Copper 360’s Bold Move: Doubling Output and Accelerating Revenue

In a strategic move set to redefine South Africa’s copper industry landscape, Copper 360 Limited, formerly known as Big Tree Copper Limited, has inked a game-changing deal to acquire Nama Copper Resources Proprietary Limited. The acquisition, valued at R200 million, is poised to significantly bolster Copper 360’s copper concentrate production capacity and reshape its revenue projections.

The Transaction Overview

Copper 360 and Mazule Resources Proprietary Limited, the current shareholder of Nama Copper, have entered into an agreement to acquire all the shares and claims in Nama Copper. The total consideration for this transaction is set at R200 million, signaling a major commitment to expanding Copper 360’s operational footprint and production capabilities.

Key Benefits of the Transaction

1. Increased Production Capacity: The acquisition is set to more than double Copper 360’s copper concentrate production capacity and output, with projections indicating an impressive 7,975 tonnes of copper metal per annum by 2025, up from the initial estimate of 3,899 tonnes.
2. Strategic Assets: Nama Copper brings valuable assets into Copper 360’s portfolio, including increased surface rights contiguous to Copper 360’s Nababeep Processing Facility, a fully operational copper concentrate plant with significant monthly processing capacity, and additional resources in the form of copper tailings and slag.
3. Operational Advantages: The deal also includes additional diesel generator capacity, an operational fleet of yellow equipment, a mining license, and a water use license application ready for submission. These components are poised to enhance Copper 360’s operational efficiency and flexibility.
4. Offtake Agreement: A crucial aspect of the agreement is the offtake agreement with Mazule, securing the sale of copper concentrate produced by Nama Copper. The agreement also includes a R50 million working capital facility, providing financial support to Copper 360.

Rationale Behind the Transaction

Jan Nelson, CEO of Copper 360, expressed enthusiasm about the acquisition, stating, “The acquisition of Nama Copper is a game changer for Copper 360.” Nelson emphasized that the move allows Copper 360 to expedite its concentrate production, ensuring that the projected revenue of R2.2 billion for the financial year 2026 can now be achieved in the 2025 fiscal year.

Strategic Positioning for Growth

The strategic rationale behind the acquisition extends beyond immediate production gains. By acquiring Nama Copper, Copper 360 gains access to a fully operational copper concentrate plant, operational resources, and additional tailings options, further solidifying its position as South Africa’s only listed copper producer.

Understanding Nama Copper’s Business

Historical Operations and Challenges

Nama Copper, located adjacent to Copper 360’s operations in Nababeep, historically processed copper slag through a sulphide flotation plant. However, economic challenges arose as the slag operations became unsustainable. The copper concentrate plant, with a processing capacity of 20,000 tonnes of sulphide ore per month, is a vital asset that aligns with Copper 360’s expansion plans.

Additional Assets and Exclusions

In addition to the copper concentrate plant, Nama Copper owns significant tailings resources. Noteworthy is the exclusion of the metal reclamation plant from the transaction, with Mazule retaining the right to operate it for a period of two years from the date of the First Tranche payment on a “no charge” lease.

Transaction Terms and Agreement Structure

Payment Structure

Copper 360 will make an initial payment, known as the First Payment Tranche, of R50 million in cash and R50 million in shares within 14 business days of the agreement’s signature. This payment will be held in escrow until due diligence is completed.

A further R100 million in cash is due upon completion of the due diligence period.

Due Diligence and Refundability

Copper 360 has a four-month window from the date of the initial cash payment to complete due diligence. The First Payment Tranche is non-refundable unless materially adverse facts are established during the due diligence period.

Operational Transition

Once the First Payment Tranche is paid, Copper 360 will operate the Nama Copper Plant under a “no charge” lease agreement with Mazule until a Section 11 approval, if required, is granted.

Offtake Agreement Details

The detailed terms of the offtake agreement remain confidential. However, it is disclosed that Copper 360 will receive approximately 80% of the prevailing LME Copper price on delivery on an “ex works” basis.

Transaction Categorization and Shareholder Approval

In accordance with JSE Limited’s Listings Requirements, the Transaction is classified as a Category 2 transaction, thus exempting it from requiring shareholder approval. Additionally, no related parties are involved in the Transaction.

Funding and Net Asset Value

The consideration for the acquisition amounts to R200 million. Copper 360 is in the process of finalizing debt and royalty agreements to fund the Transaction. The company assures shareholders that these funding structures will not have a material dilutionary effect.

Net Asset Value of Nama Copper

Based on the latest available statement of financial position of Nama Copper (unaudited management accounts at 31 August 2023), the net assets’ value subject to the Transaction is R59.8 million.

Profits Attributable to Nama Copper

As of the announcement, the Nama Copper flotation plant is under care and maintenance, with no current profit or loss attributable to the net assets.

Effective Date and Compliance Commitment

The effective date of the Transaction is the date of the First Tranche Payment. Copper 360 commits to ensuring that, after the closing date, nothing in the constitutional documents of Nama Copper will impede its compliance with the Listings Requirements.

Forward-Looking Statements

Any forward-looking statements contained in this announcement have not been reviewed or reported on by the Company’s external auditors.

Conclusion

Copper 360’s acquisition of Nama Copper signifies a pivotal moment in South Africa’s copper industry. The deal not only strengthens Copper 360’s production capabilities but also positions the company for accelerated growth, underscoring its commitment to becoming a key player in the global copper market. The successful execution of this acquisition is poised to shape the trajectory of Copper 360 and contribute significantly to the country’s mining sector.