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Kaz Minerals picks up Baimskaya copper project
Posted on Friday, 03 August 2018 12:52
Kaz Minerals is tapping into expectations that copper will play a large part in the growth of the renewable and decarbonisation sectors by acquiring the Baimskaya copper project from Aristus Holdings for USD 900.00 million.
Under terms of the transaction, the deal comprises an initial consideration of USD 675.00 million in cash for 75.0 per cent of the target.
This includes the issue of new shares for Aristus which enables the consortium of investors some exposure to the asset, as well as gaining a minority in the buyer following the deal.
A deferred payment of USD 225.00 million for the remaining 25.0 per cent is dependent on delivery conditions before 31st March 2029.
The deal also includes USD 5.50 billion in capital expenditure, which remains subject to feasibility study.
Aristus is owned and controlled by high profile individual investors such as billionaire mogul, and Chelsea football club owner, Roman Abramovich.
News reports suggest a deal represents a calculated risk for Kaz, as up until now it has only prioritised low-cost operations in Kazakhstan.
The Baimskaya project is one of the world’s most undeveloped copper assets, headquartered in a region usually ignored by international investors.
However, as Kaz’s chairman, Oleg Novachuck, told Reuters, many Russian miners worked in harsh conditions in Kazakhstan which was ideal preparation for the operation in the far east.
The Russian government has also highlighted the location as strategically important for economic development that will benefit from state-run infrastructure as well as tax incentives.
Benefits of the transaction include access to Baimskaya’s 9.50 metric tons (mt) of copper at an average grade of 0.4 per cent, alongside 16.50 million ounces of gold, graded at 0.2 grams per ton.
With a mine life expectancy of 25 years, it is expected to produce 250,000 karats (kt) per ton of copper, 400,000 karats per ounce (koz) of gold and 330,000 kt in copper equivalent over the next decade.
Novachuck added: “The development of this new project in Russia will enable the Group to continue its industry leading growth, delivering both value and volume as the copper market is forecast to enter a period of significant supply deficit.”
Kaz already has operations in east Kazakhstan with the Bozshakol and Aktogay mines. The combined production in 2017 totalled over 259,000 kt of copper, 179,000 koz and 3,506 koz of silver.
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