Altus Strategies plc has completed the first closing of its agreement to acquire an effective 0.418% net smelter return royalty (NSR) interest on the producing Caserones copper mine located in the Atacama region of northern Chile.
AQUISITION
The mining royalty company is acquiring the NSR interest for $34.1 million through a strategic 50:50 partnership with EMX Royalty Corporation.
Altus and EMX have created a jointly owned special purpose vehicle (SPV) incorporated in Chile.
On completion of the acquisition, the SPV will have acquired an effective 0.836% NSR royalty for $68.2m.
Altus is principally financing the acquisition with a $29m acquisition loan facility agreement with La Mancha Fund SCSp.
The NSR interest is expected to generate cash flow of $3.2m (post-tax) per year to Altus.
FIRST CLOSING
Altus said that the initial 76% of 0.418% NSR interest had been acquired for $26.15m.
The SPV has agreed to purchase 43% of the issued and outstanding shares of an underlying royalty holder, Sociedad Legal Minera California Una de la Sierra Peña Negra (SLM California), through a share purchase agreement with the 16 shareholders of SLM California.
This will give the SPV an indirect ownership of 43% of SLM California’s 1.944% NSR royalty interest in Caserones (0.836% NSR royalty interest, held as to 0.418% by Altus and 0.418% by EMX).
Under the first closing, the SPV has acquired 33% of SLM California for $52.3m.
The first closing also represents approximately 76% of the NSR being acquired by the SPV.
The second and final closing of the remaining 10% of the shares (24%) of SLM California is anticipated to close by 1 September 2021.