THIS
ANNOUNCEMENT CONTAINS INFORMATION THAT QUALIFIES OR MAY HAVE
QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7 OF
THE MARKET ABUSE REGULATION (EU NO. 596/2014), AS IT FORMS PART OF
THE UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION
(WITHDRAWAL) ACT 2018, AS AMENDED (THE "UK MARKET ABUSE
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THIS
ANNOUNCEMENT IS NOT INTENDED TO CONSTITUTE, AND SHOULD NOT BE
CONSTRUED AS, AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO
BUY THE SECURITIES OF THE COMPANY (AS DEFINED BELOW) IN ANY
JURISDICTION
18 July
2024
ACG
Acquisition Company Limited
("ACG" or the "Company")
·
Acquisition of
the Gediktepe Mine ("Gediktepe") in Türkiye from Lidya Madencilik
Sanayi ve Ticaret Anonim Şirketi ("Lidya"), a subsidiary of
Istanbul-based conglomerate Çalık Holding, positioning the Company
as a leading London-listed copper miner.
·
Gediktepe is a polymetallic
mining operation, currently producing gold and silver with robust
cash flows from an existing oxide operation. Copper and zinc
production to commence in 2026 following a fully funded $145
million sulphide expansion project.
·
The $290 million transaction
includes a $100 million cash consideration and the issuance of
approximately $37 million equity in ACG to Lidya, representing 30%
of the Company.
·
The acquisition and capex
are fully funded based on commitments and term sheets received by
ACG as of today.
·
The Company may consider
raising additional equity from institutional investors, to broaden
its shareholder base and optimise its capital
structure.
·
The sulphide expansion
project will be fully permitted and financed upon transaction
completion, ensuring a seamless transition from oxide to sulphide
ore production. The expansion project targets annual production of
up to 25 kt copper equivalent over an 11-year initial mine
life with an all-in sustaining costs of $2.49/lb copper
equivalent.
·
The acquisition marks the
start of an ongoing strategic partnership with Çalık Holding. Çalık
Holding's construction subsidiary, Gap İnşaat Yatırım
ve Dış Ticaret Anonim Şirketi ("GAP iNSAAT"), will undertake the
construction works for the sulphide expansion project under a
turn-key fixed-price engineering, procurement, and construction
("EPC") contract.
·
This transaction establishes
ACG as a leading copper miner on the London Stock Exchange at a
time of rising demand for copper, a metal central to the long-term
energy transition.
·
The transaction marks the
beginning of ACG's global copper consolidation strategy. The
Company is actively engaged in discussions with several further
targets.
ACG today announces that it has agreed to the
$290 million transaction (the "Transaction") with Lidya, a subsidiary
of Istanbul-based conglomerate Çalık Holding, for the acquisition
(the "Acquisition") of 100%
of the shares in Polimetal Madencilik Sanayi ve Ticaret A.Ş. (the
"Target") and associated
sulphide expansion project financing. Polimetal holds mining rights
and operates the Gediktepe
mine in Türkiye.
As of today, ACG has received commitments and
term sheets providing 100% of the required funding for the upfront
transaction consideration and sulphide expansion project capex.
This includes, among other sources of financing, senior debt and
equity of $135 million from a leading global mining private equity
fund, mezzanine debt and equity of up to $25 million from Traxys
Europe SA, and additional equity of $60.0 million from a group of
investors led by ACG's co-sponsors and a leading European family
office.
Lidya will also become ACG's strategic
industrial partner acquiring a 30% shareholding in ACG upon
completion, along with the right to appoint a director to ACG's
Board.
The Gediktepe Mine is an operating open pit
mine located in the Bigadiç district of the Balıkesir province of
Western Türkiye. Currently producing gold and silver from oxide
ore, Gediktepe is expected to transition to primary copper and zinc
production from 2026 following the completion of a fully permitted
sulphide expansion project. The expansion will target annual
steady-state copper equivalent production of up to 25 kt of copper
equivalent over an initial 11-year mine life ("LOM").
On completion of the transaction, ACG will
enter into a fixed price turn-key $145 million EPC contract with
Çalık Holding subsidiary GAP iNSAAT, who will be responsible for
delivering the sulphide expansion project on time and will cover
any capex overruns under the agreed terms. ACG is also forming a
long-term strategic partnership with GAP iNSAAT, whereby it will
have the opportunity to submit tenders for capital expenditure and
operational contracts.
Upon completion of this transaction, the
Company will be renamed ACG
Metals and the Company and the Target will
constitute a new group (the "Enlarged Group"). ACG Metals
will offer investors exposure to the expected increased long-term
demand for copper, supported by high-calibre management and
governance, in a London-listed company with a vision for continued
growth and consolidation of copper mines globally.
Artem
Volynets, Chairman and CEO of ACG, stated:
We are very
proud to announce the acquisition of the Gediktepe mine, an
existing gold and silver success story with a bright future in
copper. This transaction is a testament to ACG's commitment to
growth and our pursuit of operational excellence.
It is a
privilege for us to establish a strategic partnership with Lidya,
who share our vision for long-term development in the mining
industry and understand the significance of copper in today's
world.
This
transaction will inaugurate ACG Metals as a premier copper producer
on the London Stock Exchange. The Gediktepe mine offers us an ideal
foundation for further consolidation of copper assets globally as
the metal enjoys a sustained increase in demand.
Transaction
Highlights:
· Gediktepe is
intended to be the first asset in a wider copper consolidation
strategy which ACG will execute.
· The total
transaction value of the Gediktepe acquisition and financing of the
sulphide expansion project is approximately $290
million.
· The $290 million
transaction value consists of:
· A cash payment of
$100 million to Lidya at closing;
· A 30%
shareholding in ACG to Lidya upon completion of the transaction,
valued at approximately $37 million;
· Funding of the
$145 million sulphide expansion project;
· Transaction costs
and working capital of approximately $8 million.
· The $290 million
transaction value will be funded by:
· The issuance of
30% of ACG shares to Lidya, valued at approximately $37
million;
· $67.5 million in
equity investments;
· $40 million in
gold prepayments;
· $110 million of
senior debt;
· $22.5 million of
mezzanine debt;
· $13 million of
cash flows from the existing oxide operation.
· 100% of the
required transaction funding has already been agreed in principle
and is subject to final documentation.
· The equity
investors have agreed to subscribe for new ordinary shares at a
price of US$6.00 each in the capital of the Company, and will
receive one new redeemable warrant for each new ordinary share
purchased.
· ACG is in
advanced discussions with a number of high-quality institutional
investors and may consider implementing an additional equity
placement before completion to broaden its shareholder base and
optimise its capital structure. Stifel Nicolaus Europe Limited is
advising on the potential equity placement.
· Transaction terms
also include contingent payments starting from 12 months
post-commercial production being achieved at the sulphide expansion
project. The payments are contingent on significant increases in
copper prices and copper reserve expansions, with an aggregate cap
of $100 million starting from 2027 should the relevant thresholds
be met.
· The closing of
the Transaction is subject to the satisfaction or waiver of
customary closing conditions, including the approval of the
Acquisition by a general meeting of ACG's shareholders, antitrust
and mining permit clearances in Türkiye, and the re-admission of
all the class A ordinary shares and the warrants of the Enlarged
Group to listing, effective as of the closing date of the
Transaction.
· The
Board of Directors of ACG ("the Board") has unanimously approved
the Transaction and the Board intends to recommend that
ACG's existing
public shareholders vote in favour of the Transaction.
· Having commenced
production in 2021, the Gediktepe mine presents a compelling
investment case, secured at a very competitive transaction price.
Its financial appeal is bolstered by the after-tax NPV10% $318
million of the sulphide expansion project (using analyst consensus
commodity price forecasts).
· Over $90 million
has already been invested in the Gediktepe mine by Lidya to
date.
· In 2023, the
Gediktepe mine produced 34 koz of gold and 361 koz of silver from
the existing oxide operation. The Gediktepe production is expected
to grow substantially with the addition of copper and zinc
production from the sulphide expansion project. Development plans,
which have secured the critical permits and licences, target annual
steady-state copper equivalent production of 20-25 kt over an
initial 11-year mine life.
· While gold and
silver production from the oxide operation is expected to conclude
by 2026, ACG sees numerous opportunities to extend the oxide
operation LOM as well. In additional, gold and silver will continue
to be produced from the sulphide expansion.
· Healthy cash
flows for the existing operation will serve to bolster cash
reserves available for sulphide expansion, with ACG assuming that
approximately $13 million of cash flow from the oxide operation
will be used to fund sulphide expansion costs. Current gold and
silver prices suggest potential for cash generation of several
times this amount, and the possibility of an earlier reduction of
commitments.
· The Gediktepe
mine already benefits from a high performing in-country operating
team, with deep project management and engineering experience. The
team is committed to the continuous ongoing management of Gediktepe
under ACG ownership and is fully aligned with ACG's broader growth
strategy.
· The Gediktepe
mine possesses attractive near-mine exploration potential, in both
the oxide (gold and silver) and sulphide (copper, zinc, gold and
silver) portions of the deposit. It lies within the Tethyan
Metallogenic Belt, which stretches across Eurasia, and which
remains under-explored using modern geophysics and geochemistry, in
particular for copper. The region offers several further
exploration opportunities for ACG to consider, with Lidya as a
partner.
· The Gediktepe
mine enjoys access to well-established infrastructure and
logistics, including highways, ports, and airports, simplifying the
transportation of minerals to European and global
refineries.
· Under Lidya's
prudent management, the Gediktepe mine already has strong ESG
credentials. Having provided substantial community investment, the
operation has demonstrated its commitment to sustainable practices.
ACG intends to further this legacy, reducing carbon emissions and
aligning the business's ESG reporting to global
standards.
Next Steps
Following approval by the Financial
Conduct Authority ("FCA")
of a prospectus containing further details regarding the
Acquisition, ACG intends to convene a general meeting of its public
shareholders for purposes of considering the Acquisition (the
"Acquisition
EGM").
When doing so, ACG will publish on
its website the notice convening the Acquisition EGM, the
shareholder circular and any other related documents.
The Acquisition will constitute a
reverse takeover, as defined in the new UK Listing Rules
("UKLR") as published by
the FCA on 11 July 2024 (due to come into force on 29 July 2024).
The Company has adopted, and maintains as of the date hereof, a
structure in compliance with Chapter 5.6.18AG of the current FCA
Listing Rules, as set out in the prospectus published by ACG in
connection with its IPO. Effective as of the closing of the
Acquisition, the existing listing of ACG's class A ordinary shares and
warrants is expected to be cancelled and ACG will apply for all of
the class A ordinary shares of the Enlarged Group to be re-admitted
to listing in the Equity Shares (transition) category of the
Official List and for all of the warrants of the Enlarged Group to
be re-admitted to the Warrants, Options and Other Miscellaneous
Securities category of the Official List, in each case as provided
in the UKLR.
As announced on 28 June 2024, ACG has provided
class A ordinary shareholders with the right to redeem all or a
portion of their class A ordinary shares as described and on the
terms set forth in such announcement. ACG notes that the
corresponding redemption period is ongoing and expects to extend
this redemption period such that class A ordinary shareholders have
an opportunity to consider their decision to submit redemption
elections in light of the Acquisition and
will provide a further update in due course.
The acquisition has a long stop date
of 31 August 2024 and the acquisition is expected to be completed
before such date. If the Acquisition has not been completed by the
long stop date, either party may terminate the Acquisition
agreement.
All dates are indicative and subject to
change.
ADDITIONAL INFORMATION
For further information on the
Acquisition, please consult the acquisition presentation slide deck
available at www.acgcorp.co
in the section headed "Acquisition Documents and
Announcements".
The description of the transactions
contained herein is only a high-level summary. Additional
information about the transactions will be provided in the
prospectus and the shareholder circular, which will be published in
due course. The competent person's report relating to the
Gediktepe Mine will also be published at the
same time as the prospectus and shareholder circular and will be
made available on www.acgcorp.co
in the section headed "Acquisition Documents and
Announcements".
The prospectus and the shareholder
circular will include information required by applicable law,
including information that has not been included in this
announcement, in particular: further details on the terms and
timing of the proposed transaction, including the expected dilution
effect on public shareholders from securities held by
ACG's directors and
co-sponsors, or from new securities issued or expected to be issued
as part of the transaction, further information relating to how the
Target have been valued by ACG and any other material details and
information relating to the Acquisition.
All $ amounts are US
dollars.
About
ACG
ACG is a special purpose acquisition company
with a vision to consolidate the critical metals industry, starting
with the copper sector. Through a series of roll-up acquisitions,
ACG intends to become a premier supplier of copper and other
critical metals to the western OEM supply chain, with best-in-class
ESG and carbon footprint characteristics. On October 12, 2022, ACG
successfully raised proceeds of approximately $125 million in its
initial public offering ("IPO"), and listed on the London Stock
Exchange (symbols: ACG and ACGW). On 27 June 2024, ACG extended the
deadline by which it is required to complete an acquisition from 30
June 2024 to 12 October 2024.
For further information please visit: www.acgcorp.co
About Çalık
Holding:
Çalık Holding, a Turkish conglomerate with a
history of over 40 years, operates across multiple sectors
including energy, construction, mining, textiles, and finance.
Çalık Holding employs around 15,000 people and has a presence in
more than 30 countries. In the mining sector, Çalık Holding has
been active for over 20 years, holding stakes in two operating
mines and various development and exploration projects. GAP
İNŞAAT, construction subsidiary of
Çalık Holding has also completed around 150 projects, representing
$8.5 billion in value. Lidya is a subsidiary of Çalık Holding and
holds 100% of the shares in the Target which, in turn, holds a 100%
interest in the Gediktepe Mine.
Contacts for
ACG
Palatine Communications - Communications Advisor
Conal Walsh / Andreas Grueter / Richard
Seed
acg@palatine-media.com
Stifel Nicolaus Europe Limited - Capital Markets Advisor
Varun Talwar / Ashton Clanfield / Gregory
Rodwell
snelibACGMetals@stifel.com
+44(0) 20 7710 7600
Advisors
Stifel Nicolaus Europe Limited is acting as
capital markets advisor to ACG. Maxit Capital LP is acting as
financial advisor to ACG. Cleary Gottlieb Steen & Hamilton LLP
and Paksoy Ortak Avukat Bürosu are acting as legal advisors to ACG.
Hatch Ltd is acting as technical, environmental and social advisor
to ACG. AMC Consultants is acting as competent person. Davis Polk
& Wardwell London LLP is acting as legal advisor to Stifel
Nicolaus Europe Limited.
Forward-looking
statements
Some of the information in these materials may
contain projections or other forward-looking statements regarding
future events or the future financial performance of the Company.
You can identify forward looking statements by terms such as
"expect", "believe", "anticipate", "estimate", "intend", "will",
"could", "may" or "might" the negative of such terms or other
similar expressions. The Company wishes to caution you that these
statements are only predictions and that actual events or results
may and often do differ materially. The Company does not intend to
update these statements to reflect events and circumstances
occurring after the date hereof or to reflect the occurrence of
unanticipated events. Any forward-looking statements reflect the
Company's current view with respect to future events and many
factors could cause the actual results to differ materially from
those contained in projections or forward-looking statements of the
Company, including, among others, ACG's ability to obtain adequate
information to evaluate the target asset, ACG's ability to
successfully or timely complete the contemplated acquisition, ACG's
expectations around the performance of the target asset, ACG's
potential ability to obtain additional financing to complete the
contemplated acquisition and the financial performance of the
Enlarged Group that would result from the potential completion of
the contemplated acquisition. Forward-looking statements speak only
as of the date they are made.
Inside
information
This announcement contains inside information
for the purposes of the market abuse regulation (EU No. 596/2014),
as it forms part of United Kingdom domestic law by virtue of the
European Union (Withdrawal) Act 2018, as amended.
Important
notices
This announcement or any part of it does not
constitute or form part of any offer to issue or sell, or the
solicitation of an offer to acquire, purchase, subscribe for, any
securities in the United States, Australia, Canada, Japan, South
Africa or in any jurisdiction in which such offer or solicitation
is unlawful.
This announcement is not for publication or
distribution, directly or indirectly, in or into the United States
of America. This announcement is not an offer of securities for
sale into the United States. The securities of the Company have not
or will not be registered under the U.S. Securities Act of 1933, as
amended, and may not be offered or sold in the United States,
except pursuant to an applicable exemption from
registration.
None of Stifel Nicolaus Europe Limited or any
of its affiliates or any of its or its affiliates' directors,
officers, employees, advisers or agents accepts any responsibility
or liability whatsoever for/or makes any representation or
warranty, express or implied, as to the truth, accuracy or
completeness of the information in this announcement (or whether
any information has been omitted from the announcement) or any
other information relating to the Company, Lydia, the Target or the
Enlarged Group, whether written, oral or in a visual or electronic
form, and howsoever transmitted or made available or for any loss
howsoever arising from any use of the announcement or its contents
or otherwise arising in connection therewith. Accordingly, each of
Stifel Nicolaus Europe Limited and any of its or its affiliates'
directors, officers, employees, advisers or agents expressly
disclaims, to the fullest extent possible, any and all liability
whatsoever for any loss howsoever arising from, or in reliance
upon, the whole or any part of the contents of this announcement,
whether in tort, contract or otherwise which they might otherwise
have in respect of this announcement or its contents or otherwise
arising in connection therewith.