MMG to acquire Cuprous Capital, parent company of Botswana’s Khoemacau Copper Mine

MMG Ltd has entered into a Share Purchase Agreement (SPA) to acquire Cuprous Capital, the parent company of the Khoemacau Copper Mine in Botswana, for an effective Enterprise Value of US$1,875 million. Khoemacau is one of the highest quality new copper mines globally. The transaction aligns to MMG’s strategy to build a portfolio of high-quality mines supplying the minerals most important to a decarbonised world.

Khoemacau is wholly owned by private company Cuprous Capital Ltd, which in turn is owned 88.1% by Cupric Canyon Capital LP, a company majority owned by funds managed by Global Natural Resources Investments (GNRI) and 11.9% by Resource Capital Fund VII LP.

Khoemacau is a copper and silver mining company which in June 2021 completed construction of its low cost, 60,000 t/y copper and 1.6 Moz/y silver metal in concentrate operation at full run rate. It completed ramp up of current operations to full production in Q4 2022. Drilling of and studies on its expansion project forecast a potential increase production to over 130,000 t/y copper and 5 Moz/y silver (average run rate at full production) to unlock the full potential of its prized position in the emerging Kalahari Copper Belt. Khoemacau’s products are sold to a global customer under an existing three year third-party offtake arrangement.

It is a long life operation, with a mine life well in excess of 20 years and C1 costs in bottom half of the cost curve post expansion. It has a dominant land holding in the emerging, highly prospective Kalahari Copper Belt, with a 4,040 km2 tenement package. It has Mineral Resources of 6.4 Mt contained copper and 263 Moz contained silver. It has a highly skilled team that has successfully developed, ramped up and operated the mine from the discovery of Zone 5 in 2012 to first production in 2021.

MMG Chairman Jiqing Xu commented: “The acquisition of Khoemacau mine is an important step in achieving our vision of creating a leading international mining company for a low carbon future and will create meaningful long-term value for our shareholders. Khoemacau is a high-quality operating mine with a strong expansion case, located in one of the most prospective mining regions in Africa, the Kalahari Copper Belt, in Botswana, and capable of supporting global supply chains. This transaction aligns with our strategy to pursue value-accretive external opportunities, while continuing to drive significant organic growth opportunities across existing operations.”

Xu said that the acquisition will create long-term value for shareholders and underscores the company’s confidence in copper as a commodity with a strong forward demand as the global energy transition accelerates.

MMG Interim CEO Liangang Li, emphasised the company’s strong forward growth outlook and commended the mine’s current owners who have advanced the mine from exploration to development and operation, thanks to the support from experienced management, skilled workforce, and tier 1 partners.

“We are excited to expand our interests in copper as we see attractive growth opportunity in this sector. We look forward to working with the talented Khoemacau team, which has done an exceptional job of building this asset from exploration to production, establishing a high-quality operation with a highly motivated and largely Batswana workforce, as well as a strong safety performance and good stakeholder relationships. We look forward to continuing the next chapter of this story.”

He added: “Together with the next stage of development at Las Bambas and the completion of the Kinsevere Expansion Project, the acquisition of Khoemacau will significantly increase our copper production and build opportunities for our people, host communities and shareholders.” Completion of the transaction is expected to occur in the first half of 2024.