Metals Acquisition Corp. and Glencore Agree to Amend Terms of the CSA Mine Acquisition

11/22/2022 | 05:39pm EST

• Definitive amendment to Sale and Purchase Amendment Agreement entered into with Glencore International AG (“Glencore”) for the acquisition of the CSA Copper Mine (“CSA”) in New South Wales, Australia
• Consideration amended to consist of:
  ‒ US$775m cash (with the ability to scale up to US$875m cash)
  ‒ Up to US$100m of common equity
  ‒ US$75m deferred to be paid out of half the proceeds of any future equity raise
  ‒ US$75m contingent payment payable when copper averages > US$4.25/lb for 18 continuous months over the Life of Mine (“LOM”)
  ‒ US$75m contingent payment payable when copper averages > US$4.50/lb for 24 continuous months over the LOM
  ‒ 1.5% copper NSR

Metals Acquisition Corp. (NYSE: MTAL.U):

Transaction Overview

Metals Acquisition Corp. (NYSE: MTAL.U) (“MAC”) today announced that it has entered into a definitive amendment to the March 17, 2022 Sale and Purchase Agreement (“Transaction Agreement”) with Glencore to amend the consideration to acquire the CSA Mine as follows:

• At least US$775 million in cash upon Close, with the potential to be scaled up to US$875 million depending on final PIPE demand; plus
• A maximum of US$100 million in retained equity in the business by Glencore, with Glencore having the option to be scaled back subject to MAC raising sufficient equity (with any scale back to be reflected in an uplift to the upfront cash payment scale up, as set out above); plus
• US$75 million in a deferred cash payment (bearing interest from completion at the same rate as payable under MAC’s subordinated term loan proposed to be entered into in connection with the transaction), payable upon MAC’s listing on the ASX or alternative equity raise (capped at US$75 million plus accrued interest).
• US$150 million in cash structured as two contingent payments (US$75 million each) that are unsecured, fully subordinated and payable if, over the life of the mine, the average daily LME closing price is greater than:
  
  
  • US$4.25/lb. for any rolling 18-month period (commencing at closing) (“First Contingent Copper Payment”); and
  • US$4.50/lb. for any rolling 24-month period (commencing at closing) (“Second Contingent Copper Payment”).

The First Contingent Copper Payment and Second Contingent Copper Payment will be payable as soon as the applicable payment trigger milestone has been achieved.

• Post Closing MAC will, on a quarterly basis, pay to Glencore a royalty equal to 1.5% of Net Smelter Returns

In addition to the consideration amendments summarised above, Glencore will be entitled to appoint one director to the Board of Directors of MAC for each 10% interest it holds in MAC from time to time.

In order to fund the cash portion of the consideration, MAC expects that it will need to raise at least US$125 million in PIPE financing, which is currently expected to consist of common shares issued at $10.00 per share.

Mick McMullen, MAC CEO, said: "We have worked closely with Glencore to arrive at a transaction structure that delivers value to both parties, and an increased certainty of completion.

The acquisition of CSA represents a strong strategic fit for MAC. Our management team’s operational expertise, understanding of regional operations and relationships with local stakeholders uniquely position us to identify and realize the full potential value of the asset. CSA also provides MAC with an ideal cornerstone asset with which to establish a high-quality, mid-tier base metals company.”

Advisors

Citi is serving as financial advisor and Squirre Patton Boggs and Paul Hastings LLP are serving as legal advisors to MAC.