South32 Ltd said on Tuesday it has completed the acquisition of a 45% interest in a copper mine in Chile.
The Perth-based diversified miner acquired a 45% interest in the Sierra Gorda copper mine for $1.4 billion cash from Tokyo-based miner and metal smelting firm Sumitomo Metal Mining Co Ltd and Japanese trading firm Sumitomo Corp. A further price-linked contingent consideration of up to $500 million will be due if threshold copper prices are achieved over the next three years.
South32 funded the transaction with $600 million from its cash reserves, and $800 million from an acquisition debt facility. It expects the acquisition to ‘immediately’ contribute to its earnings, and improve its operating margins.
Production estimates for its 45% interest in 2022 include 31,000 tonnes of copper equivalent, 10,000 ounces of gold, and 225,000 ounces of silver. Guidance for 2023 will be provided with its financial 2022 annual results, South32 said.
Polish miner KGHM Polska Miedz SA holds a 55% operating stake in the Sierra Gorda mine, and South32 will now have joint control with KGHM Polska Miedz .
Chief Executive Officer Graham Kerr said: ‘Our acquisition of an interest in the Sierra Gorda copper mine is a major milestone for South32. By adding copper to our portfolio, along with our recent commitments to substantially increase our green aluminium production, we are making significant progress reshaping our portfolio for a low carbon future.’
South32 shares were down 0.8% to 235.50 pence each in London on Tuesday morning. Shortly after midday in Johannesburg, shares were down 1.6% to R 49.04 each.
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