreement to acquire 0.418% net smelter return royalty (NSR) interest for US$34.1 million on the producing Caserones copper mine in the Atacama region of northern Chile.
DEAL
The company has also entered into a $29m loan facility agreement to part finance the acquisition.
Altus said it expected the Caserones NSR to provide immediate and long-term cash flows, in line with the company’s growth strategy.
The deal is due to be closed in two phases, both of which will be completed by 1 September 2021.
The NSR interest, anticipated to generate $3.2m (post-tax) per annum to Altus, will be acquired from private vendors via a special purpose vehicle (SPV) incorporated in Chile.
A subsidiary of the company, Altus Royalties Ltd (ARL), and EMX Royalty Corporation (EMX) have equal ownership of the SPV in a strategic partnership with a combined 0.836% NSR interest.
EMX chairman Michael Winn is also a non-executive director of Altus.
LOAN
The $29m acquisition loan facility agreement is with a wholly owned subsidiary of La Mancha Fund SCSp.
La Mancha, which holds a 35.08% interest in Altus and whose chief executive is a director of Altus, recently established a $1.4 billion mining investment fund.
Altus is also reviewing further global royalty transactions with a focus on gold and copper.
TRANSFORMATIONAL
“Our acquisition of a significant cash paying royalty on a long-life copper mine in a tier-1 mining jurisdiction represents a landmark transaction for Altus,” said chief executive Steven Poulton.
“Following this acquisition, Altus will receive significant quarterly royalty income and will have long-term exposure to copper.”
Chief executive of La Mancha and director of Altus, Karim Nasr added that the acquisition represented a transformational move for Altus.
“Altus’ strong growth trajectory is evident and we expect this to continue with the company benefiting from a differentiated approach from its peers.”
Altus is an established royalty generator with a portfolio of 33 exploration and development projects and nine organically generated royalties.
CASERONES
The mine is owned and operated by Minera Lumina Copper Chile SpA, an indirect 100% owned subsidiary of JX Nippon Mining & Metals Corporation.
It has been operating since 2015 following an investment of $4.2 billion and has 17 years of mine life remaining.
Caserones is a large, open-pit porphyry copper-molybdenum deposit, located within a 17,000 hectare land package, 4,300m above sea level in the borough of Tierra Amarilla.
It produces copper and molybdenum concentrates from a conventional crusher, mill and flotation plant, as well as copper cathodes from a dump leach, solvent extraction and electrowinning plant.
JX Nippon reportedly has plans for “stepping up exploration efforts in areas around the mine” to try to expand production and further extend the mine life.
Caserones is 15km from the border with Argentina, 162km southeast of the city of Copiapó and 800km north of the capital, Santiago.