An old AFR article (might already been posted before) mentioned CSA acquisition, as well as Glencore’s Mt Isa Mines etc.:
Meet the copper miner promising to fill OZ Minerals’ big shoes
Investors that believe in the electrification of just about everything have been forced to buy into offshore stocks or miners like BHP and Rio Tinto that are heavily exposed to the iron ore price.
Jun 18, 2023 – 6.00pm
Old head fund managers are never short of gripes.
There’s the juniorisation of sell-side research teams, stable Australian companies chasing offshore M&A, CEOs selling stock, CFOs capitalising business as usual costs and just about anything to do with investment bankers or private equity firms. The latest one? The lack of a decent Australian pure-play copper producer on the ASX.
Mick McMullen has headed to Cobar to take the keys to the CSA Mine, formerly owned by Glencore. Louie Douvis
It has been slim pickings sinceBHP paid $9.6 billion for OZ Minerals in May. The ASX-focused copper bulls have a choice of Sandfire Resources, whose biggest assets are in non-tier one mining jurisdictions of Spain and Botswana, the underwater (literally, post an extreme rainfall) 29Metals, or a bunch of developers that are yet to make any money.
So, investors that believe in the electrification of just about everything in coming years and want exposure to the key ingredient copper have to buy offshore-listed stocks or something like BHP or Rio Tinto and prepare to be knocked around by the iron ore price.
Mick McMullen and his troop of fellow mining sector veterans – ex-Fortescue Metals boss Nev Power and former Northern Star Resources executive chairman and founding shareholder Bill Beament among them – are trying to change that.
They’ve just acquired CSA Copper Mine near Cobar in western NSW, producing some 40,000 tonnes a year, and are on the hunt for more assets to create the next OZ Minerals. And they are preparing to list on the ASX.
“We are here to grow this business,” McMullen, 52, says. “OZ Minerals has gone from the ASX and left a huge gap.
“We are coming, we have already started working on an ASX prospectus and look, we have a board, management team and shareholder base that punches well above the weight of a 40,000 or 50,000 tonnes a year copper producer in Australia.”
Should McMullen’s venture, Metals Acquisition Corp, list as planned in coming months, it will present as a large cap in small-cap clothing and promises not to sit still.
The company is on the lookout for other copper, nickel and zinc mines in Australia, Canada and parts of the United States, trying to pluck unloved projects from big miners – similar to CSA, which was immaterial to its former parent Glencore – and re-energise staff, production and exploration plans to get those assets firing.
The Northparkes mine in Parkes, another country NSW town,is up for sale and fits the bill. It’s a 30-year-old mine stuck inside the portfolio of China Molybdenum Company, was formerly owned by Rio and hasn’t moved the needle for its owner for a long time.
Glencore’s Mt Isa Mines, the second-largest copper producer in Australia, is another one that analysts expect McMullen would love to own.
McMullen will not confirm or deny interest in any particular asset, but says the medium term plan is to be dual listed in the US and Australia and own two to four mines of size.
CSA Mine is in Cobar, about 700 kilometres west of Sydney on the road to Broken Hill. Dominic Lorrimer
“We [the board and management team] have operated in Australia, Canada and three states in the US. We know the ropes, we want to go where we know the ropes,” he says.
“I’ve run some significant single-asset companies before, and shareholders are always keen for you to not be a single asset company. We’re looking, don’t worry.”
McMullen starts this week in Cobar, 700 kilometres west of Sydney, having taken the key to CSA only last Friday. He’s comfortable in country NSW, having grown up in Coonamble in the state’s north-west before studying geology and getting into mining.
His most recent jobs have been offshore running Detour Gold Corporation, a Canadian gold producer sold to Kirkland Lake Gold for $C4.9 billion ($5.4 billion) in 2020, and as CEO at Stillwater Mining Company, a platinum group metals company sold for $US2.7 billion in 2017.
He is joined at Metals Acquisition Corp by Power (chairman) and Beament (an investor and adviser), both well known in Australia’s resources sector, and a bunch of mining executives from offshore.
The backers set up Metals Acquisition Corp as a US-listed Special Purpose Acquisition Company two years ago, securing investor commitments, and went looking for assets.
It has been a rollercoaster ride. The hot SPACs market turned ice-cold, with few managing to raise the capital to complete their maiden deals and turn into proper NYSE-listed companies.
Australian investorswere initially lured by the names involved,liked the CSA Mine deal but fell out of love with the structure. It turned into a slog.
Should the whole thing have been structured differently? “Next question,” McMullen says, lightheartedly. “We’ve had no compensation for two years, this has been a love job for equity ... The best thing is we can now say ‘we are not a SPAC’.”
The SPAC did show McMullen and his partners were serious about raising capital for a transition metals company, and got them intoGlencore’s auction.
Post CSA deal, Metals Acquisition Corp’s capital structure includes about $US325 million equity, another $US100 million equity in Glencore’s hands and $US50 million with the founders, $US205 million in senior debt and $US135 subordinated debt. There’s also a silver stream worth about another $US150 million.
McMullen and his team have kept close to Australian fund managers in the past 12 months. His IPO will get a good hearing, if nothing else for the lack of other copper companies. But whether local investors buy in will depend on price.
Rio Tinto showed off its Northparkes Mine in NSW with a site trip in 2012, only to offload it soon after. It’s up for sale, again. Carla Gottgens
You can already picture the pitch: see what McMullen and his team have done in the past and imagine how that experience could sharpen up the likes of CSA Mine, which has a near 150-year history and is the biggest employer and taxpayer in the Cobar region with 550 miners on its books and another 150 labour contractors.
“We are turnaround and productivity improvement specialists, this is what we do. It is our bread and butter,” he says. “It’s a pretty simple plan; utilise as much of the infra as you can, get production up, get costs down, use this as a base to build a multi-asset business.
“It’s mine smarter, remove the blockages for the workforce to do better, align outcomes with compensation.
“We’ve done a lot of due diligence on the asset, and we know there is a significant amount of additional mineralisation there that can be brought into both resource and then reserve. That is just a function of some drilling.”
It will take at least a few CSAs to create anything close to OZ Minerals, which hada huge run under Andrew Cole’s leadershipand will be remembered fondly because it ended up making a lot of money for investors.
McMullen’s crew has done a similar thing before – and the gate’s wide open to do it again. The question is whether it can get the assets to build a miner of scale, and whether now is the time in the M&A cycle to be doing it.
https://www.*afr*.com/chanticleer/meet-the-copper-miner-promising-to-fill-oz-minerals-big-shoes-20230615-p5dgu6
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