- South 32 (S32) enters two binding conditional agreements with Sumitomo to acquire a 45 per cent interest in the Sierra Gorda copper mine in Chile
- To acquire the 45 per cent, the company will pay cash of US$1.55 billion (A$2.1 billion) upfront funded through cash on hand and a debt facility
- The Sierra Gorda mine is expected to produce 180,000 tonnes of copper, 5000 tonnes of molybdenum, 54,000 ounces of gold and 1.6 million ounces of silver 2021
- Subject to competition and regulatory approvals, the transaction is expected to be completed by the end of 2021
- Shares are up 5.21 per cent trading at $3.84 at 2:41 pm AEDT
South32 (S32) has entered two binding conditional agreements with Sumitomo to acquire a 45 per cent interest in the Sierra Gorda copper mine in Chile.
To acquire the 45 per cent, South32 will pay an upfront cash consideration of US$1.55 billion (A$2.1 billion) which will be funded by cash on hand and an underwritten debt facility.
South32 has also agreed to pay Sumitomo a contingent price-linked consideration of up to US$500 million (A$678 million).
Located in the prolific Antofagasta copper mining region, the Sierra Gorda mine is expected to produce 180,000 tonnes of copper, 5000 tonnes of molybdenum, 54,000 ounces of gold and 1.6 million ounces of silver in 2021.
The remaining 55 per cent is held by KGHM Polska Miedz, a global miner listed in Poland.
Subject to competition and regulatory approvals, the transaction is expected to be completed by the end of 2021.
CEO Graham Kerr is excited to be acquiring Sierra Gorda, stating it will improve its project portfolio.
“We are actively reshaping our portfolio for a low carbon world and the acquisition of an interest in Sierra Gorda will increase our exposure to the commodities important to that transition,” Mr Kerr commented.
“Adding Sierra Gorda further improves our portfolio and is expected to immediately lift group margins and earnings, supporting future shareholder returns while retaining strength and flexibility in our balance sheet.
“Looking ahead we see an opportunity for continued strong performance at Sierra Gorda with our new partner, KGHM, that can deliver substantial value to South32’s shareholders.”
South32 was up 5.34 per cent on the market with shares trading at $3.85 at 1:37 pm AEDT.