With its acquisition of the CSA copper mine in NSW, Metals Acquisition Limited has stamped its presence on the Australian mining scene.
Metals Acquisition Limited established itself with the core objective of acquiring and developing mines.
Listed on the New York Stock Exchange, the company had a global scope, with a desire to buy a mine in a Tier 1 jurisdiction that would produce minerals to support the renewable energy transition. This led Metals Acquisition to Glencore’s CSA copper mine near Cobar in New South Wales, which the company acquired in mid-June.
Australian Mining sat down with Metals Acquisition chief executive officer Mick McMullen to chat about what inspired the CSA acquisition and where to next for the operation.
What’s the background on Metals Acquisition Limited?
We set up Metals Acquisition a couple of years ago and we wanted a big solid vehicle listed on the biggest, most liquid stock exchange in the world: New York.
We could have bought an asset anywhere, so we looked at a lot of assets in the Americas and we ended up buying an asset in Australia.
Therefore, we will be listing the company on the ASX because Australian investors like to have assets in Australia, listed in Australia.
What type of mine was the company looking for?
The beauty of a SPAC (special purpose acquisition company) is you can literally do anything, so we said we’d ideally look for a decarbonisation-thematic metal.
Copper, lithium, nickel, we looked at some gold assets, we looked at some tantalum, which is an adjacency to lithium. We looked at about 80 assets, narrowed it down to about a dozen which we did detailed due diligence on. We had four or five that we then did quite a lot of negotiating on, and then we ended up with CSA as being the one.
If you look at our background, I’d spent most of my career overseas. I spent a decade in North America, doing turnarounds on much larger businesses and, you know, we like turnaround stories.
We also said we wanted to go where we knew the ropes, where we didn’t have to learn from scratch. I’m from Coonamble (NSW) and I built Tritton (the Tritton mine owned by Aeris Resources) 20 years ago in western New South Wales. Various members of our corporate team have also worked at Northparkes (copper-gold mine near Parkes) or Aurelia (Metals) or other assets in western New South Wales.
So we bought CSA, which is certainly not the most productive mine in Australia, but it is high-grade. And that’s what we do – we’re turnaround specialists. We fix the cost base and get more out of the existing infrastructure.
We didn’t want to do a development asset in the current cost environment. We wanted to take an existing mine where the capital has been sunk and capitalise on that.
What about the CSA mine appealed to Metals Acquisition?
We see a lot of excess capacity in the infrastructure at CSA, so the processing plant will do significantly more than what the current throughput is, because it’s mine constrained.
You look for assets where you’ve got a lot of excess utilisation ability. We’ve got a phenomenal orebody and then the difference is work practices, and we can change work practices relatively cheaply.
When I ran Stillwater (Mining Company) in the US, no one’s ever heard of the mine, but it’s about five CSAs stitched together, with a smelter as well. It was the biggest company in the state of Montana, but appalling productivity. I fixed the productivity, got the cost down, got production up. That’s what that exercise was.
What are your production targets at CSA?
We think about 50,000 tonnes of copper is doable in 2024. That’s the official plan but, ultimately, we think it should do about 55,000 tonnes of copper (per year).
I’ve been using a Back to the Future anecdote: ‘This is what you did in 2017. I’m not asking or promising that this mine is going to do double the best it’s ever done. We’ve just got to get back to where we were in 2017’.
You’ve got to set realistic targets for people, otherwise if you say, ‘I want to do double the best it’s ever done’, no one will believe that.
But if we say, ‘This is what you did in 2017, we want to get back to that’, and unwind some of the poor mining decisions that were made, I think we can get back to that level, but it’s probably 12 to 18 months before we get there.
Is Metals Acquisition on the lookout for any other mines?
We’re pretty busy. We had a list of assets that we looked at, so there’s a few others on that list that we could prioritise first. There are clearly some other assets in the Cobar Basin that could probably do with consolidation, but they’re a bit small.
Northparkes; it’s not inside information, it’s in the newspaper. There’s sort of an (M&A) process being run, not an official process, but there’s a process. Clearly any copper asset in that part of the world is on our list. It remains to be seen where we get to on that one.
Glencore has some other assets that they may or may not want to keep. Then because our team’s split between North America and Australia, and I’ve spent a decade in North America, there’s a few assets in Canada as well that are on our list.
The last thing (Metals Acquisition chair) Nev Power ran was Fortescue. The last thing I ran was double the size of the Super Pit. And our big anchor (equity) investors, there’s six big funds, and one of them gave us $US50 million, another one $US45 million. They are backing us to recreate an OZ Minerals-style business because there’s a huge gap in the market.
So Metals Acquisition is unlikely to be a single-asset company?
Yeah, it’s definitely going to be bigger than that and, look, the timing of these things is not always ideal. Sometimes people kick off a process even though it’s not ideal timing for you, but, you know, decent copper assets in Australia or Canada, for argument’s sake, they don’t come to market very often.
CSA hasn’t been in the public domain for 25 years, and the kind of drill results we’ll be announcing very shortly definitely haven’t been seen in the public domain for a long time.
The cut-off grade has been two-and-a-half per cent, so anything under two-and-a-half per cent isn’t even in the resource. Most of our drill results are plus-five per cent and often plus 10 or 20 per cent copper, and I don’t think the market’s seen those kind of drill results since Sandfire (Resources) discovered DeGrussa (copper mine in WA).
Not only from a risk profile point of view and in investment, but you want to be able to offer ability to grow through the organisation. If you’re a single-asset company, you struggle in your ability to attract and retain talent.
If you can show that progression, the growth and the ability to grow with the company, I think we attract a higher level of candidate as well.
This feature appeared in the August edition of Australian Mining.