Orica, an Australian chemicals company, has agreed to fully acquire Cyanco Intermediate (Cyanco) from an affiliate of Cerberus Capital Management for a total of $640m.
Cyano is a US-based manufacturer and distributor of sodium cyanide, primarily serves the gold mining industries in the US, Canada, Mexico, Latin America, and Africa. The company operates production facilities near the Nevada gold mining region and the seaborne export market.
Orica expects the proposed acquisition to complement its established mining chemicals business and create an integrated global manufacturing and distribution network.
They anticipate completing the transaction by the end of FY2024, pending the expiration of certain regulatory waiting periods and other customary closing conditions.
Orica managing director and CEO Sanjeev Gandhi said: “I am delighted to announce the acquisition of Cyanco today, accelerating the delivery of Orica’s Mining Chemicals strategy and creating a leading global mining chemicals business.
“Cyanco is a highly complementary business, and by combining it with our established sodium cyanide business, Orica will create a leading integrated global sodium cyanide producer with world-class supply capabilities in mining.”
Orica plans to finance the acquisition primarily using its existing cash on hand and undrawn committed debt facilities. Additionally, it will secure A$400m ($262m) through an underwritten institutional placement. To facilitate retail investor participation, the company will also initiate a non-underwritten share purchase plan capped at A$65m ($42.5m).
Cyanco supplies sodium cyanide, crucial for gold processing, from production facilities near Nevada’s gold mining region and seaborne export market. The company boasts an appealing financial profile and strong cash flow generation, emphasizing a robust commercial discipline in its business model.
Orica asserts its commitment to incorporating Cyanco’s greenhouse gas emissions profile into its global Scope 1, 2, and 3 inventory. The company is dedicated to achieving its existing public climate change targets.
Sanjeev added: “The Acquisition will more than double Orica’s existing sodium cyanide production capacity and provide us with the ability to cater to the highly attractive US and Canadian gold mining industries.
“By combining these two leading businesses, we expect to improve our ability to serve our customers by enhancing Orica’s global network of transfer stations in key gold mining regions, supporting security of supply to mine sites.
“The Acquisition is mutually beneficial to both Cyanco and Orica stakeholders, and we look forward to welcoming Cyanco’s employees to Orica. We are excited about the opportunities this will create for Orica, our customers, and our shareholders.”