CALM enters Macedonia for $402.5 million

David McHutchon | September 22, 2017 | Views: 1111

Central Asia Metals plc (AIM: CAML)announced that it has conditionally agreed to purchase a 100 per cent. interest in Lynx Resources Limited (“Lynx”), the owner of the SASA zinc-lead mine in Macedonia, from Orion Co-Investments III L.P. (“Orion”) and Fusion Capital AG for $402.5 million (the “Consideration”).


  • Transformational transaction for CAML, creating an AIM listed, diversified, low cost base metals producer
  • Lynx operates the SASA underground zinc-lead mine, in northeast Macedonia
  • SASA is a low cost operation with strong operating track record and a reserve base supporting production until at least 2032
  • In 2016, SASA produced 783,000 tonnes of ore which generated 22,515 tonnes of zinc in concentrate and 28,955 tonnes of lead in concentrate
  • SASA’s H1 2017 C1 zinc equivalent cash cost of $0.39 per pound is at the lower end of the second quartile of the Wood MacKenzie 2017E zinc industry cost curve
  • In the first six months of 2017,  Lynx achieved an EBITDA margin of 61 per cent.  (unaudited)


  • The Transaction represents a compelling opportunity for CAML to expand and diversify with the addition of another cash generative asset in a highly prospective jurisdiction
  • The combination of CAML and Lynx is expected to provide commodity, geographic and operational  diversification, which should enable the Group to remain well positioned throughout the commodity cycle
  • The Transaction is expected to be both earnings and cash flow per share accretive in the first full year, underpinning CAML’s dividend profile
  • Funding
  • Total Consideration of $402.5 million to be funded as follows:
  • Debt financing:
  •             o$120 million senior debt facility with Traxys (4.75% + LIBOR, 5 year term)
  • oRoll over of estimated $67 million of existing Lynx net debt (5% + LIBOR, 5 years remaining)
  • Equity financing:
    •  $153.5 million in CAML ordinary shares via an Accelerated Book Build (“ABB”) expected to be launched shortly
    •  $50 million in CAML ordinary shares to Orion via an equity subscription
    • $12 million of deferred consideration

The Transaction

  • The Transaction will be a reverse takeover under the AIM Rules and so will be subject to shareholder approval at a General Meeting scheduled for 11 October 2017, following the publication of an AIM Admission Document for the Enlarged Group
  • The Independent CAML Directors unanimously recommend that shareholders vote in favour of the Transaction at an Extraordinary General Meeting
  • The Company has received irrevocable undertakings from the Directors that they will vote in favour of the Resolutions at an Extraordinary General Meeting representing approximately 23.5 per cent. of the existing ordinary shares
  • It is currently anticipated that the AIM admission document will be posted to shareholders, and trading of CAML shares will recommence, on 25 September 2017

Commenting on the transaction, Nick Clarke, Executive Chairman said: “We believe that this Transaction is an exceptional opportunity for CAML to acquire a high quality asset which complements our existing business. The combination of CAML and Lynx creates an AIM listed, diversified, base metals producer with low cost, long life operations which are expected to generate positive cash flows throughout the commodity cycle”.

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