Appian sells Brazilian companies, Atlantic Nickel and Mineração Vale Verde, to Sibanye-Stillwater for US$1.0 billion and additional royalty
PR92582
LONDON, Oct. 26, 2021 /PRNewswire=KYODO JBN/-
Highlights
-Appian agrees sale of wholly owned Atlantic Nickel and Mineração Vale Verde
to Sibanye-Stillwater for:
- US$1.0 billion in cash, and;
- An additional 5.0% NSR royalty on production from the underground
expansion at Atlantic Nickel
-Transaction demonstrates Appian's ability to identify and deliver on
opportunities for value creation in the mining sector, generating outsized
returns for its investors
- In 2018, Appian acquired Atlantic Nickel out of bankruptcy for US$68
million and Mineração Vale Verde for US$40 million
- Atlantic Nickel has since executed a successful restart of
operations, delivered first quartile C1 cost performance, and defined an
underground Resource extending mine life to 35 years
- Mineração Vale Verde has since revised its DFS and completed project
construction and commissioning ahead of schedule and under budget and is now
ramping up operations
-Appian is pleased to see the assets purchased by Sibanye-Stillwater, a
company known for its strategic vision, operational excellence and responsible
stewardship
-Transaction marks the successful conclusion to a highly competitive
dual-track process with widespread interest
- Transaction also represents Appian's 4th and 5th exits, or intentions to
exit, this year
- Follows Fortuna Silver's C$1.1bn acquisition of Roxgold; sale of
Appian's royalty interest over Caserones copper mine to Nomad Royalty Company
for US$23 million in cash; and the sale of Peak Resources' royalty back to the
company
-Appian will retain ongoing investment exposure to the upside potential of
both assets, through:
- A 2.75% NSR royalty at Atlantic Nickel, which will step up to 7.75%
on payable metal produced upon completion of mining the open pit Reserve;
- A 35% stream on gross gold revenues at Mineração Vale Verde, and;
- The 100% ownership of the Pereiro Velho gold exploration property
post-acquisition
Appian's portfolio remains well positioned for growth with exposure to key
decarbonisation commodities
Appian Capital Advisory LLP ("Appian" or the "Company"), the investment advisor
to long-term value focused private equity funds that invest solely in mining
and mining-related companies, announces the sale of its Brazilian battery
metals-focused portfolio companies Atlantic Nickel ("Atlantic Nickel") and
Mineração Vale Verde ("MVV") (together the "Assets") to Sibanye-Stillwater
("Sibanye") for a cash consideration of US$1 billion (the "Transaction") and an
additional 5.0% NSR royalty on production from the Santa Rita underground
expansion.
Appian acquired Atlantic Nickel (previously Mirabela Nickel), owner of
Santa Rita, one of the largest open pit nickel sulphide mines in the world,
located in Bahia, Brazil ("Santa Rita") out of bankruptcy in 2018. The same
year it also purchased MVV, owner of the Serrote greenfield open-pit
copper-gold asset located in Alagoas, Brazil ("Serrote"). The Transaction
reflects the Company's progress in successfully de-risking and improving the
Assets, demonstrating the strength of the Appian model and the Company's
ability to identify, acquire and optimise undervalued mining projects using
technical arbitrage, creating significant value for its investors.
The successful restart of Atlantic Nickel and commissioning of MVV,
combined with support from strong base metals markets, in particular nickel and
copper for electric vehicles and decarbonisation, provides a logical time for
Appian to exit the Assets. The Company considered a range of options, including
listing the Assets, and the Transaction follows a competitive, multi-stage
dual-track process with interest from a large number of groups globally looking
to gain exposure to decarbonisation metals. Sibanye was selected for the
strength of its bid and focus on ESG, based on its alignment with Appian's
values and commitment to continued responsible stewardship of the Assets. The
entire workforce of Atlantic Nickel and MVV, which Appian grew from around 50
to 3,387 employees, will transfer to Sibanye.
Citi and Standard Chartered acted as M&A financial advisors to Appian on
the Transaction, with McCarthy Tetrault as legal advisors and Ernst & Young as
tax advisor, with BMO and RBC acting as financial advisors around Equity
Capital Markets options.
Michael W. Scherb, Founder and CEO of Appian, commented:
"These exits – the fourth and fifth from Appian this year – further
underline the strength of our unique operating model, with our ability to
identify, acquire and develop projects effectively. Sibanye will be a great
custodian for this asset base, and with our ongoing exposure I am confident
that Atlantic Nickel and MVV will continue to deliver long-term value as well
as taking care of its local communities and stakeholders. The transaction also
highlights the strong and growing demand for decarbonisation commodities.
Appian's portfolio is ideally positioned for its next phase of growth with a
major focus on the metals driving the critical global energy transition."
Appian's ongoing exposure to the Assets
Under the terms of the Transaction, the Company will retain significant
exposure to the Assets with a 2.75% royalty on the open pit and a 7.75% royalty
on the underground resources at Atlantic Nickel's producing Santa Rita mine and
exploration properties held by Atlantic Nickel and a 35% stream on gross gold
revenue payable from MVV's Serrote mine and exploration properties.
Appian is considering strategic alternatives for its royalty portfolio.
Appian will also retain the Pereira Velho gold project, which will be spun
out of MVV. Pereira Velho is a highly prospective gold exploration project
located 20km to the east of the Serrote mine, consisting of a 1,500m long
gold-in-soil anomaly and gold mineralization hosted in quartz-sulphide veins.
Exploration activities to date, including an ongoing drill campaign, have
yielded promising results, including trench intercepts of 22m @ 1.05 g/t Au and
74m @ 0.63 g/t Au, as well as visible gold in drill core samples.
Atlantic Nickel acquisition and optimisation
Appian acquired Atlantic Nickel out of a complex bankruptcy process for
US$68 million in 2018, after identifying an opportunity to implement a
differential operating approach to restart the mine at a first quartile cost
position and benefit from over US$1 billion of previously sunk capital.
The Company subsequently carried out major work to improve and optimise
Santa Rita, developing a redefined mine plan with a lower strip ratio and more
selective mining, with a successful restart in January 2020 and subsequent
ramp-up. Appian has de-risked the asset with a defensive operational strategy
and definition of underground extension, driving value creation with a first
quartile cost position (C1 cost of US$2.97/lb Ni payable achieved since restart
compared to the nickel price of US$9.03/lb at announcement date.
The Company has grown the Resources at Santa Rita significantly since 2018
through systematic infill and expansion drilling of the open pit and
underground Resource areas. Since acquisition, Appian has been able to extend
the life of mine by 27 years to 35 years in total, by defining an underground
Resource of 202Mt total MI&I at 0.60% NiS, 0.19% Cu and 0.01% Co plus PGEs+Au.
Since restart, Appian has built out the team at Atlantic Nickel from 40 to
2,527 employees, providing significant local employment and benefits. Over that
time, Atlantic Nickel has produced 156kt of nickel concentrate containing 21kt
of nickel, with 15 shipments of in-spec concentrate, while the asset has
generated gross revenue of US$286 million, with EBITDA of US$118 million.
MVV acquisition and optimisation
The Company acquired MVV from Aura Minerals for a total consideration of
US$40 million in 2018, consisting of a US$30 million cash payment and a US$10
million subordinated vendor loan. Appian identified Serrote as a rare
standalone, construction-ready, copper project with meaningful precious metal
by-product credits that could benefit from Appian's technical arbitrage
strategy.
Appian initiated extensive technical work to optimise Serrote's mine plan
in preparation for construction, resulting in an updated Definitive Feasibility
Study ("DFSU") that maximised the asset's efficiency and economic profile.
Appian's 14-year, 4.1Mtpa mine plan validated the potential for enhanced
returns from a smaller-scale, lower-cost, more efficient operation, with higher
grade and a lower-strip ratio, while still maintaining medium-term expansion
optionality. The initial 50.4Mt Reserve pit is based on a subset of the defined
Resources based on a defensive US$2.70/lb copper price, and further potential
exists to extend the life of mine and copper production from the 112Mt of MI&I
Resources defined.
Appian has unlocked significant value for investors, by bringing Serrote
into production in May 2021 under budget and ahead of schedule, with US$195
million spent versus an initial budget of US$243 million. The operational
development and team growth of 10 to 860 employees, has provided significant
employment and economic development for the local community. The mine is
forecast to operate with a defensive second quartile C1 cost position of
US$1.11/lb Cu payable net of by-products. Construction was fully funded by
Appian alongside a US$140 million project financing facility from Société
Générale, ING and Natixis. Attractive offtake terms were also secured for
Serrote's high-quality copper-gold concentrate, with the first shipment
expected before year-end.
The exploration program at MVV continues to prove out the broader regional
upside potential, identifying additional targets that could be brought into the
Serrote mine plan over the longer-term.
The Appian Way Charitable Foundation's impact on the local Brazilian
communities
Appian's Charitable Foundation has played a key role in enhancing social
and community engagement, and an estimated 37,000 people have directly
benefited from the Foundation's programs over the previous three years. We look
forward to Sibanye continuing a similar approach. For 2021, the AWCF Trustees
approved a combined social and community budget of US$2.25 for Appian's
operations in Brazil. This budget is being used to support social initiatives
in the local communities as well as environmental measures. A substantial part
of the budget is dedicated to the STEAM teacher training initiative that the
AWCF is cooperating on with Educando and UNEAL, two local teacher training
programs.
Outlook and strategic focus
Appian will continue to enhance its unique operating model, and focus on
energy transition commodities used in batteries, electric vehicles, and
renewable power systems, including copper and nickel, with 70% of Fund I and
50% of Fund II (to date) invested into this critical sector, balanced by
investments in precious metals and other commodities.
About Appian Capital Advisory LLP
Appian Capital Advisory LLP is the investment advisor to long-term value
focused private equity funds that invest solely in mining and mining-related
companies.
Appian is a leading investment advisor in the metals and mining industry,
with global experience across South America, North America, Australia and
Africa and a successful track record of supporting companies to achieve their
development targets, with a global operating portfolio overseeing nearly 5,000
employees.
Appian has a global team of over 50 experienced professionals with offices
in London, Toronto, Lima, Belo Horizonte and Sydney.
For more information, please visit www.appiancapitaladvisory.com, or find
us on LinkedIn or Instagram.
For further information:
Finsbury Glover Hering
Charles O'Brien, Richard Crowley, Theo Davies-Lewis
+44 (0)20 7251 3801
AppianCapital-LON@finsbury.com
Appian Capital Advisory
Michael W. Scherb
+44 (0)20 7004 0951
info@appiancapitaladvisory.com
Source: Appian Capital Advisory LLP
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