Altus Strategies to acquire royalty interest on Caserones
Altus Strategies has agreed to acquire an effective 0.418% net smelter return (NSR) royalty interest on the producing Caserones copper mine in the Atacama region of northern Chile, it announced on Tuesday.
The AIM-traded firm said it expected the Caserones NSR to provide it with “immediate and long-term” cash flows, in line with its stated growth strategy.
Closing was expected to take place in two phases, with both closings being completed by 1 September.
The consideration to be paid by Altus for the NSR interest was $34.1m in cash, with the interest being acquired from private vendors via a special purpose vehicle incorporated in Chile.
Altus Royalties, a wholly-owned subsidiary of Altus, and TSX-V and NYSE American-listed EMX Royalty Corporation, have equal ownership of the special purpose vehicle.
The company said it had also entered into a $29m acquisition loan facility agreement with a wholly-owned subsidiary of La Mancha Fund.
Looking at Caserones, Altus said the NSR interest was expected to generate cash flow of $3.2m after tax per year to Altus, with the mine having been operating since 2015, with 17 years of mine life remaining.
It noted that La Mancha holds a 35.08% interest in Altus, with its chief executive being a director of the company.
Additional royalty transactions were under review globally, the board confirmed, with a focus on gold and copper.
“Our acquisition of a significant cash paying royalty on a long-life copper mine in a tier-1 mining jurisdiction represents a landmark transaction for Altus,” said chief executive officer Steven Poulton.
“The Acquisition of the NSR interest will be part-financed by a $29m acquisition bridge loan facility provided by La Mancha, our largest shareholder, which has recently established a $1.4bn mining investment fund.
“The provision of the facility underscores La Mancha's commitment to the long-term growth of Altus and the quality of this acquisition.”
Following the acquisition, Poulton said Altus would receive “significant” quarterly royalty income, and would have long- term exposure to copper.
He said the firm expected demand for copper to remain strong, as the global economy looked to decarbonise at the same time as emerging markets embarked on infrastructure development, urbanisation and wealth creation.
“Altus is an established royalty generator with an experienced management team, a portfolio of 33 exploration and development projects and nine organically generated royalties.
“We are actively reviewing a number of additional royalty transactions globally, primarily focused on gold and copper, and I look forward to updating shareholders on these opportunities in due course.”
At 1428 BST, shares in Altus Strategies were up 0.85% at 59p.