REG - ACG Acquisition Co. - Acquisition Announcement

ACG MetalsAnnouncement

18/07/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240718:nRSR8476Wa&default-theme=true

RNS Number : 8476W  ACG Acquisition Company Limited  18 July 2024

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 REGULATION")

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA
OR ANY OTHER JURISDICTION IN VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION

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 (http://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 (http://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 (http://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.

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQSFAEEWELSEEW