COPPER360 today announced terms of a R200m acquisition that will enable it to more than double copper concentrate production and deliver that quantum leap a year earlier than the firm’s current production expansion plans.
The deal is for Nama Copper Resources which is adjacent to Copper360’s operations in South Africa’s Northern Cape province. Nama Copper consists of a processing plant – which Copper360 will use to treat more ore from its Rietberg resource – as well as a large copper tailings resource worth R12bn to R24bn assuming a $8,500/t copper price.
The structure for the deal is that Copper360 will pay R100m upfront for Nama in a consideration consisting of R50m in non-refundable cash – to be financed with new debt – and R50m in shares. The balance of the consideration is payable a year later.
Jan Nelson, CEO of Copper360, described today’s deal was “a game changer”, adding that in addition to the production and revenue boost, and quicker delivery of cash flow, there is an option for expanding Nama Copper’s metal-in-tailings resource.
Shares in Copper360 fell just under a percent in Johannesburg suggesting investors might be waiting on deal closure as well as an update on the commissioning of a concentrator the company already announced it would build by this month. The concentrator is to treat the sulphide ores from the Rietberg mine.
Prior to the deal with Nama, Copper360 had targeted copper concentrate of 3,899 tons a year by 2026. With Nama’s plant, however, copper concentrate will increase to 7,975 tons by 2025. “The Nama Copper plant will ensure that the revenue of R2.2bn planned for the financial year 2026 will now be able to be delivered in the 2025 financial year,” said Nelson.
The seller of Nama Copper is Mazule Resources Proprietory which can’t make a go of its plant because it doesn’t have access to high value sulphide resources Copper360 has at Rietberg, the company said.
Copper 360 will have four months from the date of the initial cash payment due, to complete a due diligence on Nama Copper, it said.