PERTH (miningweekly.com) – Diversified miner South32 has struck a $185-million copper and nickel royalty deal with London-based Anglo Pacific Group.

The agreement also includes contingent payments of up to $15-million.

South32 on Tuesday said that the base metal royalties were across third-party interests in a mix of producing assets and advanced development stage projects, mostly in copper and nickel in Australia, the US and Chile. These projects included the West Musgrave project, in Western Australia, owned by ASX-listed Oz Minerals, and the Santo Domingo project, in Chile, owned by Capstone Copper.

Under the terms of the agreement, Anglo Pacific will pay $47.6-million in cash to South32, along with $82.4-million in shares, giving the diversified miner a 16.9% interest in Anglo Pacific.

In addition, the Anglo Pacific will make six quarterly cash payments totalling $55-million, to be paid in equal instalments over the next 18 months. These will be largely self-financed by cash flow generated from the group’s current asset portfolio.

“Today’s sale of another noncore royalty package is a further step forward in unlocking latent value from our portfolio,” said South32 CEO Graham Kerr

“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.”

Anglo Pacific CEO Marc Bishop told shareholders that with the acquisition of the base metal royalties, the company was now firmly positioned as the leading, future-facing commodities royalty and streaming company with copper, nickel, and cobalt at the core of its 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,” said Bishop.

“South32 will hold an approximate 16.9% stake in Anglo Pacific post transaction completion, demonstrating conviction in the outlook for our existing business, the acquired royalty portfolio, and our proven ability to deliver shareholder value. We are delighted to welcome South32 as a shareholder.”

South32’s sale of its base metal royalties followed the 2021 divestment of four precious metal royalties to Elemental Royalties Corp for $40-million in cash and $15-million in Elemental shares.

The company has retained a package of 36 royalties, including net smelter royalties over the Mirador mine, the San Carlos/Panantza project, and the Warintza project, in Ecuador.