Capstone Copper Corp (ASX: CSC) shares are marching higher today.
Shares in the S&P/ASX 200 Index (ASX: XJO) copper stock closed yesterday trading for $14.55. In morning trade on Tuesday, shares are changing hands for $14.78 apiece, up 1.6%.
For some context, the ASX 200 is up 0.4% at this same time.
Here’s what’s catching investor interest today.
Capstone Copper shares lift on asset sale
Capstone Copper shares are lifting after the miner announced that it has entered into a definitive agreement to sell its Cozamin copper-silver zinc-lead mine, located in Mexico.
Capstone said that Luca Mining Corp will pay up to US$385 million (AU$542.3 million) in total consideration for the mine.
The ASX 200 copper stock noted that figure is comprised of:
- US$275 million in upfront cash, subject to customary closing adjustments
- US$15 million in Luca shares, to be issued to Capstone at closing
- US$35 million in deferred consideration, to be received on the first anniversary of closing
- And up to US$60 million in contingent cash consideration tied to annual average copper prices
Capstone said it will use the fund to strengthen its balance sheet and as well as support its growth pipeline.
What did management say?
Commenting on the $542 million divestment helping boost Capstone Copper shares today, president and CEO Cashel Meagher said, “Cozamin has been an important part of our portfolio, providing stability and strong cash flows as Capstone has matured into a diversified copper producer.”
Meagher added:
The transaction optimises our portfolio and further strengthens our balance sheet, enabling us to redeploy capital into our high-return growth projects and allowing leadership to focus on the opportunities we believe will create the most value for our shareholders. It is an ideal time to streamline our portfolio through this divestiture as we advance towards transformational copper growth in Chile and the United States.
We are also pleased to retain exposure to the exploration upside at Cozamin, through our shareholding in Luca, following completion of the Transaction. Given the strong operational track record of the Luca team in Mexico, we believe they will be excellent stewards of the mine and are well placed to unlock its full potential.
What’s happening with the copper price?
Capstone Copper shares have surged 33.5% since this time last year, supported in part by soaring global copper prices.
The red metal is back near all-time highs today, trading for US$14,661 per tonne. That sees the copper price up a whopping 47% in 12 months, spurred by spiking demand from data centres, EVs and the ongoing energy transition.
The post Capstone Copper shares take off on $542 million divestment news appeared first on The Motley Fool Australia.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.