The Chinese company MMG Limited (HKEX: 1208) has expanded its Africa project portfolio after acquiring the Canadian miner Cuprous Capital Ltd. The acquisition granted the miner with one of the leading copper mines in Botswana, the Khoemacau mine.
On Tuesday, the miner announced the share purchase agreement to acquire the parent company of the Khoemacau Copper Mine in Botswana, for an effective enterprise value of US$1.9 billion. The value was calculated on a cash-free and debt-free basis.
Khoemacau is one of the highest-quality new copper mines according to the company and the transaction aligns with its current vision of supplying minerals “to a decarbonized world”.
Cuprous Capital is owned 88.1 per cent by Cupric Canyon Capital LP, a company majority owned by funds managed by Global Natural Resources Investments (GNRI) and 11.9 per cent by Resource Capital Fund VII LP. GNRI is focused on the global natural resources section, specifically on upstream oil and gas –excluding the US– mining. More than $3bn of equity has been committed since 2006.
Under the agreement, MMG will pay an interest amount of between US$148 million and US$188 million and will also be entitled to the cash flows and economic benefits derived from the business during this time.
The mining operation boasts an annual copper equivalent production ranging from 50,000 to 65,000 tonnes. However, the company has plans for a near-term expansion that could increase output to 135,000 to 155,000 thousand tonnes.
The mine is anticipated to have a long life of over 20 years and costs are expected to be in the lower half of the cost curve following the expansion. The mine is in the Kalahari Copper Belt and holds a 4,040-kilometre square tenement package. Its mineral resources include 6.4 million tonnes of contained copper and 263 million ounces of contained silver.
“This transaction aligns with our strategy to pursue value-accretive external opportunities while continuing to drive significant organic growth opportunities across existing operations,” MMG Chairman Jiqing Xu said.
Completion of the transaction is expected to occur in the first half of 2024.
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MMG Interim CEO Liangang Li said the company has a strong forward growth outlook and praised the mine’s current owners who have advanced the mine from exploration to development and operation. Khoemacau completed a ramp-up of current operations to full production in the fourth quarter of 2022. Products are sold to a customer under an existing three-year third-party offtake arrangement.
“We look forward to working with the talented Khoemacau team, which has done an exceptional job of building this asset from exploration to production, establishing a high-quality operation with a highly motivated and largely Batswana workforce, as well as a strong safety performance and good stakeholder relationships,” Li said.
Li added that the acquisition will significantly increase the company´s copper production and build opportunities for shareholders. MMG has copper and zinc operations across Australia, Peru and the Democratic Republic of Congo.
Copper is crucial for the global energy transition. It powers renewable energy systems and its properties make it essential for low-carbon technologies.
