Canadian mining company Rio2 is acquiring a 99.1pc interest in the Condestable underground mine in Peru, expanding the firm's metals portfolio beyond gold. The acquisition will give Rio2 immediate cash flows and exposure to a metal that has traded at record highs on the London Metal Exchange this week.
Rio2 will pay $217mn to Peruvian company Southern Peaks Mining in a staged consideration, with the structure including $80mn cash, $65mn in vendor debt, $35mn in equity and a $37mn deferred payment due in 2027-30. Rio2 has lined up a $120mn equity raise to support the transaction, after upsizing on investor demand, it said.
Condestable is 90km south of Lima and has a 8,400 t/d plant that produces a clean concentrate with no processing penalties. Output is forecast at 27,000 t/yr of copper equivalent, with average earnings of $110mn at consensus pricing or $145mn at spot, over the next five years. The operation runs on 100pc renewable hydropower.
Rio2 projects its pro-forma annual earnings before interest, tax, depreciation and amortisation will reach $330mn once its Fenix gold mine in Chile begins commercial production.
Peru is the world's third largest copper producer. The Condestable mine complements Rio2's current Chilean footprint and returns the company to a familiar jurisdiction. It previously built and sold gold mining company Rio Alto Mining in Peru. Rio2 expects the transaction to lead to around 30pc copper revenue exposure in the near term. Closing is subject to customary approvals.
