Anglo Pacific Group PLC struck a deal with a Mantos Copper SA subsidiary to acquire a 1.525% net smelter royalty on the Mantos Blancos open pit copper mine in Chile for about US$50.3 million in cash, with completion expected shortly.
The company said Aug. 31 that the NSR applies exclusively to the mine's copper output and covers its 16-year life as well as future expansions. The acquisition will be financed using a US$50 million drawdown of the company's revolving credit facility.
Anglo Pacific has been looking to diversify its royalty portfolio as it tries to lessen its coal exposure, with the company expecting to have US$150 million in funds by the end of the year to spend on its planned expansion, its CEO Julian Treger said in March. Treger is a nonexecutive director of Mantos Copper.
The company expects immediate cash flow from the royalty, which marked its first significant exposure to a producing copper mine. In 2018, Mantos Blancos' copper production totaled 42,000 tonnes, with output expected to rise to 45,400 tonnes in 2019 and 42,300 tonnes in 2020.
Concurrent with the NSR deal, Mantos entered a US$250 million financing package, including a US$150 million off-take facility with Complejo Metalurgico Altonorte S.A. and a US$25 million agreement with an Osisko Gold Royalties Ltd. subsidiary to upsize an existing silver stream agreement.
Together with a US$25 million equity funding commitment from Mantos' majority shareholder, Orion Mine Finance LLP, Anglo Pacific said the combined proceeds will cover US$219 million in costs related to a debottlenecking project at the mine.
The project is expected to extend the mine life to at least 2035 at reduced cash costs and increase the throughput capacity of the sulfide ore concentrator plant to 7.3 million tonnes per annum by 2021 from 4.3 Mtpa currently.
