Metals Acquisition IPO Down Under goes over forecast

Metals Acquisition (NYSE: MTAL.U) has raised A$325 million ($285 million) through a new listing in Australia that will help pay for the billion-dollar purchase of the CSA copper mine there.

The Jersey-based company’s initial public offering on the ASX, where it is expected to begin trading under the ticker MAC on Feb. 20, was oversubscribed by about A$25 million, the company said on Friday.

The financing will strengthen the company’s balance sheet as it prepares to pay Glencore (LSE: GLEN) US$75 million by June as part of the US$1.1 billion purchase of CSA about 700 km northwest of Sydney, BMO Capital Markets said on Friday. The deal was done in 2022.

“The listing can also fund additional exploration and development at the CSA mine, improve working capital, and/or reduce or support refinancing of current debt,” BMO mining analyst Jackie Przybylowski wrote in a note. “Proceeds of the ASX listing could also support future acquisitions.”

One target could be Glencore’s Mt. Isa copper mine in Queensland, the analyst said. The purchase of the cash flow-producing operation would elevate Metals Acquisition to a mid-tier copper miner, the analyst said. 

Production growth

ASX shares in Metals Acquisition are expected to list at A$17 apiece. The funds will help the company potentially increase production growth at CSA as well as pay for exploration, company chair Patrice Merrin and CEO Mick McMullen said in the release.

“Owning and operating an Australian copper mine we have long felt it was logical to dual list,” said McMullen, former CEO and president of Detour Gold in Ontario before Kirkland Lake Gold (TSX: KL; NYSE: KL) bought it for $4.9 billion in 2019.

Metals Acquisition, formed in 2021, says it’s focused on operating and acquiring metals and mining businesses critical for electrification and decarbonization in high quality, stable jurisdictions. Its sole asset so far is the CSA mine, 11 km northwest of Cobar in New South Wales.

The mine produces about 40,000 tonnes of copper annually, according to the company. It’s one of Australia’s oldest and deepest underground mines, stretching back about 150 years and reaching 1.9 km down. Ore is processed onsite and transported by rail 700 km to the Port of Newcastle for export to smelters in Asia.

Streams sold

CSA also produced about 431,000 oz. payable silver annually from 2019 to 2021. Metals Acquisition sold a US$90-million silver stream and a US$75-million copper stream to Osisko Gold Royalties (TSX: OR; NYSE: OR) in 2022.

Glencore has a 1.5% net smelter return royalty on the life of the mine and holds about US$100 million in equity of Metals Acquisition. At least US$775 million of the CSA purchase is to be in cash, the companies agreed.

Shares in Metals Acquisition fell about 1% to US$12.51 apiece on Friday morning in New York after gaining nearly 20% in the last month, valuing the company at US$628 million. They’ve traded in a 52-week range of US$8.49 and US$13.47.