US$34.1 For Caserones Copper Mine NSR
Altus Strategies Plc (AIM: ALS, TSXV: ALTS, OTCQX: ALTUF) has completed the second and final closing of the recently announced 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.
Altus is acquiring the NSR interest for US$34.1 million through a strategic 50:50 partnership with NYSE American and TSX Venture exchanges listed, EMX Royalty Corporation (EMX). Altus and EMX have created a Special Purpose Vehicle (SPV) incorporated in Chile that is owned jointly by Altus and EMX. The SPV has now acquired an effective 0.836% NSR royalty for US$68.2 million. Altus has principally financed the Acquisition with a US$29 million acquisition loan facility agreement (provided by La Mancha Fund SCSp.
Highlights:
- Final Closing of Acquisition of a 0.418% NSR interest on Caserones copper mine in Chile
- Payment of US$7.95M made for balance of 0.418% NSR interest
- NSR interest is expected to generate cash flow of US$3.2M (post-tax) per year to Altus
- Caserones has been operating since 2015 and has 17 years of mine life remaining
- Acquisition part-financed by US$29M loan facility from major shareholder La Mancha
- La Mancha holds a 35.08% interest in Altus and its Chief Executive is a Director of Altus
- SPV owned by Altus and EMX to share revenues from a combined 0.836% NSR interest
- Additional royalty transactions under review globally with a focus on gold and copper
“We are delighted to announce the final closing of the Acquisition of a significant cash paying royalty on a long-life copper mine in a tier-1 mining jurisdiction,” Chief Executive, Steve Poulton, said.
“Altus has acquired an effective 0.418% NSR royalty interest on the Caserones copper mine in the Atacama region of Chile, for a cash consideration of US$34.1M. The NSR interest is expected to generate approximately US$3.2 million (post-tax) per year attributable to Altus. The Caserones mine is owned and operated by JX Nippon Mining & Metals Corporation of Japan and has an estimated 17 years of production remaining.
“The Acquisition of the NSR interest has been part-financed by a US$29 million acquisition bridge loan facility provided by La Mancha, our largest shareholder, which has recently established a US$1.4 billion mining investment fund. The provision of the facility underscores La Mancha’s commitment to the long-term growth of Altus and the quality of this Acquisition.
“We are also delighted to have formed a strategic relationship with NYSE American and TSX-V listed EMX Royalty Corp. to acquire the NSR through the creation of a Chilean SPV company. Our partnership with EMX is strengthened by Michael Winn, the Chairman of EMX, who is also a Non-Executive Director of Altus.
“In addition to our Acquisition, it is notable that TSX-listed Nomad Royalty Company Ltd, which has a market capitalisation of approximately C$440 million, has recently agreed to purchase a further 0.351% NSR royalty interest on the Caserones mine, increasing their total effective NSR interest to 0.631%. The Nomad transaction underscores the strength of investor interest in this high quality royalty.
“Following this Acquisition, Altus will receive significant quarterly royalty income and will have long-term exposure to copper. We expect the demand for copper to remain strong in the years ahead, as the global economy seeks to decarbonise in parallel with continued infrastructure development, urbanisation and wealth creation in emerging markets.
“Altus is currently assessing a number of other potential royalty acquisitions globally, alongside our on-going royalty generation programmes in Africa. I look forward to updating shareholders on these activities in due course.”
Final Closing of Caserones NSR
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, through a Share Purchase Agreement with the 16 shareholders of SLM California and thereby acquire indirect ownership of 43% of SLM California’s 1.944% NSR royalty interest in the Caserones property (i.e. a 0.836% NSR royalty interest, held as to 0.418% by Altus and 0.418% by EMX).
Under the First Closing announced on 23 August 2021, the SPV acquired 33% of SLM California for US$52.3 million, representing approximately 76% of the NSR being acquired by the SPV. The second and final closing of the remaining 10% of the shares of SLM California has now completed and the final consideration of US$15.9 has been paid by the SPV.
Altus expects the Caserones NSR will provide it with immediate and long-term cash flows, in line with its stated growth strategy.
About the Caserones Mine
The Caserones mine is a large, open-pit porphyry copper-molybdenum deposit, located within a 17,000 hectare land package at an elevation of approximately 4,300m above sea level in the borough of Tierra Amarilla, in the Atacama region of northern Chile. The mine is approximately 15km from the border with Argentina, 162km southeast of the city of Copiapó and 800km north of the capital, Santiago.
Located at the southern end of the well documented Maricunga mineral belt, the geology of Caserones comprises an Early-Miocene porphyry system associated with a cluster of dacite porphyries and breccias intruding Palaeozoic granitic, volcanic, and metamorphic rocks. Caserones has a well-developed supergene enrichment profile of oxide copper and secondary chalcocite that overlies hypogene sulphide (chalcopyrite-molybdenite) mineralisation.
The mine is owned and operated by Minera Lumina Copper Chile SpA, an indirect 100% owned subsidiary of JX Nippon Mining & Metals Corporation of Japan. 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.
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