Mineração Vale Verde completes US$140m debt financing for Serrote development

LONDON, Feb. 4, 2021 /PRNewswire/ --

Highlights

• US$140m debt financing raised to fully fund the project through to production
• Transaction is the largest greenfield mining project finance transaction to have reached completion since the beginning of 2020 and the onset of COVID-19, highlighting the strong underlying fundamentals of the project
• Construction is progressing well, on time and in line with budget, now over 90% complete
• Project development has been maintained in line with plan in spite of COVID-19, while ensuring the safety of all MVV employees
• Offtake agreement signed with international trader

Mineração Vale Verde Ltda. ("MVV" or the "Company") and Appian Capital Advisory LLP ("Appian") are pleased to announce that MVV has secured a US$140m debt financing to finalise the development of the Serrote copper-gold project ("Serrote") located in Alagoas, Brazil. The financing will fund all remaining development costs, with the project now fully funded through to production.

The Company has executed definitive documentation with ING Capital LLC, Natixis, New York Branch, and Societe Generale (the "MLAs"), for a US$140m project finance debt facility, the largest greenfield mining project finance transaction to have been announced since the beginning of 2020 and the onset of COVID-19. The extensive technical, legal, environmental and social due diligence undertaken by the MLAs is a strong endorsement of the robust fundamentals of the Serrote Project, the quality of the MVV management team and the strength of Appian as a sponsor. The financing further underlines the commitment of Appian and its portfolio companies to best-in-class ESG practices, including compliance with the Equator Principles and IFC Performance Standards on Social Sustainability. MVV has achieved financial close and commenced drawdowns under the facility.

As part of the overall project funding package, Appian Natural Resources Fund II will acquire a royalty over a portion of the project's gold by-product production.

Project update and key milestones

Serrote remains on track for first production in the second half of 2021. Construction is progressing on time and in line with budget, with over 94% of overall project execution complete. Mechanical completion has been achieved in a number of areas with pre-commissioning activities and operational readiness programs also well advanced in order to ensure a smooth, and efficient ramp up, and enabling operations to start safely.

Several key milestones were achieved during 2020, the majority ahead of plan. These included construction of the phase I tailings storage facility; the signing of an offtake agreement with an international trader to support the financing; construction and erection of the new 21km 230kV powerline; and construction of the majority of key processing plant infrastructure. Phase I pre-stripping has also been completed and overall pre-stripping is well ahead of plan, with ~6 million tonnes of earth moved to date and stockpiling of fresh ore having commenced. Strong operational momentum has continued into 2021 with the project recently achieving another significant milestone by processing first ore through the primary crusher.

As previously announced in August 2019, Appian completed a Definitive Feasibility Study ("DFS") prior to commencing construction which highlighted the robust economics of the project. As outlined in the DFS, the project is expected to produce approximately 20 ktpa of copper equivalent over an initial 14-year mine life from a low-strip, open pit mine supplying a 4.1 Mtpa processing plant. Serrote's initial life of mine will exploit a mineral reserve of 52.65 Mt grading 0.6% Cu and 0.1 g/t, defined using US$3.00/lb Cu, with substantial value upside available through a potential expansion into the larger 108.85 Mt Measured and Indicated Resource at Serrote as well as through the potential at some of the nearby satellite deposits.

The current macro-economic environment further enhances the highly attractive economics of the project with MVV expected to produce at an AISC of ~US$1.33/lb Cu and generate steady-state annual EBITDA margins in excess of 65%, at currently prevailing exchange rates and commodity prices.

COVID-19

Serrote has remained operational despite the challenges caused by the COVID-19 pandemic. Our priority remains the safety of our people and the communities in which we operate, and we have adjusted our working practices to protect employees in the most effective ways, allowing us to remain on schedule with development.  

Paulo Castellari, CEO MVV & Appian Brazil commented:

"I am pleased that we have been able to secure this financing for Serrote, which finalises the overall funding package and will support completion of project development and delivery of first production. It is an important development which recognises the continued progress and key milestones achieved to date and highlights the attractiveness of this high-quality copper-gold deposit. The tremendous progress we have made during the pandemic is also testament to the hard work and determination of our employees, and I look forward to bringing Serrote into production on schedule and in line with budget."

Endeavour Financial acted as financial advisor to the Company. Norton Rose Fulbright LLP acted as legal counsel to the Company.

For further information:

Finsbury Glover Hering +44 (0)20 7251 3801 / AppianCapital-LON@finsbury.com^[1] 

Charles O'Brien, Ruban Yogarajah, Richard Crowley

Appian Capital Advisory +44 (0)20 7004 0951 / info@appiancapitaladvisory.com^[2]

Michael W. Scherb

About Mineração Vale Verde Ltda.

MVV is developing Serrote, an advanced stage, de-risked greenfield open-pit copper-gold development asset currently under construction and with all major permits in place, located in Alagoas, Brazil. The Company is headquartered in Belo Horizonte, with a high-quality management team with extensive local and international experience operating at site.

Following Appian's acquisition of the asset in mid-2018, an updated DFS was completed outlining a 14-year initial mine life with production of approximately 20 thousand tonnes of copper equivalent per annum in a premium, high grade concentrate. Serrote is expected to be well positioned in the second quartile of the copper cost curve on a total cash cost basis.

MVV is pursuing several expansion opportunities beyond the initial mine life, with significant defined mineralization outside of the current mine plan as well as numerous satellite resources and targets within trucking distance of the planned plant infrastructure. Less than 50% of the 112Mt global resource is currently contained within the mine plan, with active drilling and growth plans underway to increase mineable inventory.

About Appian Capital Advisory LLP

Appian Capital Advisory LLP is the investment advisor to long-term value focused private equity funds that invest solely in mining and mining related companies.

Appian is a leading investment advisor in the metals and mining industry, with global experience across South America, North America, Australia and Africa and a successful track record of supporting companies to achieve their development targets, with a global operating portfolio overseeing nearly 5,000 employees.

Appian has a global team of 37 investment professionals with offices in London, Toronto, Lima, Belo Horizonte and Sydney.

For more information please visit www.appiancapitaladvisory.com^[3], or find us on LinkedIn^[4] or Instagram^[5].

References

1. ^{^} AppianCapital-LON@finsbury.com (www.prnasia.com)
2. ^{^} info@appiancapitaladvisory.com (www.prnasia.com)
3. ^{^} www.appiancapitaladvisory.com (www.appiancapitaladvisory.com)
4. ^{^} LinkedIn (www.linkedin.com)
5. ^{^} Instagram (www.instagram.com)