Sandfire to buy giant Spanish copper complex for US$1.9B

Australian mid-cap miner Sandfire Resources (ASX: MTR) is buying the Minas De Aguas Teñidas (MATSA) mining complex in Spain for about US$1.9 billion, as it seeks to become a large copper-focused producer. 

The company went into a trading halt on Thursday morning while Macquarie Capital and Citi went about securing investor support to raise A$1.2 billion (about US$910 million) to partially fund the transaction. 

The acquisition of MATSA, which was owned by Trafigura and Abu Dhabi’s Mubadala, was put up for sale earlier this year.  

The copper mining complex in southern Spain began operations in 2009 and comprises three underground mines that also produce zinc and lead concentrate. They all feed into a 4.7 million tonne-per-year central processing facility. 

Once Sandfire combines MATSA with its own DeGrussa operation, the business could produce up to 194,000 tonnes of copper-equivalent in fiscal year 2022. 

The mines are in southwestern Spain’s Huelva province. The area, just north of the Iberian Pyrite Belt, is about 250 km long. Evidence of mining activity there dates from the Copper Age, around 4,500 years ago. 

Copper prices have climbed this year, hitting a record high above US$10,000 a tonne in February as a global shift towards a greener economy has increased demand for the metal. 

“Base metal assets which offer this combination of scale, grade, mine life and exploration upside are extremely rare globally,” Sandfire CEO Karl Simich said in a press release. 

Sandfire is funding the deal through a combination of a US$650 million syndicated and underwritten debt facility, an equity raising, and by using existing cash reserves and a corporate debt facility, it said in the statement. 

The company, which is targeting completion in the first quarter of 2022, needs foreign direct investment approval from the Spanish government and must clear other regulatory hurdles.