Ground Breakers: Evolution adds to copper cache with Northparkes acquisition, SQM forges ahead with Azure takeover

China’s CMOC sells 80% Northparkes mine stake to Evolution Mining for US$475m
Lithium darling Azure files paperwork for SQM’s proposed takeover, despite Rinehart and MinRes running interference
Reward Minerals locks in a deal to buy the mothballed $400m Beyondie sulphate of potash (SOP) project for just $20m

Large copper mines continue to change hands with China’s CMOC selling of its Northparkes mine stake to Evolution Mining (ASX:EVN).

The 80% stake in Northparkes in NSW, which Rio Tinto sold to CMOC for US$820m in 2013 as part of a broader portfolio rationalisation, will be offloaded to EVN for US$475m.

Japan’s Sumitomo retains its 20% stake.

Gold mid-tier EVN has been growing its copper hoard since acquiring Glencore’s stake in the Ernest Henry copper and gold mine 18 months ago.

The long life, low grade but highly profitable Northparkes mine is expected to substantially increase EVN’s copper exposure to ~30% of revenue in FY24.

It adds 25,000t copper and 38,000oz gold to EVN’s production profile in FY24, boosting group guidance to 789,000oz gold and 62,500t of copper.

“Following a period of higher capital investment, the asset is now entering a cash flow generation phase, aligned with our strategy to continue to deleverage our balance sheet while delivering returns to our shareholders,” EVN MD and CEO Lawrie Conway says.

However, EVN also inherits a gold streaming agreement, which saw CMOC receive ~$US550m up front in 2019 for 630,000oz gold, and 9Moz to be delivered over the ensuing years.

Just 38,000oz has been delivered to date.

In addition to this advance amount, buyer Triple Flag has been paying 10% of the spot gold and silver prices for each ounce delivered under the streaming agreement. Ouch.

This locks up 67.5% and 100% of EVN’s share of gold and silver production, respectively, which will fall to 33.75% and 50% in future years.

The deal will be funded by a $525m institutional placement, share purchase plan and a $200m debt facility.

SQM forges ahead with Azure takeover despite interference, weak prices

Lithium darling Azure Minerals (ASX:AZS) has today filed paperwork for SQM’s proposed takeover at $3.52/sh, despite Gina Rinehart and MinRes potentially running interference, Liontown style.

Going, Going … Albemarle pulls the pin on $6.6 billion Liontown mega lithium deal amid Rinehart shenanigans https://t.co/zOXYxHSA5u

— Maureen O’Mahoney (@cheerio46) October 16, 2023

Rinehart and Minres have accrued 18.9% and 13.6% stakes in the tier 1 explorer in the wake of SQM’s $1.63 billion takeover offer in October.

SQM, potentially learning from Albemarle’s mistakes, will launch a simultaneous conditional off-market takeover offer for $3.50/sh should the scheme not be successful.

The deal is being pushed through as lithium prices plumb new lows, with most stocks bearing the brunt.

AZS fell ~4.5% in early trade to $3.53/sh, a small premium to the SQM offer price.

Can Reward breathe new life into a failed potash play?

Minnow Reward Minerals (ASX:RWD) has locked in a deal to buy the mothballed Beyondie sulphate of potash (SOP) project for just $20m from the administrators of Kalium Lakes.

Developed and built for an initial ~$400m in 2021, the operation soon hit difficulties during ramp-up which forced Kalium to tap the market for another +$100m.

The company was put out of its misery with the appointment of receivers in August this year.

It represents a nightmare-inducing period for WA SOP investors which also saw Salt Lake Potash (ASX:SO4) go into receivership owing US$127 million in 2021.

The deal has been great for the RWD share price, however: