Sandfire Eyes Copper Riches With $1.9 Billion Spanish Buy
(Bloomberg) -- Sandfire Resources Ltd. has agreed to buy a copper mining complex in Spain from Mubadala Investment Company and Trafigura Group Pte Ltd. for about $1.9 billion, boosting its exposure to a bullish long-term demand outlook for the metal seen key to the clean energy transition.
The acquisition of Minas de Aguas Teñidas S.A. (Matsa) “immediately transforms Sandfire into one of Australia’s largest copper-focused producers,” the Perth-based company said in a statement. “Base metal assets which offer this combination of scale, grade, mine life and exploration upside are extremely rare globally,” Chief Executive Officer Karl Simich said.
Copper prices hit historic highs north of $10,000 a ton earlier this year on surging demand as the global economic recovery from the pandemic gathered momentum. However, concerns over a resurgence of the virus and a potential slowdown in China have seen a sharp retreat back towards $9,000.
Matsa began operations in 2009 and Sandfire gave proforma production guidance for the asset of between 100,000 and 120,000 tons in fiscal 2022. That compares with the group’s contained copper output of 70,845 tons in fiscal 2021. Sandfire will retain a concentrate offtake agreement with Trafigura for 100% of Matsa’s production.
Sandfire will fund the transaction through a combination of a $650 million syndicated and underwritten debt facility, an equity raising of about A$1.2 billion ($870 million) and by using existing cash reserves and a corporate debt facility, the company said.
Sandfire, which is targeting completion in the first quarter of 2022, needs foreign direct investment approval from the Spanish government and must clear other regulatory hurdles. The company was advised on the deal by Macquarie.
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