EQ Resources (ASX:EQR) is set to become one of the world’s largest tungsten concentrate producers after signing a deal to acquire the Barruecopardo mine in Spain’s Salamanca province.
EQ Resources has agreed to acquire Saloro from Tungsten Mining JV SLU — a portfolio company of fund manager Oaktree Capital Management — for a ‘nominal consideration’ of €1 (A$1.68).
It also acquired “the benefit of all of the intercompany loans owed by Saloro to the Oaktree group” — totalling about €80 million (A$134.3 million) — for €1.
The completion of the transaction remains subject to a number of conditions, including the approval of foreign direct investment agencies in Australia and Spain, but is expected to occur 15 business days after the last condition is either satisfied or waived.
As part of the agreement, Oaktree will also subscribe for 278 million new shares in EQ Resources at $0.09 each, representing a 30% premium to the company’s 15-day volume-weighted average share price and valuing the overall investment at $25 million. Once complete, Oaktree will hold a 15.85% stake in EQ Resources and will be issued 78 million options exercisable at $0.10 per share within two years.
It also acquired ‘the benefit of all of the intercompany loans owed by Saloro to the Oaktree group’ — totalling about €80 million (A$134.3 million) — for €1
The $25 million package will be split evenly between the repayment of debt under Saloro’s bank facilities, expenses at Barruecopardo, and working capital. Saloro’s outstanding debts currently total roughly €35 million (A$58.76 million) to various Spanish banks.
Located in the western part of the country, near the border with Portugal, Barruecopardo’s mining history dates back almost 100 years. Activities ground to a halt in the early 1980s, but after 10 years of preparation — including 15 months of construction — the mine was brought back online in 2019 by its current owner, Saloro SLA.
In December 2011, a mineral resource estimate for Barruecopardo was prepared by CSA Global as part of a Definitive Feasibility Study prior to the restart of operations. Released in February 2012, it measured 27.39 million tonnes at 0.26% tungsten oxide, representing 7.26 million tonnes of contained tungsten oxide.
In an announcement to investors, EQ Resources says the acquisition aligns with its strategy to become “a substantial and globally leading supplier of sustainably produced critical minerals”.
The company said both Barruecopardo and its existing Mt Carbine open-pit operation in northern Queensland have been de-risked in recent years and are expected to generate a variety of cost-savings and operational synergies.
“This is without doubt an outstanding development and a transformational acquisition for EQR that delivers a huge value opportunity for shareholders,” EQ Resources CEO Kevin MacNeill says.
“This is without doubt an outstanding development and a transformational acquisition for EQR that delivers a huge value opportunity for shareholders”
“Our technical and geology teams assessed this opportunity in the recent months, and with the installation of their first Tomra XRT sorter, we can provide technical assistance to our new colleagues at Saloro to immediately optimise production.”
“We are excited to have selected EQR as partner to acquire Saloro,” Oaktree Managing Director Federico Alvarez-Demalde adds.
“EQR is a remarkable partner that shares our operational excellence and ESG values, committed to responsible and sustainable practices. This partnership reinforces our conviction about the incredible opportunity presented in the tungsten supply space, and the need to secure sustainable and ESG-focused critical metals supply chains.”
Write to Oliver Gray at Mining.com.au
Images: EQ Resources Ltd
