AMN - NAMIBIA/BURKINA FASO: Trevali deal with Glencore

Glencore has entered into a definitive agreement with Trevali Mining Corp, whereby Trevali will purchase Glencore’s 80% interest in the Rosh Pinah mine in Namibia and 90% interest in the Perkoa mine in Burkina Faso.

The aggregate consideration is $400 million, of which $244 million will be paid in cash, with the remaining $156 million paid by Trevali through the issuance of shares. Trevali will additionally pay Glencore $30 million to repay an existing debt facility. The transaction is subject to customary regulatory approvals and is expected to close by July 2017.

The transaction will add two African zinc assets to Trevali’s portfolio of mines in Peru and Canada, creating the only global mining company focused on zinc. The transaction will materially increase Trevali’s geographic footprint and access to global capital markets, which will enable the company to take advantage of the significant opportunities to grow across the zinc market.

Glencore will increase its direct ownership in Trevali from 4% to 25% and its board membership to a total of two seats.

Following completion of the transaction, Trevali will have an annual production of some 230,000 tonnes of contained zinc and will have operational presence in North America, South America and Africa. Glencore will have the offtake from all four of Trevali’s mines.

Trevali expects that, upon completion of the transaction, the assets would create a premier TSX-listed global zinc producing company. It:

 More than doubles Trevali’s current production scale to approximately 410 Mlb payable of annual zinc production, to position the company as a top-10 global zinc producer;

 Maintains an attractive cash-cost profile with increased leverage to zinc;

 Refinanced balance sheet significantly reduces cost of capital and increases covenant flexibility to pursue M&A opportunities;

 Further builds on Trevali’s long-standing strategic relationship with Glencore, which will become a cornerstone investor (25%) in Trevali;

 Diversifies the portfolio and creates a global platform to enable future growth; and

 Adds Glencore’s industry-leading operating and management teams.

Trevali President and Chief Executive Officer Dr Mark Cruise said: “The acquisition of Rosh Pinah and Perkoa is an historic event and unique opportunity for Trevali shareholders, and sets the stage for a multi-asset, low-cost global zinc producer. The assets provide strong upside to shareholders in the current strengthening macro-zinc environment through scale of production as well as an attractive package of exploration ground.”

Glencore’s Head of Zinc Marketing Daniel Mate said: “We are pleased to strengthen our partnership with Trevali as they embark on the development of the premier zinc company in the market. Trevali has a proven track record in the sector demonstrated by the success in opening up the Santander mine in Peru and the Caribou mine in Canada.

“We have been working together as partners since their first mine was built and we share the same vision for the future growth of the business through value-creating organic and inorganic growth opportunities. We are excited to form part of this unique global zinc vehicle, providing pure zinc exposure across a wide geographic footprint.”

www.glencore.com