Copper future shines bright

Mount Isa Mines may be next big bet for Metals Acquisition as price soars

It’s not just the gold price that has been motivating miners on mergers and acquisitions – the copper price has ascended to lofty heights as well.

This has led some to wonder whether it’s time for Metals Acquisition to make its next big bet, following its $1.6bn purchase of the CSA copper mine at Cobar, NSW, when it was a special purpose acquisition vehicle (SPAC).

The next target on Metals Acquisition’s to-do list is widely considered to be the Mount Isa Mines complex in Queensland owned by Glencore – its 14 per cent shareholder on listing.

If Glencore is in fact a seller, why not act on it now?

Metals Acquisition successfully listed in Australia on February 20, with its initial public offering priced at the top of its price range at $17 per CHESS Depositary Interest.

Its chief executive Mick McMullen has credibility in the market and he could capitalise on that good will.

Plenty of water has passed under the bridge since Metals Acquisition started life by acquiring CSA in 2022, with the deal closing the following year.

The price of COMEX copper has rallied 24 per cent in the past six months to $US4.43 per pound, causing Metals Acquisition’s share price to rally.

It could be time to capitalise on that rise and tap the market to fund another transaction.

While it’s widely believed that Mount Isa Mines would be in Metals Acquisition’s cross hairs, it’s not clear how much of the business it would acquire.

Glencore describes Mount Isa Mines as one of the world’s largest mining complexes, a hub of copper and zinc operations in Queensland. It is the second largest copper producer in Australia and a key asset in Glencore’s global mining portfolio.

The asset includes underground mines, mineral processing and smelting operations, power generation, support and administrative services.

Glencore operates the copper and zinc-lead-silver processing streams.

It operates copper and zinc concentrators, a filter plant, copper and lead smelters and support services.

Products are transported to Townsville for further refinement and export to domestic and international markets.

A deal for the whole thing could be well above $1bn, but rehabilitation liabilities need to be factored in.

The CSA mine cost $US1.1bn ($1.6bn) and owner Glencore helped to fund the deal through a deferred consideration facility, which Metals Acquisition

was to pay back after the float.

CSA floated in February as a $US758m ($1.2bn) business after earlier listing on the New York Stock Exchange to seek additional funding to pay for its acquisition of CSA.

The IPO was increased from $200m to $300m and then to $325m.

It was two to three times oversubscribed by investors keen to gain exposure to copper on the ASX after BHP acquired OZ Minerals for $9.6bn in 2023.