Copper market’s biggest whale fuels speculation of a major shift
The world’s single biggest buyer of copper, State Grid Corp. of China, has slowed its purchases of copper wire this year.
Nomad Royalty Company (TSX: NSR) has entered into an agreement with Appian Capital, investment advisor to the Appian Natural Resources Funds, to acquire a royalty interest in the producing Caserones copper mine located in the Atacama region of Chile.
The Caserones mine is operated by Minera Lumina Copper Chile, which is indirectly owned by JX Nippon Mining & Metals Corp. The mine has over five years of operational history with a current estimated mine life of 19 years.
Under the agreement, Nomad will receive an effective 0.28% net smelter return royalty on Caserones by acquiring ownership in a private Chilean company that holds the payment rights to the copper mine.
As consideration, Nomad will make a cash payment of $23 million to Appian, as well as deliver two million common share purchase warrants. The warrants can be exercised at $1.085 per share for a period of 36 months following the date of the agreement.
“The Caserones royalty provides Nomad with immediate cash flow over a very long mine life from Chile, a tier 1 mining jurisdiction,” Nomad CEO Vincent Metcalfe said in a press release.
“The acquisition of the Caserones royalty provides Nomad with exposure to copper at a time when the demand for green and electrification linked commodities, in particular copper, is set to surge to record highs as the global economy transitions to zero emission technologies,” Nomad’s chief investment officer Joseph de la Plante added.
Located on a land package of approximately 17,000 hectares, the Caserones open-pit mine is expected to produce significant volumes of copper and molybdenum over the long term. Production in 2019 reached 146kt Cu and 2,778t Mo, with expected life of mine average annual payable production of about 148kt CuEq.
Nomad’s shares jumped 4.9% by 1 p.m. ET Friday on the latest royalty acquisition, giving the company a market capitalization of C$606 million.
