By Business Reporter
GLOBAL diversified mining company Glencore has finalised the sale of its 80 percent stake in the Rosh Pinah mine, and its 39 percent interest in the Gergarub project, both in Namibia, as well as its 90 percent stake in the Perkoa mine in Burkina Faso, to zinc-focused base metals miner Trevali Mining Corporation, for a total consideration of US$417.8 million.
Glencore’s sale of its portfolio of zinc assets included a cash payment of US$245 million and shares in Canada-based Trevali worth US$172.6 million, which has increased Glencore’s share in Trevali from 4.3 percent to 21.3 percent.
The sale also included an option to acquire a 100 percent interest in the Canada-based Heath Steele project, including related exploration properties and assets.
“We are very pleased to finalise our acquisition of the Rosh Pinah and Perkoa zinc mines, which marks a truly transformational event for Trevali shareholders, by establishing the company as a multi-asset, top-ten global zinc producer,” said Trevali President and Chief Executive Officer, Dr Mark Cruise.
“These assets complement our successful Santander and Caribou mines and provide a significant upside to shareholders in this strengthening macro zinc environment, through scale of production, as well as an attractive package of exploration ground,” he added. All of the deposits remain open for expansion and active resource expansion programmes are in progress. Trevali also welcomed Glencore as a key strategic shareholder, which expands on the strong, proven business relationship they have enjoyed since 2010, at Trevali’s Santander operation.
Glencore’s decision to sell the assets was made in the context of its overall investment purposes.
“Glencore will continue to review its investment alternatives from time to time and may determine to increase or decrease its equity ownership in Trevali, through the acquisition or sale of additional outstanding common shares or other securities of Trevali, either through open market or privately negotiated transactions, in accordance with applicable securities laws,” the mining company stated last Thursday.
Meanwhile, following completion of the transaction, Trevali’s board of directors has been expanded to eight members, with Glencore having the right to nominate two directors.
Trevali has implemented a succession plan and board renewal process, and Glencore has the right to nominate its independent directors within 90 days, following completion of the transaction. Glencore intends to exercise this additional nomination right, in accordance with the terms of an investor rights agreement entered into between Glencore and Trevali at the closing of the transaction.
In addition, Trevali used US$40 million to repay its 12.5 percent senior secured notes, due on 30 May 2019, in full.
With the closing of the transaction, the Canadian zinc miner has added additional high-quality zinc production to its existing portfolio, and has expanded its asset and geographic diversification, taking it to global top-ten zinc producer status, with one of the highest zinc leverage ratios, as a percentage of revenue.
Trevali’s transaction with Glencore more than doubles its production from the Caribou and Santander mines, to about 410 million payable pounds of yearly zinc output.
-Additional reporting by Mining Weekly
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