ACG raises $200 million in bonds to finance a copper mine in Türkiye

ACG said the bond issue will be used to convert the company’s Gediktepe mine, located 250 kilometers south of Istanbul, into producing copper and zinc concentrates from gold and silver. It plans to start annual production of up to 25,000 tons of copper equivalent early next year, including some precious metal by-products.

“Securing financing to develop the sulphide project and move into copper production is a major step in ACG’s goal of becoming a leading copper producer in the London market,” Artem Volynets, ACG Chairman and CEO, said in a statement. He added that this “demonstrates our ability to access deep pools of capital.”

Dollar-denominated shares in ACG Metals have been worth $5.10 per share in London since early November, valuing the company at 77.3 million pounds ($95.6 million).

Debt consolidation

The debt is also intended to consolidate gold prepayment debt facilities with metals dealer Traxys Europe and Argentem Creek Partners. ACG can call in or redeem the bonds after two years, she said. In July, ACG said Traxys would finance up to $25 million of mid-market debt and equity to buy the mine.

ACG said Gediktepe will have comprehensive sustainable costs in the first quarter over an initial life of 11 years and is targeting an internal rate of return in excess of 30%. It is banking on strong cash flow generation from a potential 73% operating margin and a $146 million turnkey engineering, procurement and construction (EPC) contract with GAP Inşaat.

Last year, ACG estimated overall sustainment costs at $2.49 per pound of copper equivalent. ACG said at the time that Gediktepe’s after-tax net worth was $318 million at a 10% discount rate.

Balikesir Province

The mine, located in the Begadeş district of Türkiye’s western Balikesir province, broke ground in 2021. In 2023, it produced 34,000 ounces. of gold and 361,000 oz. Of silver.

“We are well positioned to create value for ACG shareholders while maintaining a strong balance sheet,” Volynets said. “Our copper production at Gediiktepe will provide the foundation for further organic and inorganic growth.”

Upon purchasing the mine for $290 million last year, Volynets said ACG planned to create a mid-tier copper producer with a production capacity of about 300,000 tons per year. He said it would use a combination strategy to buy assets such as how it combined the alumina assets of Sual Group, Rusal and Glencore (LSE: GLEN) to create UC Rusal.