Appian sells Brazilian companies, Atlantic Nickel and Mineração Vale Verde, to ACG for US$1.065 billion

The Appian funds acquired Atlantic Nickel (previously Mirabela Nickel), owner of Santa Rita, one of the largest open pit nickel sulphide mines in the world, located in Bahia, Brazil (Santa Rita) out of bankruptcy in 2018. The same year they also purchased MVV, owner of the Serrote greenfield open-pit copper-gold asset located in Alagoas, Brazil. Subsequently Appian successfully restarted Atlantic Nickel and commissioned MVV. Appian undertook significant work to de-risk and improve the Assets, demonstrating the strength of the Company’s model and its ability to identify, acquire and optimise mining projects using technical arbitrage to create value. Both mines are long-life, low-cost and ranked within the first decile for carbon emissions amongst all nickel and copper producers worldwide.

Highlights

• Funds advised by Appian agree the sale of the wholly owned Atlantic Nickel and Mineração Vale Verde to ACG for US$1 billion, while ACG will also pay US$65 million to extinguish the gold stream over Mineração Vale Verde, all in cash.
• Provides a compelling value proposition for ACG, which will be the only London-listed nickel sulphide producer of scale, creating a natural platform for further growth and consolidation of critical metals assets focused on leading western OEMs.
• The transaction reflects the significant work to optimise the assets, demonstrating the strength of Appian’s operating model and its ability to identify, acquire and develop mining projects.

o Acquired Atlantic Nickel out of bankruptcy in 2018, executing a successful restart, with first quartile C1 cost performance (c. US$3.16/ lb Ni for the open pit and c. US$2.02/ lb Ni for the underground), defining an underground resource and extending mine life to 35 years.

o Purchased Mineração Vale Verde in 2018, revising its DFS and completing project construction and commissioning during the COVID-19 pandemic, ahead of schedule and under budget before successfully ramping up.

o Mines are cash-generative operations, producing nickel sulphide and copper concentrates with low carbon emissions.

• ACG has entered into long-term investment partnerships with global commodities group Glencore, PowerCo (Volkswagen’s in-house battery development subsidiary) and Stellantis (owner of Fiat and Peugeot), for offtake and funding.

o Reflects the quality of the assets and their attractive characteristics for western automotive manufacturers at this point in the investment cycle, providing a transparent and secure supply of critical metals across the value chain.

o Will support optimising the assets’ ability to meet future demand, and help address supply-chain challenges currently arising in global commodities.

• Appian’s funds remain extremely well positioned for growth with exposure to key decarbonisation commodities balanced with precious metals investments

The Transaction will provide a compelling value proposition for ACG, Appian, and their respective investors. Upon closing, ACG will be renamed ACG Electric Metals, creating the only London-listed nickel sulphide producer with pure play electric metals exposure, as a natural platform for further growth and consolidation of critical metals assets focused on deliveries to leading western OEMs.

Michael W. Scherb, Founder and CEO of Appian, commented: “Appian began investing in decarbonisation commodities a decade ago, recognising that society was structurally undersupplied for the upcoming energy transition. This innovative transaction in the battery metals space will mark Appian’s 10th, 11th and 12th exits, reflecting the strength of our operating model and ability to identify, acquire and optimise mining assets. Likewise, ACG is a great custodian for Atlantic Nickel and MVV, and is well placed to unlock significant further growth from these market-leading companies. The Glencore, Volkswagen and Stellantis partnerships are particularly notable, underlining the growing need for EV commodities and the demand for robust, transparent and traceable supply chains from western automotive OEMs, industry and other stakeholders.”

Artem Volynets, CEO of ACG, said: “We are very proud to announce this transaction in strategic partnership with Glencore, Stellantis, La Mancha, PowerCo and Royal Gold, as well as senior debt providers Citigroup, ING and Societe Generale. It will establish ACG Electric Metals as a premier supplier of critical metals into the western EV value chain, with best-in-class ESG characteristics and minimal CO2 emissions. ACG Electric Metals will be a company designed to take advantage of the opportunities presented by key global trends: the massive increase in demand for battery metals, the polarisation of supply chains, and the need to reduce the world’s total carbon footprint – from the mine to the end-customer. These high-quality mines will enable ACG’s mission to be the green metals supplier of choice to western EV automakers. This acquisition establishes a solid platform for further growth and long-term shareholder value creation.”

Read the article online at: https://www.globalminingreview.com/finance-business/12062023/norton-rose-fulbright-advises-appian-on-sale-of-brazilian-mines-to-london-listed-spac/