Glencore sells CSA Copper Mine in NSW for $US1.1b

Global commodities house Glencore will sell the CSA Copper Mine in NSW’s Cobar region to an American special purpose acquisition company for $US1.1 billion, plus an ongoing royalty.

Street Talk understands Glencore and the SPAC, NYSE-listed Metals Acquisition Corp, signed a binding agreement on Thursday after months of talks.

The deal was said to value CSA at 4.5-times expected earnings, and would be funded with a combination of fresh debt and equity and cash.

Glencore will also take a small stake in Metals Acquisition Corp as part of the agreement, sources said, and receive a small royalty from CSA’s future production.

Located near the NSW town of Cobar, CSA produces between 40,000 and 46,000 tonnes of copper in concentrates per year and also produces a silver byproduct.

The mine operates 24 hours a day, employs 500 people and its copper is sent to the Port of Newcastle for export to smelters in Asia. It has a remaining mine life of nearly 20 years.

Glencore bought CSA out of receivership and restarted its operations in 1999.

It has tried to sell the asset a few times in the past decade, culminating in an auction that played out over the past six months. Bank of America and UBS advised Glencore on the talks.

Metals Acquisition Corp outlasted rival bidders, including Australia’s IGO Ltd which was nominated as the preferred buyer in February and in exclusive talks to secure the asset and sign the deal this week.

The SPAC is run by Mick McMullen, the former boss of Canadian gold miner Detour Gold, and a mining executive with experience in Australia and globally.

The SPAC also counts a handful of well-known Australian mining types as advisers, including former Northern Star Resources boss Bill Beament. It raised $US265 million to list in a deal via Citigroup last year.

Citi is understood to have advised Metals Acquisition Corp on the CSA acquisition, and will help line up associated equity funding alongside Canaccord Genuity and Ashanti Capital. Commonwealth Bank of Australia is understood to be involved as a lender.

The deal’s expected to complete this year, subject to a handful of conditions including regulatory approvals.

The deal comes amid renewed interest in copper mines globally, in the expectation that it will be in demand on the back of the decarbonisation and electrification trends.

Copper is trading at about $US10,000 a tonne or $US450 a pound on the LME three month futures market, to be up about 10 per cent in the past year and close to 60 per cent in the past three years.