Appian sells Brazilian companies, Atlantic Nickel and Mineração Vale Verde, to Sibanye-Stillwater for US$1.0 billion and additional royalty

Appian Capital Advisory LLP

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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