Diversified miner South32 says it is set to unlock as much as $200m (R3.4bn) in value through the sale of royalties — something that will also see it pick up a stake in London and Toronto-listed streaming and royalty firm Anglo Pacific.
Royalties refer to agreements where miners give a portion of their future revenue in exchange for a loan, with South32 announcing the sale of four base metals royalties, largely in copper and nickel in Australia, Chile and the US.
The sale includes fixed consideration of $103m in cash payments and $82m of Anglo Pacific shares, which would see South32 hold about a 16.9% interest in that firm. The deal includes contingent payments of up to $15m, conditional upon, among other things, a nickel project in Western Australia entering commercial production.
The sale would see South32 retain 36 royalties, weighted towards base metals, and follows the divestment of four precious metals royalties to Elemental Royalties in 2021 for $40m in cash and $15m in shares, This gave it a stake of 19.7% in that company.
“Today’s sale of another non-core royalty package is a further step forward in unlocking latent value from our portfolio,” CEO Graham Kerr said in a statement.
“The proposed transaction will realise an immediate cash payment, while also retaining long-term exposure to these royalties through our shareholding in Anglo Pacific,” he said.
South32 is a globally diversified mining and metals company and produces bauxite, alumina, aluminium, metallurgical coal, manganese, nickel, silver, lead and zinc at its operations in Australia, Southern Africa and South America.
The group was unbundled from BHP in 2015 and completed its sale of its SA coal assets to Seriti earlier in 2021.
By the JSE’s close the miner’s shares were down 1.64% to R41.64, amid general market pressure. The shares have fallen 11.4% so far in 2022.
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