First Royalty Income Expected From Chile Copper Mine in Chile
Altus Strategies Plc (AIM: ALS, TSXV: ALTS, OTCQX: ALTUF) is expected to receive its first royalty income payment this month, from its effective 0.418% net smelter return royalty (NSR) interest on the Caserones copper mine in Chile.
The royalty receivable is projected to be in excess of US$1 million (before tax) for the quarter ending 30 June 2021. Due to strong copper prices during the period, it is believed this may represent the highest quarterly royalty payment from Caserones since production commenced in 2015.
Highlights:
- First quarterly royalty income payment of over US$1M (pre-tax) expected this month
- Payment of 0.418% NSR royalty in respect of Q2 at Caserones copper mine in Chile
- Altus’ interest in Caserones NSR was acquired in August 2021 for US$34.1 million
- Mine in operation since 2015 with an estimated 17 years of production remaining
- Additional royalty transactions under review globally with a focus on gold and copper
“Having only recently closed the acquisition of the NSR on the Caserones copper mine in Chile, we are delighted to already be advising shareholders that the first royalty payment is expected imminently,” Chief Executive, Steven Poulton, said.
“ The payment will relate to the receivable royalty for the second quarter of 2021 and, being our first royalty income, will represent a landmark event for Altus. Given strong copper prices during the period, the royalty is expected to be the highest on record, since production commenced at Caserones in 2015.
“We expect demand for copper to remain strong in the years ahead, as the global economy seeks to decarbonise in parallel with continued infrastructure development, urbanisation and wealth creation in emerging markets.
“Altus is currently assessing a number of other potential royalty acquisitions globally and I look forward to updating shareholders on these activities and the receipt of the Caserones royalty income in due course.”
Altus acquired the Caserones NSR interest in August 2021 for US$34.1 million through a strategic 50:50 p
artnership with NYSE American and TSX Venture exchanges-listed EMX Royalty Corporation (EMX). Altus and EMX created a Special Purpose Vehicle (SPV), incorporated in Chile, that is owned jointly by Altus and EMX.
The SPV acquired an effective 0.836% NSR royalty interest for US$68.2 million (attributable as 0.418% to Altus and 0.418% to EMX), by purchasing 43% of the issued and outstanding shares of Sociedad Legal Minera California Una de la Sierra Peña Negra (“LM California). SLM California holds a 1.944% NSR royalty on Caserones.
Altus principally financed the acquisition with a US$29 million acquisition loan facility agreement provided by its largest shareholder La Mancha Fund SCSp.
Altus expects the Caserones NSR will provide it with long-term cash flows, in line with its stated growth strategy.
The Caserones mine is a large, open-pit porphyry copper-molybdenum deposit, located within a 17,000 hectare land package at an elevation of approximately 4,300m above sea level in the borough of Tierra Amarilla, in the Atacama region of northern Chile. The mine is approximately 15km from the border with Argentina, 162km southeast of the city of Copiapó and 800km north of the capital, Santiago.
Located at the southern end of the well documented Maricunga mineral belt, the geology of Caserones comprises an Early-Miocene porphyry system associated with a cluster of dacite porphyries and breccias intruding Palaeozoic granitic, volcanic, and metamorphic rocks. Caserones has a well-developed supergene enrichment profile of oxide copper and secondary chalcocite that overlies hypogene sulfide (chalcopyrite-molybdenite) mineralisation.
The mine is owned and operated by Minera Lumina Copper Chile SpA, an indirect 100% owned subsidiary of JX Nippon Mining & Metals Corporation of Japan. It produces copper and molybdenum concentrates from a conventional crusher, mill and flotation plant, as well as copper cathodes from a dump leach, solvent extraction and electrowinning plant.
The mine has been in operation for five years, following a capital investment of approximately US$4.2 billion. It has a reported average waste to ore strip ratio of 0.47, and in 2020, reportedly produced 104,917 tonnes of copper and 2,452 tonnes of fine molybdenum in concentrates, as well as 22,056 tonnes of fine copper in cathodes.
Caserones has an estimated 17 years of operation remaining under its current mine plan, along with excellent exploration potential. In a news release dated 9 November 2020, JX Nippon announced plans for “stepping up exploration efforts in areas around the mine” in an effort to expand production and further extend the mine life.
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