Triple Flag outlines $350 million Peruvian streaming deal
Triple Flag, a new mining financing firm backed by U.S. hedge fund Elliott Management Corp, has said that it would pay $250 million to buy future silver production from a mine in Peru owned by Peruvian miner Compañía Minera Milpo.
In a report by Reuters, Toronto-based Triple Flag, a 7-month-old company founded by former Barrick Gold chief financial officer Shaun Usmar, said it would buy the silver "stream" from Milpo's Cerro Lindo poly-metallic zinc mine. It is Triple Flag's first deal.
In streaming transactions, mining finance companies such as Triple Flag provide miners with funds upfront in exchange for a portion of the future output - often a byproduct - from a mine at a set discounted price.
This type of financing became especially popular during a mining sector downturn in recent years when debt-laden miners did not want to tap the equity markets for finance at a time when their share prices were weak.
Triple Flag said in a statement it would pay 10 percent of the spot silver price for each ounce of silver it got from the mine. Silver delivery would start next month.
Cerro Lindo, a low-cost, long-life mine that started operations in 2007, is one of the world's 10 largest zinc mines.
Milpo is a unit of VM Holdings S.A., the metals and mining business of Votorantim S.A, a large, private Brazilian conglomerate with interests in a variety of sectors including cement, energy and orange juice.
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Global iron ore production to recover by 5.1% in 2021
Global iron ore production fell by 3% to 2.2bnt in 2020. Global production is expected to grow at a compound annual growth rate (CAGR) of 3.7% to 2,663.4Mt between 2021 to 2025. The key contributors to this grow will be Brazil (6.2%), South Africa (4.1%), Australia (3.2%) and India (2.9%). Key upcoming projects expected to commence operations include South Flank in Australia (2021), Zulti in South Africa (H2 2021), Serrote Da Laje in Brazil (H2 2021) and Gudai-Darri (2022), according to GlobalData, a leading data and analytics company.
Vinneth Bajaj, Associate Project Manager at GlobalData, comments: “Declines from Brazil and India were major contributors to the reduced output in 2020. Combined production from these two countries fell from a collective 638.2Mt in 2019 to an estimated 591.1Mt in 2020. The reduced output from the iron ore giant, Vale, was the key factor behind Brazil’s reduced output, while delays in the auctioning of mines in Odisha affected India’s output in 2020.
“Miners in Australia were relatively unaffected by COVID-19 due to effective measures adopted by the Australian Government, while a speedy recovery in China led to a significant 10.4% increase in the country’s iron ore output.”
Looking ahead, the global iron ore production is expected to increase by 111.3Mt to 2,302.5Mt in 2021. Rio Tinto is expected to produce up to 340Mt of iron ore, while BHP has released production guidance of 245–255Mt, supported by the start of the Samarco project in December, which is expected to produce between 1–2Mt.The company has retained its guidance for Australian mines at 276–286Mt on a 100% basis, due to scheduled maintenance work at its ore handling plant and tie-in activity at the Area C mine and South-Flank mine.
Bajaj added: “The remaining companies are expected to produce more than 600Mt of iron ore, including FMG, whose production is expected to range between 175–180Mt supported by its Eliwana mine that commenced operations in late December 2020, and Anglo American, which is expecting to produce between 64–67Mt. Vale is expected to resume 40Mt of its production capacity, taking its overall production capacity to 350Mt in 2021, with production guidance of 315-335Mt.”