PERTH (miningweekly.com) – Copper miner Sandfire Resources on Thursday announced a A$1.24-billion equity raise to fund the A$2.57-billion purchase of the Matsa mining complex, in Spain.
The ASX-listed company has entered into a binding sale and purchase agreement with Trafigura and Mabudala Investment Company to acquire all of Minas De Aguas Tenidas (Matsa) for a cash consideration of $1.865-billion.
The Matsa operation is a large, high-quality, long-life underground copper operation in Spain, which comprises three mining operations feeding a 4.7-million-tonne-a-year central processing facility, producing between 100 000 t/y and 120 000 t/y of copper equivalent.
As part of the transaction, Sandfire will retain a life-of-mine concentrate offtake agreement with commodity trader Trafigura for all of the production from Matsa.
With the acquisition, Sandfire’s pro-forma group production for the 2022 financial year is targeted at between 170 000 t and 194 000 t, confirming Sandfire as one of Australia’s largest copper-focused producers.
“Base metal assets which offer this combination of scale, grade, mine life and exploration upside are extremely rare globally. The Matsa acquisition transforms Sandfire into a first quartile copper producer of global scale and allows us to leverage our skill set to deliver on our growth ambitions to create one of the highest quality and most compelling copper exposures on the ASX,” said Sandfire MD and CEO Karl Simich.
Sandfire will fund the transaction through a combination of a $650-million syndicated and underwritten debt facility secured by Matsa, and a $905-million, or A$1.24-billion, fully underwritten equity raising, as well as some A$297-million from existing cash reserves and the drawdown of a A$200-million corporate debt facility.
“The high-quality debt and equity funding package we have secured ensures that we can fully fund the acquisition of this Tier 1 asset while retaining balance sheet flexibility to deliver our Motheo copper mine, in Botswana, and maintain a global exploration programme,” said Simich.
The A$1.24-billion fully underwritten equity raising will consist of a A$120-million strategic placement to investor AustralianSuper, a A$165-million institutional placement, and a A$963-million one-for-one accelerated non-renounceable entitlement offer.
The equity raising will be conducted at a price of A$5.40 a share, representing a 13.2% discount to Sandfire’s last traded price, and a 6.2% discount to the company’s theoretical ex-rights price.
The company has received an ASX waiver to enable an expanded Tranche 1 placement capacity, given that both the institutional and retail components of the entitlement offer are fully underwritten, with some 231-million new shares to be issued under the offer, representing 129.6% of the company’s current issued capital.
Following the capital raise, AustralianSuper would emerge with a shareholding of between 5.4% to 12.2% in Sandfire, subject to the level of take-up of the retail entitlement offer.
Meanwhile, Sandfire has entered into a binding credit-approved underwritten commitment letter and term sheet with Citi, Macquarie Bank, Natixis and Societe Generale to provide the $650-million syndicated and underwritten debt facility, which will have a five-year term.
The facility is expected to be fully repaid within four years of drawdown, due to the forecast cashflow from the Matsa operations.
The facility will be fully supported by Matsa cashflows, without any required contribution from the DeGrussa operation, or any of Sandfire’s other assets, with the security of the facility limited to Matsa.
The company has also entered into a binding credit-approved commitment letter and term sheet with ANZ to provide a A$200-million corporate debt facility, which will have a period of 12 months, supported by DeGrussa cash flows over its remaining mine life.