Capstone Copper has announced that fund entities managed by Orion Resource Partners have reached an agreement to purchase a 25% ownership stake in both the Santo Domingo project and the Sierra Norte project in Chile.
The total cash consideration for this acquisition amounts to around $360m.
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Under the agreement, Orion will pay $225m upon a positive final investment decision (FID) at Santo Domingo, with an additional $75m to follow within six months.
Contingent payments of up to $60m will be linked to specific project milestones.
At the same time, Orion will invest $10m in new Capstone shares, purchasing them at a 5% premium over the recent volume-weighted average price.
This investment will offer immediate financial backing for new exploration activities at both projects.
Capstone president and CEO Cashel Meagher said: “Santo Domingo represents the next pillar of transformational growth in the world-class district we are building in the Atacama region of Chile.
“Backed by industry-competitive capital intensity and first quartile cash costs, Santo Domingo is key to continuing our growth trajectory and leadership in the critical minerals industry, led by long-life, low-cost, responsible and safe production. Our same team that successfully built and ramped-up Mantoverde will support construction and ramp-up of Santo Domingo, which is 35km away from Mantoverde.
“The transaction provides further support for the significant value we are eager to unlock in the Mantoverde-Santo Domingo district. As substantial equity holders in Capstone over the past few years, Orion has been extremely supportive of Capstone and our management team. We look forward to continuing to build on our long-standing relationship and realising substantial value at Santo Domingo.”
The agreement lowers Capstone’s equity investment in the Santo Domingo project to approximately $400m (C$561.7m), based on proportional contributions and project financing.
Capstone, which is based in Vancouver, Canada, holds a buy-back option that enables it to regain complete ownership of Santo Domingo after achieving commercial production, with conditions that guarantee Orion a specified return.
Orion Resource Partners chief investment officer Istvan Zollei commented: “Orion looks forward to building on our existing relationship with the Capstone team through this partnership. As proven mine builders and operators with a strong local presence and social licence, we are confident in Capstone’s ability to build and operate Santo Domingo as a high-quality, diversified copper operation, producing the metals the world needs for the clean energy transition.”
Upon closing, Orion’s ownership in Capstone will rise from 11.9% to 12% due to the share subscription.
In August, Capstone announced that it has sanctioned the Mantoverde Optimised project in Chile for construction.
