Metals Acquisition in an 8-K said it entered into a silver purchase agreement with Osisko Bermuda Limited in support of the SPAC’s proposed acquisition of Glencore’s CSA copper mine in Australia.
Terms call for Osiko to advance a $75 million upfront cash deposit on account of future deliveries of refined silver by the combined company, if and when the merger is completed. The amount of the Silver Deposit will be increased by an additional $15 million if the average silver market price quoted by the London Bullion Market Association is $25.50 per ounce or more over the 10 business-day period prior to the closing of the Silver Stream. The Silver Deposit represents a pre-payment of a portion of the purchase price for refined silver to be sold by the combined company to Osisko under the Silver Stream.
The Silver Deposit will be used to finance, in part, the SPAC’s acquisition of the copper mine shares owned by of Cobar Management Pty. Limited, a wholly owned subsidiary of Glencore Operations Australia.
Total consideration on the deal is up to $1.1 billion, consisting of $775 million up front cash consideration (with the potential to be scaled up to $875 million depending on equity demand) to Glencore, plus the combined company’s issuance of up to 10 million ordinary shares to Glencore (with Glencore having the option to scale down to none subject to the SPAC raising sufficient equity). Terms also call for a $75 million deferred cash payment to Glencore tied to a future equity raise undertaken by the newsly formed company, plus two separate $75 million contingent payments to Glencore tied to future copper price thresholds. The merged company would also enter into a net smelter royalty underr which Glencore would receive a royalty of 1.5% of all net smelter copper concentrate produced from the CSA Mine and associated approximately $31 million in transaction costs.
Osisko has right of first refusal with respect to any royalty, stream or similar interest in the metals or other minerals mined from the project.
Metals Acquisition last week disclosed it had entered into a mezzanine debt facility loan note subscription agreement with Sprott Private Resource Lending II to finance, in part, the copper mine deal. The Mezz Facility provides $135 million in funding available to the SPAC with a maturity of five years from the closing of the business combination. Read more.
