EX-99.3 4 tm2316257d1_ex99-3.htm EXHIBIT 99.3

 

Exhibit 99.3

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Introduction

 

The following unaudited pro forma condensed combined financial information are provided to aid you in your analysis of the financial aspects of the proposed transaction (see Note 1) (the “proposed transaction” or the “Transaction”).

 

The unaudited pro forma condensed combined financial information has been prepared based on the MAC historical financial statements and the CMPL historical financial statements as adjusted to give effect to the proposed transaction. The unaudited pro forma condensed combined statement of financial position gives pro forma effect to the proposed transaction as if it had been consummated on March 31, 2023. The unaudited pro forma condensed combined statement of comprehensive income for the three months ended March 31, 2023, and the year ended December 31, 2022, and give effect to the proposed transaction as if it had occurred on January 1, 2022.

 

The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and do not necessarily reflect what the company’s combined financial condition or results of operations would have been had the proposed transaction occurred on the dates indicated. Further, the pro forma combined financial information may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

 

The unaudited pro forma condensed combined financial information contained in this filing has been prepared by, and are the responsibility of, MAC Limited and MAC. Moreover, neither MAC’s independent accountants, Ernst & Young LLP, or CMPL’s independent accountants, Deloitte Touche Tohmatsu, have compiled or reviewed the unaudited pro forma condensed combined financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and, accordingly, each of CMPL (and their directors and officers), Glencore (and their directors and officers), Ernst & Young LLP and Deloitte Touche Tohmatsu assumes no responsibility for, and disclaims any association with, the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with:

 

·the accompanying notes to the unaudited pro forma condensed combined financial information.

 

·the historical unaudited financial statements of MAC for the three months ended March 31, 2023 (which are included in MAC’s Quarterly Report for the three months ended March 31, 2023 in exhibit 99.3 to the Current Report on Form 8-K filed with the SEC on May 26, 2023 pursuant to Rule 425 (the “Q1-2023 8-K”)), and the audited financial statements for the year ended December 31, 2022; and

 

·the historical unaudited interim condensed financial statements of CMPL for the three months ended March 31, 2023, and the audited financial statements for the year ended December 31, 2022, and the related notes included in the Registration Statement.

 

SEC Regulation S-X, as amended by the final rule, Release No. 33-10786, Amendments to Financial Disclosures about Acquired and Disposed Businesses. Release No. 33-10786 replaces the historical pro forma adjustments criteria with simplified requirements to depict the accounting for the proposed transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management’s Adjustments”). The adjustments presented in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an understanding of the combined company upon consummation of the proposed transaction.

 

This information should be read together with the financial statements and related notes, as applicable, of each of CMPL and MAC included in this filing and the proxy statement / prospectus filed with the SEC on May 11, 2023 (the "proxy statement/prospectus").and CMPL’s and MAC’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this filing and the proxy statement / prospectus.

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL

POSITION AS AT MARCH 31, 2023

(in thousands of US dollars)

 

   Historical                       
   Metals
Acquisition
Corp		   Cobar
Management
Pty Limited		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (50%
redemption
scenario)		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (no
redemption
scenario)		 
ASSETS                                    
Current assets                                    
Cash and cash equivalents  $-   $406   $73,139   (a)  $55,395           $91,273 
              196,908   (b)                  
              132,300   (b)                  
              75,000   (b)        (75,000)   (b)     
              224,433   (c)        (25,000)   (c)     
              16,720   (d)                  
              (17,571)  (e)                  
              (12,574)  (f)                  
              (9,280)  (g)                  
              15,000   (h)                  
              (775,000)  (h)                  
              135,879   (i)        135,879    (i)     
              35   (v)                  
Cash   35    -    (35)  (v)                  
Other receivable   65    1,648    -       1,713            1,713 
Inventories   -    21,415    24,068   (h)   45,483            45,483 
Prepaid expenses   193    1,962    -       2,155            2,155 
Total current assets   293    25,431    79,022       104,746    35,879       140,624 
Non-current assets                                    
Property and equipment   -    423,910    815,785   (h)   1,238,308            1,238,308 
              (1,387)  (d)                  
Intangible assets   -    721    -       721            721 
Long term investment   -    -    12,574   (f)   12,574            12,574 
Inventories   -    334    -       334            334 
Prepaid expenses   -    56    -       56            56 
Other assets   -    -    -       -            - 
Marketable securities held in Trust Account   271,757    -    (271,757)   (i)   -            - 
Deferred financing costs   1,598    -    (1,598)   (b)   -            - 
Total non-current assets   273,355    425,021    553,617       1,251,993    -       1,251,993 
Total assets  $273,648   $450,452   $632,638      $1,356,738   $35,879      $1,392,617 

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL

POSITION AS AT MARCH 31, 2023

(in thousands of US dollars)

 

   Historical                       
   Metals
Acquisition
Corp		   Cobar
Management
Pty Limited		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (50%
redemption
scenario)		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (no
redemption
scenario)		 
LIABILITIES                                    
Current liabilities                                    
Trade payables  $-   $10,734   $-      $10,734           $10,734 
Accrued expenses and accounts payable   2,078    -    56,968   (e)   59,046            59,046 
Trade payables related parties   -    1,720    (1,720)  (h)                  
Deferred liabilities   10,261    -    (10,261)  (e)   -            - 
Deferred underwriting discount   9,280    -    (9,280)  (g)   -            - 
Due to related party   23    -    (23)  (e)                  
Promissory note - related party   1,459    -    (1,459)  (e)                  
Other payables   -    6,483    -       6,483            6,483 
Lease liabilities   -    568    6,413   (d)   6,981            6,981 
Short term debt - Bank   -    -    68,333   (b)   68,333            68,333 
Deferred consideration - Glencore   -    -    75,000   (j)   75,000            75,000 
Warrant Liability   10,992    -    6,965   (l)   17,957            17,957 
Provisions   -    11,870    -       11,870            11,870 
Total current liabilities   34,093    31,375    190,936       256,404    -       256,404 
                                     
Non-current liabilities                                    
Deferred liability - upfront deposit from Silver Stream   -    -    73,139   (a)   73,139            73,139 
Royalty payable   -    -    45,000   (k)   45,000            45,000 
Contingent consideration payable   -    -    104,500   (k)   104,500            104,500 
Lease liabilities   -    67    10,308   (d)   10,375            10,375 
Provisions   -    44,600    -       44,600            44,600 
Debt financing costs   -    -    -       -            - 
Long term debt - Bank   -    -    127,361   (b)   127,361            127,361 
Long term debt - Mezz   -    -    131,915   (b)   131,915            131,915 
Financial liability - Copper Stream Backstop Facility   -    -    75,000   (b)   75,000    (75,000)  (b)   - 
Deferred tax liabilities   -    10,108    121,375   (h)   131,483            131,483 
Total non-current liabilities   -    54,775    688,598       743,373    (75,000)      668,373 
Total Liabilities  $34,093   $86,150   $879,534      $999,777   $(75,000)     $924,777 

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF FINANCIAL

POSITION AS AT MARCH 31, 2023

 

   Historical                       
   Metals
Acquisition
Corp		   Cobar
Management
Pty Limited		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (50%
redemption
scenario)		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (no
redemption
scenario)		 
Class A ordinary shares subject to possible redemption, 26,514,780 shares at redemption value  $271,757   $-   $(271,757)  (i)  $-           $- 
                                     
EQUITY                                    
Retained earnings   -    209,606    (209,606)  (h)                  
Parent net investment   -    154,696    (154,696)  (h)   -            - 
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 6,628,695 shares issued and outstanding   1    -    (1)  (m)   -            - 
Common shares   -    -    6   (m)   6    1   (m)   7 
Additional paid-in capital   -    -    453,342   (m)   453,342    110,877   (m)   564,220 
Accumulated deficit   (32,203)   -    (64,183)  (e)   (96,386)   -       (96,386)
Total equity   239,555    364,302    (246,896)      356,961    110,879       467,840 
Total liabilities and equity  $273,648   $450,452   $632,638      $1,356,738   $35,879      $1,392,617 

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF COMPREHENSIVE

INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2023

(in thousands of US dollars)

 

   Historical                       
   Metals
Acquisition
Corp		   Cobar
Management
Pty Limited		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (50%
redemption
scenario)		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (no
redemption
scenario)		 
Revenues  $-   $65,227   $17,523   (u)  $82,750           $82,750 
Cost of goods sold   -    (51,749)   1,232   (n)   (52,991)           (52,991)
              (1,081)  (o)                  
              (1,393)  (p)                  
Gross profit   -    13,478    16,281       29,759            29,759 
Operating expenses                                    
Distribution and selling expenses   -    (3,275)   (5,089)  (u)   (8,364)           (8,364)
Administrative expenses   -    (299)   -   (v)   (4,887)           (4,887)
              (1,204)  (v)                  
              (3,383)  (v)                  
              (1)  (v)                  
Operating and formation costs   (1,204)   -    1,204   (v)                  
Acquisition costs   (3,383)   -    3,383   (v)                  
Bank Fee   (1)   -    1   (v)                  
Net foreign exchange gains/(losses)   -    (672)   -       (671)           (671)
              1   (v)                  
Change in foreign exchange   1    -    (1)  (v)                  
Change in fair value of warrants   (3,448)   -    -       (3,448)           (3,448)
Finance income   -    4    -       4            4 
Trust interest income   2,849    -    (2,849)  (r)                  
Finance costs   -    (153)   (11,036)  (s)   (11,230)   897   (s)   (10,333)
              (41)  (v)                  
Interest expense   (41)   -    41   (v)                  
Profit/(Loss) before income tax   (5,227)   9,083    (2,693)      1,163    897       2,060 
Income tax benefit/(expense)   -    (3,981)   2,805   (t)   (1,176)   (269)  (t)   (1,445)
Profit/(loss) for the year  $(5,227)  $5,102   $112      $(13)  $628      $615 
Profit (Loss) per share - basic  $(0.16)               $(0.00)          $0.01 
Weighted average shares outstanding - basic   33,143,475                 52,838,332            63,595,722 
Profit (Loss) per share - diluted  $(0.16)               $(0.00)          $0.01 
Weighted average shares outstanding - diluted   33,143,475                 52,838,332            82,156,786 

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF COMPREHENSIVE

INCOME

FOR THE YEAR ENDED DECEMBER 31, 2022

(in thousands of US dollars)

 

   Historical                       
   Metals
Acquisition
Corp		   Cobar
Management
Pty Limited		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (50%
redemption
scenario)		   Transaction
Accounting
Adjustments		   Notes  Metals
Acquisition
Corp Pro
Forma (no
redemption
scenario)		 
Revenues  $-   $219,705   $105,938   (u)  $325,643           $325,643 
Cost of goods sold   -    (189,496)   9,475   (n)   (189,782)           (189,782)
              (4,188)  (o)                  
              (5,573)  (p)                  
Gross profit   -    30,209    105,653       135,862            135,862 
Operating expenses                                    
Distribution and selling expenses   -    (17,246)   (19,939)  (u)   (37,185)           (37,185)
Administrative expenses   -    (1,230)   (62,796)  (q)   (73,997)           (73,997)
              (224)  (v)                  
              (5)  (v)                  
              (2,117)  (v)                  
              (7,625)  (v)                  
Stock compensation   (224)   -    224   (v)                  
Bank Fee   (5)   -    5   (v)                  
Operating and formation costs   (2,117)   -    2,117   (v)                  
Acquisition costs   (7,625)   -    7,625   (v)                  
Net foreign exchange gains/(losses)   -    (453)   -       (453)           (453)
Change in fair value of warrants   1,477    -    -       1,477            1,477 
Change in fair value conversion option   7    -    (7)  (r)   -            - 
Finance income   -    6    -       6            6 
Trust interest income   3,753    -    (3,753)  (r)                  
Finance costs   -    (930)   (44,526)  (s)   (45,456)   3,589   (s)   (41,867)
Amortization of discount on convertible promissory note   (8)   -    8   (r)                  
Profit/(Loss) before income tax   (4,742)   10,356    (25,360)      (19,746)   3,589       (16,157)
Income tax benefit/(expense)   -    (15,715)   22,969   (t)   7,254    (1,077)  (t)   6,177 
Profit/(loss) for the year  $(4,742)  $(5,359)  $(2,392)     $(12,493)  $2,512      $(9,980)
Profit (Loss) per share - basic  $(0.14)               $(0.24)          $(0.16)
Weighted average shares outstanding - basic   33,143,475                 52,838,332            63,595,722 
Profit (Loss) per share - diluted  $(0.14)               $(0.24)          $(0.16)
Weighted average shares outstanding - diluted   33,143,475                 52,838,332            63,595,722 

 

 

 

 

 

Note 1 — Description of the Proposed Transaction

 

On March 17, 2022, MAC, MAC-Sub, and Glencore entered into the Share Sale Agreement, as amended by the Deed of Consent and Covenant, dated November 22, 2022 (together, the “Share Sale Agreement”). As a result of the transactions contemplated by the Share Sale Agreement, MAC will merge with and into MAC Limited (the “Merger”), with MAC Limited continuing as the surviving company (MAC Limited following the Merger is referred to as “New MAC”) and MAC-Sub will acquire 100% of the equity interests of CMPL from Glencore by way of acquisition with CMPL becoming a direct subsidiary of MAC-Sub and an indirect subsidiary of New MAC as a result thereof. Glencore will receive at least $775 million in cash, with the potential for this amount to be scaled up to $875 million depending on equity demand) (subject to a customary closing accounts adjustment (including New MAC being liable for accounting and auditing fees in connection with the proposed transaction) to reflect the working capital, net debt and tax liabilities of CMPL at the time of closing under the Share Sale Agreement (the “Closing”), a $75 million deferred payment (plus applicable interest within 12 months of Closing), up to $150 million in two contingent payments (subject to copper price performance), a 1.5% copper only net smelter return royalty and up to 10,000,000 newly issued New MAC Ordinary Shares issued at the redemption share price of $10.00 per share ($100 million worth included in the $1,100 million purchase price). The maximum cash consideration of $875 million will be funded through a combination of a 100% payable long term silver sale-and-purchase agreement (the “Silver Stream”) with Osisko through an upfront payment of $75 million (with the potential for an additional $15 million if the average LBMA silver price over the ten (10) day period prior to the closing of the Silver Stream is greater than $25.50/oz, $90 million total), a $205 million syndicated senior term loan facility, a $135 million mezzanine facility, and equity. MAC has agreed to a Redemptions Backstop Facility with Osisko that comprises $25 million of equity and a $75 million copper- linked financing facility (the “Copper Stream”) that is fully subordinated to the syndicated senior term loan facility. Upon the Closing of the Business Combination, New MAC Ordinary Shares and New MAC Warrants are expected to trade on the NYSE under the ticker symbols “MTAL” and “MTAL.WS”, respectively, and New MAC will become a publicly listed entity. Within several months following the consummation of the Business Combination, New MAC expects to pursue a dual listing on the ASX. No certainty can be provided as to the timing of any such listing or whether it will be ultimately successful. The Business Combination is expected to close in the second quarter of 2023, following the receipt of the required approval by MAC’s shareholders and the fulfillment of other customary closing conditions. The unaudited pro forma condensed combined financial information contained herein assume, among other things, that MAC’s shareholders approve the proposed Business Combination.

 

In addition, MAC expects to raise at least approximately US$172 million of proceeds from private equity placements (“PIPE Financing”) as partial consideration for the Business Combination with certain investors. The MAC Class A Ordinary Shares subscribed for in the PIPE Financing will convert into New MAC Ordinary Shares in connection with the Business Combination. The PIPE Financing is conditioned on, and is expected to be consummated immediately prior to, the Closing of the Business Combination, and with each MAC Class A Ordinary Share subscribed for by the PIPE Investors to be exchanged for one New MAC Ordinary Share, substantially concurrently with the Closing of the Business Combination.

 

It is also anticipated that, in connection with the Business Combination and to establish liquidity upon Closing, New MAC will enter into a sale-leaseback agreement with Sandvik Financial Services Pty Ltd for certain capital equipment for $16.7 million (A$25 million) over a three-year term.

 

 

 

 

Concurrently with the Closing, a Royalty Deed between New MAC, Glencore and CMPL will become effective, pursuant to which CMPL will be required, on a quarterly basis, to pay to Glencore a royalty equal to 1.5% of net smelter returns from all marketable and metal-bearing copper material produced from the Cornish, Scottish, and Australian mine (“CSA Mine”) near Cobar, New South Wales, Australia, and certain specified exploration licenses held by CMPL in addition to the CSA Mine at the time of Closing. After Closing, MAC will have an obligation to pay deferred consideration of $75 million plus interest to Glencore within 12 months of Closing (from the proceeds of equity capital raises) and if the amount is not paid any residual amount owing will be settled on the next business day (12 months post-Closing plus one (1) business day) via the issue of top-up New MAC equity applying a 30% discount to the 20-trading day VWAP before the issuance (the “Equity Conversion Date”). If New MAC is listed on more than one exchange, the VWAP will be calculated by reference to the exchange with the largest volume (US$ equivalent) over the 20-trading day period before the Equity Conversion Date. If the New MAC Ordinary Shares cannot be issued to Glencore due to applicable law or the rules of any applicable stock exchange, Glencore, in its sole discretion, may delay the date for the issuance of the New MAC Ordinary Shares, noting that such right only delays the date for the issuance of the New MAC Ordinary Shares, which amount of New MAC Ordinary Shares will be set on the Equity Conversion Date.

 

Also, in connection with the Business Combination, MAC agrees to pay Glencore $150 million in cash structured as two contingent payments of $75 million each (each, a “Contingent Payment”) that will be unsecured, fully subordinated and payable if, and only if, over the life of the mine, the average daily LME closing price is greater than:

 

(a)            $4.25/lb ($9,370/mt) for any rolling 18-month period (commencing at Closing); and

 

(b)            $4.50/lb ($9,920/mt) for any rolling 24-month period (commencing at Closing).

 

Additionally, in connection with the Business Combination, CMPL and GIAG will enter into a new Offtake Agreement, a life-of-mine offtake obligation pursuant to which CMPL is committed to selling all Material to GIAG, and GIAG is committed to buying all Material. The new Offtake agreement replaces the existing offtake agreement between CMPL and GIAG.

 

Glencore shall also have the right to appoint one director to the New MAC Board for every 10% of New MAC Ordinary Shares that it beneficially owns.

 

For a description of the Business Combination and certain agreements executed in connection therewith, see “The Business Combination Proposal”, “The Share Sale Agreement” and “Certain Agreements Related to the Business Combination.”

 

Note 2 — Basis of Presentation

 

The historical financial statements of CMPL have been prepared in accordance with IFRS as issued by the IASB and in its presentation currency of the U.S. dollar. The historical financial statements of MAC have been prepared in accordance with U.S. GAAP in its presentation currency of the U.S. dollar. The unaudited pro forma condensed combined financial information has been prepared using IFRS, the basis of accounting of CMPL. After giving effect to pro forma adjustments (i.e., the conversion and redemption of the MAC Class A Ordinary Shares immediately prior to Closing) there were no accounting policy differences requiring adjustment to MAC’s historical US GAAP financial statements in order to align with IFRS.

 

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

 

The pro forma adjustments reflecting the consummation of the proposed transaction are based on certain currently available information and certain assumptions and methodologies that MAC believes are reasonable under the circumstances. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments, and it is possible the differences may be material. MAC believes that its assumptions and methodologies provide a reasonable basis for presenting all the significant effects of the proposed transaction based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the proposed transaction. MAC and CMPL have not had any historical relationship prior to the proposed transaction. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

 

 

 

To effect the Business Combination and in addition to the debt financing, MAC must have cash held either in or outside the Trust Account, including the aggregate amount of any proceeds from the PIPE Financing, equal or exceeding a minimum of $490 million, for a minimum total cash funding amount of $775 million. MAC cannot predict how many of the public shareholders will exercise their right to have their MAC Class A Ordinary Shares redeemed for cash. Pursuant to the IPO letter agreement, our Sponsor, officers and directors have agreed to waive their redemption rights with respect to their Founder Shares and any public shares they may have acquired after MAC’s IPO in connection with the completion of the Business Combination. Additionally, our Sponsor, officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if we fail to complete our initial business combination within the prescribed time frame.

 

As a result, MAC has considered two redemption scenarios as follows:

 

•Assuming No Redemptions Scenario: This scenario assumes that no MAC public shareholders holding MAC Class A ordinary shares exercise their redemption rights

 

•Assuming 50% Redemptions Scenario: This scenario assumes that half of the MAC public shareholders holding MAC Class A Ordinary Shares exercise their redemption rights. The 50% redemption scenario represents 13,257,390 outstanding public shares that are redeemed in connection with the Business Combination at a per share redemption price of $10.25 per share as at March 31, 2023. The minimum PIPE Financing that we need to raise under the redemption assumption is approximately $126 million and at the time of this filing we have committed PIPE Financing of approximately $172 million. If we are unable to successfully raise this amount of PIPE Financing, or if redemptions are higher than our assumption, then we would not be able to fund the minimum cash consideration for the Business Combination.

 

After the Business Combination, MAC’s current public shareholders, the Sponsor, which directly owns the Founder Shares (and which are indirectly owned by the initial shareholders), the PIPE Investors, and current CMPL shareholders, would be expected to own approximately the following percentages of New MAC Ordinary Shares:

 

   Assuming 50% Redemption Scenario   Assuming No Redemption Scenario 
   Shares   %   Shares   % 
MAC public shareholders   13,257,390    25%   26,514,780    42%
Shares held by Sponsor (including the Anchor Investors and Cornerstone Investors) (1)   6,628,695    13%   6,628,695    10%
PIPE Investors(2)   17,222,247    33%   17,222,247    27%
Redemptions Backstop Facility(3)   2,500,000    5%   -    0%
Current CMPL shareholders   10,000,000    19%   10,000,000    16%
Other Equity(4)   3,230,000    6%   3,230,000    5%
    52,838,332    100%*   63,595,722    100%*

 

*The percentages may not add due to rounding

 

(1)Green Mountain Metals LLC is the record holder of the shares reported herein. In addition, certain of MAC’s officers and directors and Anchor Investors hold Class B units in Green Mountain Metals LLC, which entitle them to an equivalent number of New MAC Ordinary Shares on distribution. The Sponsor has subsequently agreed to transfer 517,500 Founder Shares to the Cornerstone Investors. The amounts shown for these individuals are included in the total owned by Green Mountain Metals LLC.

 

(2)Assumes 17,222,247 shares issued to PIPE Investors at the redemption share price of $10.00 per share for gross proceeds of approximately $172 million (Refer to Note 5(c)).

 

(3)The Redemptions Backstop Facility comprises an equity subscription component of up to $25 million (2,500,000 shares at the share redemption price of $10.00 per share) and a Copper stream component of up to $75 million. If there are no redemptions, the Redemptions Backstop Facility will not be utilized.

 

(4)Other Equity comprises 1,500,000 shares as part of the Mezzanine financing package as well as 1,500,000 shares as part of the Silver Sale-and-purchase agreement. The remaining 230,000 shares represent participation by certain of MAC’s officers and directors.

 

 

 

 

All subscriptions are at the PIPE subscription price of $10.00 per share.

 

The share amounts and ownership percentages set forth above do not take into account (i) MAC Warrants that will remain outstanding immediately following the Business Combination and may be exercised thereafter, (ii) New MAC Warrants issued in relation to the subordinated financing and (iii) equity awards to be issued under the 2023 Plans. In accordance with the terms of the Share Sale Agreement, in no event will MAC redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.

 

The estimated proceeds from the PIPE Financing are US$172 million. Under either of the redemption scenarios above, MAC will have sufficient funds to complete the Transaction.

 

Note 3 — Accounting for the Business Combination

 

The Business Combination will be accounted for using the acquisition method in accordance with IFRS 3. MAC has been identified as the “acquirer” as it will obtain control over CMPL as the “acquiree” by its wholly owned subsidiary, MAC-Sub, purchasing 100% of the share capital of CMPL. The Transaction will be completed by transferring cash and issuing New MAC Ordinary Shares to Glencore. In addition, there will be a Royalty Deed with Glencore which is to be classified as a financial liability. Deferred and contingent consideration also exists for the potential payouts to Glencore based on proceeds from a future ASX listing and/or capital raising and if the average daily LME closing price for copper is greater than (a)$4.25/lb ($9,370/mt) for any rolling 18-month (commencing at Closing), and (b) $4.50/lb ($9,920/mt) for any rolling 24-month period (commencing at Closing) during the life of the mine. The cash being transferred represents a significant majority of the total consideration, meaning the SPAC merger is carried out primarily by transferring cash rather than by exchanging equity interests. The purchase consideration will be allocated to the fair value of the acquired assets and liabilities and will be based on management’s best estimate of the fair value based on currently available information. The actual amount allocated to certain identifiable net assets could vary as the purchase price allocation is finalized. The Royalty Deed Agreement and potential payments for the ASX dual-listing and average copper prices are to be classified as a financial liability and initially recognized at fair value, and subsequently measured at fair value with changes recognized in profit or loss. The Offtake Agreement represents an executory contract that replaces the existing offtake agreement between CMPL and Glencore which will be settled and closed out on the date of the acquisition. Delivery of goods and sales earned under the new Offtake Agreement will be recorded in accordance with CMPL’s revenue recognition policies when they occur which has been reflected as Transaction Accounting Adjustments in the unaudited pro forma condensed combined financial statements.

 

Note 4 — Impacts of Alternative Redemption Scenarios

 

The unaudited pro forma condensed combined financial statements reflect the Transaction assuming 50% and 0% redemption scenarios by existing Class A shareholders (see Note 2). If redemptions are higher than MAC’s assumption of 50%, it would not be able to fund the minimum cash consideration for the Transaction. A 100% redemption scenario has not been presented in the unaudited pro forma condensed combined financial statements for this reason.

 

Note 5 — Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The unaudited pro forma condensed combined statement of financial position and combined statements of income (loss) have been prepared to reflect the Transaction together with the related transactions summarized above and the following assumptions and adjustments.

 

 

 

 

Unaudited Pro Forma Condensed Combined Statement of Financial Position

 

(a)Upfront deposit relating to the sale-and-purchase agreement for 100% of the payable silver over the life- of-mine (“Silver Stream”): Adjustment related to proceeds from the $75 million upfront deposit for the Silver Stream. The term of the Silver Stream is 20 years and represents a prepayment for payable silver to be sold to Osisko. The Silver Stream is an executory contract and MAC only has a responsibility to deliver refined silver if refined silver is produced. An additional $15 million of funding (for a total funding of $90 million) would be available under the Silver Stream subject to silver prices above a threshold price of $25.50 per ounce for if the average LBMA silver price over the ten (10) day period prior to the closing of the Silver Stream. Based on current silver prices, the additional funding would not be available, and accordingly the pro forma information is only based on the $75 million. The upfront deposit of $75 million was recorded as a deferred liability in the pro forma balance sheet. The economic effective date for the commencement of deliveries under the Silver Stream be February 1, 2023. Given the Closing Date will occur after February 1, 2023, MAC shall sell and deliver Refined Silver to the Purchaser in an amount equal to the Streamed Silver Quantity of each outturn of Refined Silver by an offtaker (provisional or final) between February 1, 2023, and the Closing Date within twenty (20) business days of the Closing Date. No deliveries of Refined Silver will be required if either the Closing Date has not occurred, or the Silver Deposit has not been paid by the Purchaser. The contractual amount owing as at March 31, 2023 is $1,861,020. The proceeds from the Silver Stream have been adjusted to reflect the amount owing as at March 31, 2023.

 

(thousands of US dollars)    
Gross proceeds under Silver Stream  $75,000 
Less Deliveries owing as at March 31, 2023   (1,861)
Net Silver Stream Proceeds  $73,139 

 

(b)Credit facilities: MAC has entered into a syndicated senior term loan facility for $205 million and a mezzanine facility for $135 million that will be used to partially fund the cash portion of the purchase price payable in the Transaction. Both facilities are currently subject to the fulfilment of certain conditions precedent prior to Closing. MAC has already incurred debt issuance costs associated with the facilities of $1,598,459 and estimates the incremental costs to be incurred of $10,792,027 and payable upon the Closing. The net amount available under the syndicated senior term loan facility to fund the purchase price is $195.7 million after taking into account incremental debt issuance cost of $8,092,027. The mezzanine facility has an original issue discount of 2% and the total estimated incremental cost associated for the facility is $2,700,000. The net amount available to fund the purchase price is $131.9 million. The Redemptions Backstop Facility comprises a $75 million copper stream and an incremental $25 million equity commitment (See Note 2 and Note 5(c)). The $75 million copper stream is fully subordinated to the senior lending facility with a delivery holiday for the first 12 months post-Closing. On the 5th anniversary of Closing, New MAC will have the option to buy back one third of the residual stream amount (reducing the second Threshold Stream and Tail Stream to 3.25% and 1.5%, respectively) for $40 million cash. Deliveries under the copper stream may be deferred and are therefore accounted as a financial liability at fair value of the consideration received. Under the No Redemption Scenario, MAC will not drawdown on the Redemption Backstop Facility of $75 million and accordingly Osisko will not be required to fund the incremental $25 million equity commitment. The interest on the Mezzanine facility can be paid in cash or accrued as a payment-in-kind (“PIK”) at the election of MAC. PIK interest will only be settled in cash as a bullet payment at the maturity date of the facility. The percentage that can be accrued as a PIK is dependent on a range of copper prices. The senior and mezzanine debt facilities are recognized at amortized cost net of debt issuance costs and original issue discounts. See “Certain Agreements Related to the Business Combination” contained in the Registration Statement for more information.

 

 

 

 

(in thousands of US dollars)    
Syndicated Senior Term Loan  $205,000 
Less Estimated Incremental Debt issuance costs   (8,092)
Net Funding Amount  $196,908 
Less Accrued Debt issuance cost   (1,214)
Syndicated Senior Term Loan Liability  $195,694 
Portion reclassified to short term   (68,333)
Syndicated Senior Term Loan Liability - Long Term  $127,361 
      
Mezzanine Loan  $135,000 
Less Estimated Incremental Debt issuance costs   (2,700)
Net Funding Amount  $132,300 
Less Accrued Debt issuance cost   (385)
Mezzanine Loan Liability  $131,915 

 

(c)Private placement and replacement of MAC Class B Ordinary Shares with New MAC Ordinary Shares: The adjustment reflects the estimated net proceeds from the issuance of a total of 22,952,247 MAC Ordinary Shares at the redemption share price of $10.00 per share (par value of $0.0001 per share) less any share issuance costs to PIPE Investors (17,222,247 shares), Other Equity from Osisko, Sprott and certain of MAC’s officers and directors (an aggregate of 3,230,000 shares) and in relation to the equity component of the Redemptions Backstop Facility (2,500,000 shares, if applicable). The issuance of the 22.95 million MAC Ordinary Shares have a nominal value of $2,295, and at $10.00 per share, will generate gross proceeds of $229.5 million. The proceeds from the PIPE Financing, Other Equity and equity component of the Redemptions Backstop Facility are recognized at the fair value of the consideration received less estimated share issuance costs of approximately $5,089,000 for a net funding amount of $224.4 million. Upon Closing, the current 6,628,695 MAC Class B Ordinary Shares held by the Sponsor (including the interests of certain initial IPO investors (“Anchor Investors”)) will be converted on a one-for-one basis into New MAC Ordinary Shares. Certain qualified institutional buyers or institutional accredited investors who are unaffiliated with the MAC management team (“Cornerstone Investors”) purchased a total of 9,000,000 New MAC Ordinary Shares, or 52.3%, of the PIPE of 17,222,247 Ordinary Shares. The Sponsor has agreed to transfer an aggregate of 517,500 Founder Shares to Cornerstone Investors. MAC estimated the aggregate fair value of these Founder Shares attributable to Cornerstone Investors via their purchase of PIPE shares to be $4,641,975, or $8.97 per share. The Founder Shares allocated to the Cornerstone Investors represent a capital contribution by the Sponsor for the benefit of MAC and are recorded as offering costs and reflected as a reduction in the proceeds from the offering and offering expenses. The Sponsor, initial shareholders and Cornerstone Investors have waived all anti-dilution rights with respect to such shares.

 

Shares  Assuming 50%
Redemption
Scenario		   Assuming No
Redemption
Scenario		 
PIPE Investors   17,222,247    17,222,247 
Redemptions Backstop Facility   2,500,000    - 
Other Equity   3,230,000    3,230,000 
Total Shares issued   22,952,247    20,452,247 
           
(in thousands of US dollars)          
Gross proceeds  $229,522   $204,522 
Capital contribution for allocation of Founder Shares to
Cornerstone Investors		   4,642    4,642 
Fair value of Sponsor Shares to Cornerstone Investors   (4,642)   (4,642)
Less Share Issuance Costs   (5,089)   (5,089)
Net Proceeds  $224,433   $199,433 

 

(d)Sale-leaseback: In conjunction with the Transaction and to establish liquidity upon Closing, MAC will enter into a permitted sale-leaseback arrangement for newly acquired underground equipment with an estimated fair value on acquisition of $16.7 million (A$25 million) which will result in the recognition of a lease liability of $16.7 million and a corresponding right-of-use asset amount. The fair value of the assets subject to the sale are equal to the current carrying value. The net effect of the transaction is a reduction in Property, Plant and Equipment of $1,387,492 (See Note 5(e)). The lease liability is recognized at amortized cost over an expected lease term of three (3) years and split between a long-term portion of $10.3 million and a short-term portion of $6.4 million.

 

 

 

 

(e)Repayment of the Promissory note and related party amounts from the Sponsor, accounting for incremental transaction costs: The promissory note from the MAC Sponsor is to partially fund transaction costs in connection with the proposed Business Combination and will be repaid on closing under the terms of the note. Adjustment to decrease New MAC’s cash by an approximate $17.6 million and settle the deferred liability relating to estimated transaction costs incurred to date in MAC of approximately $10.26 million, accrued expenses and accounts payable related to the transaction in MAC of $2.1 million, incremental transaction cost of $3.75 million in connection with the Transaction and settlement of the MAC promissory note and related party amounts of $1.48 million. The $10.3 million deferred liability includes the current estimate of agreed accounting and auditing fees incurred by Glencore on the Transaction. These transaction costs do not relate to share or debt issuances. The cash settlement of Stamp duty will be made post-Closing and based on the final valuation of acquired assets. MAC’s transaction costs comprise stamp duty, legal and accounting fees that are not accounted for as a reduction in additional paid-in capital or as a reduction in debt funding and will be recognized in MAC’s consolidated statement of comprehensive income when the Transaction occurs.

 

(thousands of US dollars)    
Transaction costs incurred on closing     
Stamp duty  $59,046 
Other transaction costs   3,750 
Transaction Costs  $62,796 
Loss recognized on Sale-and-leaseback   1,387 
Accumulated deficit  $64,183 
      
Transaction costs settled on closing     
Other transaction costs incurred on closing  $3,750 
Accrued expenses and accounts payable   2,078 
Deferred liabilities   10,261 
Due to related party   23 
Promissory note from related party   1,459 
   $17,571 

 

(f)Cash collateral posted for Environmental Rehabilitation Bond: Adjustment relates to the posting of 50% cash collateral for the estimated closure bond of $25.1 million (A$37.5 million) on closing of the Transaction with Tokio Marine & Nichido Fire Insurance Co. The collateral is measured at fair value on the date of the transfer.

 

(g)Deferred underwriting costs: Adjustment relates to the payment of the deferred underwriting fees related to the August 2, 2021, initial public offering of MAC and will be settled on closing of the Transaction.

 

 

 

(h)Acquisition of CMPL: If the transaction had occurred on March 31, 2023, the estimated preliminary fair values of the identifiable assets and liabilities (and related tax impacts) of CMPL and the purchase consideration would be as follows:

 

(in thousands of USD dollars)  Carrying Value   Purchase Price
Allocation		   Fair Value 
Assets               
Cash and cash equivalents(1)  $406   $15,000   $15,406 
Trade receivables from related parties   -    -    - 
Other receivables   1,648         1,648 
Inventories   21,415    24,068    45,483 
Prepaid expenses   2,018         2,018 
Property, plant and equipment(3)   423,910    815,785    1,239,695 
Intangible assets   721         721 
Inventories   334         334 
Other assets   -         - 
Total Assets  $450,452   $854,853   $1,305,305 
                
Liabilities               
Trade payables  $10,734        $10,734 
Trade payables related parties(2)   1,720    (1,720)   - 
Other payables   6,483         6,483 
Short term Lease liabilities   568         568 
Short term Provisions   11,870         11,870 
Lease liabilities   67         67 
Provisions   44,600         44,600 
Deferred tax liabilities(3)   10,108    121,375    131,483 
Total Liabilities  $86,150   $119,655   $205,805 
Net Assets Acquired  $364,302   $735,198   $1,099,500 
                
Estimated Purchase Price Consideration               
Cash            $775,000 
Royalty Deed             45,000 
Deferred Consideration             75,000 
Fair value of Contingent Consideration             104,500 
Current CMPL shareholders             100,000 
Total            $1,099,500 

 

(1)The Transaction as agreed, allows for a minimum working cash amount of $15 million to be available in cleared funds as well as finished product inventory equating to approximately one month of production or two shipments upon Closing to establish minimum liquidity. The finished product inventory has been revalued to estimated net realizable value. Estimated net realizable value is determined based on the prevailing copper sales price less estimated treatment and refining costs based on the new offtake agreement.

 

(2)Parties have agreed that all related party transactions in CMPL will be settled prior to closing as it represents amounts receivable and payable under the historical offtake agreement.

 

(3)The preliminary purchase price allocation is based on management’s best estimate using the depreciated replacement cost method and taking into account any change in the tax base of the assets as a result of the allocation. The actual amount allocated to certain identifiable net assets could vary as the purchase price allocation is finalized post closing.

 

(4)In the event that the proceeds from PIPE Investors and the cash from trust relating to non- redemption of Class A Ordinary Shares exceed $420,000,000, Glencore will have the right to scale back the 10,000,000 shares in New MAC, in multiples of 100,000 at an issuance price of $10.00 per share, and receive the equivalent cash consideration. This right is only applicable at Closing. If the above condition is met, Glencore will have the sole discretion to scale back the shares in New MAC to $0 (with any scale-back to be reflected in the upfront cash payment). Based on MAC’s current assumptions (including with respect to the size of the PIPE Financing and the number of redemptions), it is not likely that Glencore will be able to scale back the amount of New MAC Ordinary Shares it receives.

 

 

 

 

(i)Redemption of MAC Class A Ordinary Shares: Adjustment to reflect the MAC redemption assumption of 50% of existing MAC Class A Ordinary Shares upon Closing of the Transaction. These shareholders will be able to fully redeem their funds at the original subscription price of $10.00 per share plus interest. The remaining 50% in the Trust account reflecting 13,257,390 non-redeeming MAC Class A Ordinary Share shareholders will become ordinary shareholders of New MAC, resulting in $135,878,683 (13,257,390 shares at $10.00 per share plus interest) as at March 31, 2023, to be transferred to available cash to fund the Transaction.

 

Under the No Redemption Scenario, all MAC Class A Shareholders representing 26,514,780 of issued shares will become ordinary shareholders of New MAC, resulting in $271,757,366 (26,514,780 shares at $10.00 per share plus interest) as at March 31, 2023, to be transferred to available cash to fund the Transaction. Under the No Redemption Scenario, New MAC will not drawdown the Redemption Backstop Facility of $100 million described in Note 5(b) and Note 5(c).

 

(j)Deferred Consideration:

 

$75,000,000 as a deferred cash payment on the following terms:

 

a.payable upon New MAC’s listing on the ASX or undertaking any alternative equity raise (up to 50% of the net proceeds from the raise, capped at $75 million);

 

b.the unpaid balance of the $75,000,000 will accrue interest at a rate equivalent to what New MAC pays on the Mezz Facility, set at 3-month SOFR plus a variable margin of 8 – 12% (which will be determined by reference to prevailing copper prices); and

 

c.any residual (up to the $75,000,000 plus applicable interest) not paid in cash by the date that is twelve (12) months after the Closing will be settled on the next business day through the issuance of additional New MAC Ordinary Shares at a 30% discount to the 20-trading day VWAP before the issuance (the “Equity Conversion Date”). If New MAC is listed on more than one exchange, the VWAP will be calculated by reference to the exchange with the largest volume (US$ equivalent) over the 20-trading day period before the Equity Conversion Date. If the New MAC Ordinary Shares cannot be issued to Glencore due to applicable law or the rules of any applicable stock exchange, Glencore, in its sole discretion, may delay the date for the issuance of the New MAC Ordinary Shares, noting that such right only delays the date for the issuance of the New MAC Ordinary Shares, which amount of New MAC Ordinary Shares will be set on the Equity Conversion Date;

 

d.The Deferred Consideration are recognized as a financial liability that is measured at amortized cost.

 

(k)Contingent Adjustments (please refer to Note 3 for additional information regarding the accounting treatment of these portions of the Transaction):

 

a.Royalty Deed: The Royalty Deed is a net smelter return royalty agreement pursuant to which after the Closing, CMPL will pay to the Seller a royalty equal to 1.5% from all net smelter returns from all marketable and metal-bearing copper material produced from the mining tenure held by CMPL at the time of the Closing. The $45 million adjustment reflects the fair value of the Royalty Deed upon close of the Transaction. The estimated fair value was determined by discounting 1.5% of the future expected copper net smelter return over the expected life of the mine. The net smelter return is determined using consensus copper prices less estimated treatment and refining costs under the new offtake agreement.

 

b.Copper price: After Closing, Glencore is entitled to $150 million in cash structured as two contingent payments of $75 million each, the First Contingent Copper Payment and Second Contingent Copper Payment, that are unsecured, fully subordinated and payable if, and only if, over the life of the mine, the average daily LME closing price is greater than (i) $4.25/lb ($9,370/mt) for any rolling 18-month period (commencing at Closing), and (ii) $4.50/lb ($9,920/mt) for any rolling 24-month period (commencing at Closing). The contingent payments are recognized as a financial liability and measured at fair value estimated at $104.5 million based on the output from a commodity price simulation model and recognized as a financial liability.

 

Key assumptions    
LME Spot Copper Price  $4.10 
Annualized Copper Price Volatility   26.10%
Annual Copper Price Inflation Rate   1.04%
Risk-free Interest Rate   3.70%
Reversion factor   11.60%

 

 

 

 

(l)Warrant liability: Adjustment for the fair value of 3,187,500 warrants to purchase New MAC Ordinary Shares issued to Sprott in connection with the Mezzanine Facility. The warrants have an exercise price of $12.50 per share, are fully transferable and have a 5-year term from the date of issuance. The Warrant liability is estimated at fair value using a Black-Scholes Merton model.

 

Key assumptions    
Underlying Share Price  $10.22 
Strike Price  $12.50 
Volatility   25.00%
Risk-free Interest Rate   3.70%
Term   5 years 

 

(m)Additional paid-in capital: Adjustment for the conversion of MAC Class A and B shares to common shares in New MAC based on the respective Redemption Scenario. The remaining adjustments reflect the additional paid-in capital for shares issued at $10 per share less the Par Value of $0.0001 per share in New MAC less share issuance costs associated with the PIPE Investors and warrants issued in connection with the Mezzanine Facility.

 

  Proceeds   Common Shares - Par Value   Additional Paid-In Capital 
(in thousands of USD dollars)  Assuming
No
Redemption		   Assuming
50%
Redemption		   Assuming
No
Redemption		   Assuming
50%
Redemption		   Assuming
No
Redemption		   Assuming
50%
Redemption		 
MAC Class A Ordinary Shareholders  $271,757   $135,879   $3   $1   $271,754   $135,877 
PIPE Investors   172,222    172,222    2    2    172,221    172,221 
Redemption Backstop Facility   -    25,000    -    0    -    25,000 
Current CMPL shareholders   100,000    100,000    1    1    99,999    99,999 
Other Equity Investments   32,300    32,300    0    0    32,300    32,300 
Gross Proceeds   576,279    465,401    6    5    576,274    465,396 
Fair Value of Founder Shares allocated to Cornerstone Investors   (4,642)   (4,642)   -    -    (4,642)   (4,642)
Mezz Warrants issued   (6,965)   (6,965)   -    -    (6,965)   (6,965)
PIPE Share Issuance Costs   (5,089)   (5,089)   -    -    (5,089)   (5,089)
    559,583    448,705    6    5    559,578    448,700 
Capital contribution for Founder Shares allocated to Cornerstone Investors by Sponsor   4,642    4,642    -    -    4,642    4,642 
Class B Shares held by the Sponsor   -    -    1    1    -    - 
Total  $564,225   $453,347   $7   $6   $564,220   $453,342 

 

(n)Depreciation of acquired assets: Reflects the revised depreciation of finite-lived assets arising on the acquisition of CMPL and based on management’s preliminary estimate of estimated useful lives. The major categories of property, plant and equipment are depreciated on a unit of production (“UOP”) and/or straight-line basis. The finite-lived assets relate to buildings and plant and equipment that are depreciated on a straight-line basis while mineral resource and mine development follow the UOP basis. Estimated useful lives are linked to MAC’s estimate of current life-of-mine while the estimated UOP rate is approximately 2% on an annualized basis. UOP is based on MAC’s current estimate of proven and probable reserves which includes inferred resources converted at a historical conversion rate Pro forma adjustments by asset category are as follows:

 

 

 

 

   For the three months ended March 31, 2023 
(in thousands of USD dollars)  CMPL
Depreciation		   Revised MAC
Depreciation		   Transaction
Accounting
Adjustment		 
Freehold land and buildings  $(65)  $(159)     
Plant and equipment   (7,218)   (5,596)     
Right-of-use assets   (352)   (8)     
Mineral Resource   -    (1,609)     
Mine Development   (4,061)   (3,092)     
Included in cost of goods sold  $(11,696)  $(10,464)  $1,232 

 

   For the year ended December 31, 2022 
(in thousands of USD dollars)  CMPL
Depreciation		   Revised MAC
Depreciation		   Transaction
Accounting
Adjustment		 
Freehold land and buildings  $(529)  $(635)     
Plant and equipment   (32,319)   (22,384)     
Right-of-use assets   (1,320)   (30)     
Mineral Resource   -    (6,435)     
Mine Development   (17,160)   (12,369)     
Included in cost of goods sold  $(51,328)  $(41,853)  $9,475 

 

Asset Category  Carrying
Value at
March 31,
2023		   Allocation of
FV
Adjustment
to Asset
Categories		   Revised
Asset
Base		   Revised
useful
life		   Depreciation
method		  Revised
Annual
Depreciation
using MAC
Useful Lives		   Revised
Quarterly
Depreciation
using MAC
Useful Lives		 
Freehold land and buildings  $1,182   $10,245   $11,427    18   Straight Line  $635   $159 
Plant and equipment   198,056    204,853    402,909    18   Straight Line   22,384    5,596 
Right-of-use assets   547    -    547    18   Straight Line   30    8 
Mineral Resource   -    282,271    282,271    2%  UOP   6,435    1,609 
Exploration and evaluation   -    -    -    2%  UOP   -    - 
Mine Development   224,125    318,415    542,540    2%  UOP   12,369    3,092 
Total   423,910    815,784   $1,239,694           $41,853   $10,464 

 

 

 

 

(o)Royalty Deed: Reflects estimated costs of 1.5% copper only net smelter return royalty payable to Glencore as part of the Royalty Deed going forward. See Note 1, Note 2, Note 5(k)(a) herein.

 

(p)Sale-leaseback: Reflects estimated depreciation of the right of use asset and interest on the sale- leaseback. The right-of-use asset is capitalized at $16.7 million (see Note 5(d)) and depreciated over an estimated useful life of three (3) years on a straight-line basis.

 

(q)Transaction costs: Reflects estimated costs associated with the Transaction of $62.8 million to be incurred subsequent to December 31, 2022 (See Note 5(e)).

 

(r)Reversal of Trust interest income, Change in fair value of conversion option and Amortization of discount on convertible promissory note: Trust income represents interest earned from the cash held in the Trust Account for the three months ended March 31, 2023, of $2,848,650 and for the year ended December 31, 2022, of $ 3,753,097. The Trust funds will be utilized to fund the proposed Business Combination and accordingly this income will not form part of future operations. The change in fair value of the conversion option is applicable to the conversion option embedded in the promissory note from the Sponsor to MAC in order to fund expenses related to the Transaction in 2022. The Promissory note will be converted to Private warrants or per the terms, settled at the close of the Transaction (See Note 5(e)).

 

(s)Interest on debt facilities and Glencore Deferred Consideration: Reflects interest expense related to the drawdown of a $205 million syndicated senior term loan using a current estimate of the payable interest rate of 8.1% and the interest expense relating to the $135 million Mezz Facility is based on an estimate of the applicable interest rate of 12.5%. The Glencore Deferred Consideration carries interest at the same rate as the Mezz Facility; the interest rate period is assumed to be six (6) months from Closing, taking into account the timing and estimated proceeds from the planned ASX listing as discussed in these notes and elsewhere in this filing. Under the 50% Redemption Scenario, interest is also calculated on the $75 million Copper Stream from Osisko.

 

   For the Three months ended March 31, 2023 
(in thousands of US dollars)  Metals
Acquisition
Corp Pro Forma
(50%
redemption
scenario)		   Metals
Acquisition
Corp Pro Forma
(no redemption
scenario)		 
Interest Expense          
Subordinated debt - Mezz Term Loan  $4,220   $4,220 
Senior Debt - Term Loan (Banks)   4,167    4,167 
Senior Debt - Revolving Credit Facility (Banks)   -    - 
Glencore Deferred Payment   1,289    1,289 
Redemption Backstop Facility - Debt (Copper Stream)   897    - 
Surety Bond (Environmental Liability)   251    251 
Equipment leases   212    212 
Total interest expense  $11,036   $10,139 

 

The sensitivity analysis below demonstrates the impact of 0.125% change on the Transaction Adjustment interest expense for the three months ended March 31, 2023, of $10,139 under the No Redemption scenario and $11,036 under the 50% Redemption Scenario for the period.

 

   Assuming No Redemption   Assuming 50% Redemption 
(in thousands of US dollars)  Decrease
0.125%		   Increase
0.125%		   Decrease
0.125%		   Increase
0.125%		 
Senior Debt - Term Loan (Banks)  $4,177   $4,262   $4,177   $4,262 
Subordinated debt - Mezz Term Loan   4,103    4,231    4,103    4,231 
Glencore Deferred Payment   1,278    1,301    1,278    1,301 
Redemption Backstop Facility - Debt (Copper Stream)   -    -    873    921 
Surety Bond (Environmental Liability)   244    259    244    259 
Equipment leases   208    216    208    215 
Total interest expense  $10,009   $10,269   $10,883   $11,189 
Net Movement  $(130)  $130   $(153)  $153 

 

 

 

 

   For the year ended December 31, 2022 
(in thousands of US dollars)  Metals
Acquisition
Corp Pro Forma
(50%
redemption
scenario)		   Metals
Acquisition
Corp Pro Forma
(no redemption
scenario)		 
Interest Expense          
Subordinated debt - Mezz Term Loan  $16,878   $16,878 
Senior Debt - Term Loan (Banks)   16,667    16,667 
Glencore Deferred Payment   5,157    5,157 
Redemption Backstop Facility - Debt (Copper Stream)   3,589    - 
Surety Bond (Environmental Liability)   1,006    1,006 
Equipment leases   1,229    1,229 
Total interest expense  $44,526   $40,937 

 

The sensitivity analysis below demonstrates the impact of 0.125% change on the Transaction Adjustment interest expense for the year ended December 31, 2022, of $40,937 under the No Redemption scenario and $44,526 under the 50% Redemption Scenario for the period.

 

   Assuming No Redemption   Assuming 50% Redemption 
(in thousands of US dollars)  Decrease
0.125%		   Increase
0.125%		   Decrease
0.125%		   Increase
0.125%		 
Senior Debt - Term Loan (Banks)  $16,710   $17,047   $16,710   $17,047 
Subordinated debt - Mezz Term Loan   16,410    16,923    16,410    16,923 
Glencore Deferred Payment   5,110    5,204    5,110    5,204 
Redemption Backstop Facility - Debt (Copper Stream)   -    -    3,495    3,683 
Surety Bond (Environmental Liability)   974    1,037    974    1,037 
Equipment leases   1,209    1,250    1,209    1,250 
Total interest expense  $40,413   $41,461   $43,908   $45,144 
Net Movement  $(524)  $524   $(618)  $618 

 

(t)Tax: The adjustment reflects the estimated tax impact of pro forma adjustments relating to MAC-Sub at the Australian Company tax rate of 30% for the three months ended March 31, 2023, and for the year ended December 31, 2022 as well as pro forma management adjustments at New MAC that will be subject to Jersey company tax of 0% which is equivalent to the MAC Cayman tax rate.

 

   Three months ended March 31, 2023 
(in thousands of US dollars)  Assuming 50%
Redemption		   Assuming No
Redemption		 
Tax effect of All Transaction adjustments  $808   $539 
Deferred Tax release due to temporary differences associated with revised depreciation   741    741 
Reversal of CMPL uncertain tax positions(1)   1,256    1,256 
Transaction Adjustment  $2,805   $2,536 
CMPL Tax expense   (3,981)   (3,981)
Tax (benefit)/Expense  $(1,176)  $(1,445)

 

(1)The CMPL uncertain tax positions relates to an estimated impact of a transfer pricing matter relating to the historical offtake agreement as well as the historical Tax Consolidated Group. New MAC (via MAC-Sub) will form a new Tax Consolidated Group and accordingly this tax position will not apply going forward.

 

 

 

 

   For the year ended December 31, 2022 
(in thousands of US dollars)  Assuming 50%
Redemption		   Assuming No
Redemption		 
Tax effect of All Transaction adjustments  $7,608   $6,531 
Deferred Tax release due to temporary differences associated with revised depreciation   2,966    2,966 
Reversal of CMPL uncertain tax positions   12,395    12,395 
Transaction Adjustment  $22,969   $21,892 
CMPL Tax benefit   (15,715)   (15,715)
Tax (benefit)/Expense  $7,254   $6,177 

 

(1)The CMPL uncertain tax positions relates to an estimated impact of a transfer pricing matter relating to the historical offtake agreement as well as the historical Tax Consolidated Group. New MAC (via MAC-Sub) will form a new Tax Consolidated Group and accordingly this tax position will not apply going forward.

 

(u)Offtake agreement: Adjustments to revenue and distribution and selling expenses to account for the revised offtake agreement between MAC-Sub and CMPL related party. The historical CMPL financial statements accounts for the offtake agreement with GIAG, the same counterparty as the counterparty going forward. The terms and nature of the agreement have changed, and therefore the financial statements have been adjusted to reflect the effects of the new agreement for the three months ended March 31, 2023, and the year ended December 31, 2022. The offtake agreement has changed from a price participation agreement for treatment and refining costs to benchmark offtake agreement with market referenced treatment and refining cost. Any amounts receivable under the historical offtake agreement will be settled on Closing (Refer to Note 5(h)).

 

(v)Reclassification to conform financial statement line-item presentation: Please also refer to Note 8. MAC operating and formation costs for the three months ended March 31, 2023, of $1,203,610, acquisition costs of $3,383,270 and bank fees of $1,191 have been reclassified as Administrative expenses and will be non-recurring in the 12 months following the consummation of the Business Combination. Similarly, operating and formation costs for the year ended December 31, 2022, of $2,117,475 and acquisition costs of $7,625,359 and bank fees of $5,205 have been reclassified as Administrative expenses, are non-recurring and will not recur beyond the 12 months following the consummation of the Business Combination.

 

Note 6 — Management Adjustments

 

Management Adjustments reflects adjustments for estimated corporate costs to operate New MAC post the Transaction, as a publicly traded mining company owning the CSA mine. The estimated corporate expenses represent dis-synergies of the Business Combination since CMPL represents a privately held entity that do not have an existing executive or corporate structure.

 

Corporate overhead costs are based on Managements’ experience of running single asset, public mining companies and based on judgment. These costs may not be sufficient to cover all expected and unexpected overhead costs in order to run New MAC.

 

 

 

 

(in thousands of US dollars)  Three months
ended March 
31, 2023		   For the
year ended
December 
31, 2022		 
Directors’ and officers' insurance  $625   $2,500 
Executive and Corporate personnel salaries   985    3,940 
Director Fees   130    520 
Regulatory fees   31    125 
Investor relations and conference fees   138    550 
Head Office Rent   19    75 
IT and communications   328    1,312 
Audit Fees and Internal control   100    400 
Miscellaneous   63    250 
Corporate overhead costs  $2,418   $9,672 

 

The effect of Management Adjustments on earnings per share for the three months ended March 31, 2023, are as follows:

 

   Three months ended March 31, 2023 
(in thousands of US dollars)  Assuming No
Redemption		   Assuming 50%
Redemption		 
Profit/(loss) for the year  $615   $(13)
Corporate overhead costs   (2,418)   (2,418)
Revised Profit/(Loss) for the year  $(1,803)  $(2,431)
           
Loss per share - basic  $(0.03)  $(0.05)
Weighted average shares outstanding - basic   63,595,722    52,838,332 
Profit (Loss) per share - diluted  $(0.03)  $(0.05)
Weighted average shares outstanding - diluted   63,595,722    52,838,332 
Effect of potential dilutive securities   -    - 
Adjusted weighted average shares outstanding - diluted   63,595,722    52,838,332 

 

For the three months ended March 31, 2023, 18,561,064 of potentially dilutive common shares, issuable upon the exercise of the Public Warrants (8,838,260), Private Warrants (6,535,304) and Mezzanine Financing Warrants (3,187,500) were not included in the computation of loss per share as their effect was anti-dilutive.

 

 

 

 

The effect of Management Adjustments on earnings per share for the year ended December 31, 2022, are as follows:

 

   For the year ended December 31, 2022 
(in thousands of US dollars)  Assuming No
Redemption		   Assuming 50%
Redemption		 
Profit/(loss) for the year  $(9,980)  $(12,493)
Corporate overhead costs   (9,672)   (9,672)
Revised Profit/(Loss) for the year  $(19,652)  $(22,164)
           
Loss per share - basic  $(0.31)  $(0.42)
Weighted average shares outstanding - basic   63,595,722    52,838,332 
Profit (Loss) per share - diluted  $(0.31)  $(0.42)
Weighted average shares outstanding - diluted   63,595,722    52,838,332 
Effect of potential dilutive securities   -    - 
Adjusted weighted average shares outstanding - diluted   63,595,722    52,838,332 

 

For the year ended December 31, 2022, 18,561,064 of potentially dilutive common shares, issuable upon the exercise of the Public Warrants (8,838,260), Private Warrants (6,535,304) and Mezzanine Financing Warrants (3,187,500) were not included in the computation of loss per share as their effect was anti- dilutive.

 

Note 7 — Profit (loss) per share

 

The pro forma net income (loss) per share is calculated using the pro forma weighted average number of shares outstanding, and the issuance of additional shares in connection with the Business Combination and PIPE financing for the three months ended March 31, 2023, and the year ended December 31, 2022.

 

Basic and diluted net income (loss) per share is calculated by dividing the net income (loss) for the period by the pro forma weighted average number of ordinary shares and dilutive shares that would have been outstanding during the period using the treasury stock method. Excluded from the calculation are potential equity awards to be issued under employee plans. New MAC Warrants issued in connection with the Business Combination are not included in the basic earnings per share calculation as the options are not exercised at the date of the consummation of the Share Sale Agreement.

 

The weighted average number of ordinary shares was determined by taking the historical number of ordinary shares outstanding of MAC and adjusting for the shares issued under the Transaction and shown in Note 4.

 

   Assuming No
Redemption
Scenario		   Assuming
50%
Redemption
Scenario		 
New MAC Ordinary shares outstanding after Business Combination   63,595,722    52,838,332 
New MAC Warrants          
Public Warrants   8,838,260    8,838,260 
Private Warrants   6,535,304    6,535,304 
Mezzanine Financing Warrants   3,187,500    3,187,500 
Total New MAC Ordinary Shares Outstanding After Warrant Exercise   82,156,786    71,399,396 
           
Profit (Loss) per share Denominator          
Weighted average shares outstanding – basic   63,595,722    52,838,332 
Weighted average shares outstanding – diluted   63,595,722    52,838,332 

 

For the three months ended March 31, 2023, under the 50% Redemption scenario, and the year ended December 31, 2022, under the 50% Redemption and No Redemption scenarios, 18,561,064 of potentially dilutive common shares, issuable upon the exercise of the Public Warrants (8,838,260), Private Warrants (6,535,304) and Mezzanine Financing Warrants (3,187,500) were not included in the computation of loss per share as their effect was anti-dilutive.

 

 

 

 

 

For the three months ended March 31, 2023, under No Redemption scenario, 18,561,064 of dilutive common shares were included in the computation of profit per share.

 

Note 8 — Financial Statement Reclassification

 

The following table provides a reconciliation of the reclassification of certain balances on the statement of comprehensive income for the three months ended March 31, 2023, and the year ended December 31, 2022, to conform MAC line items to those used by CMPL and as applied in preparing the pro forma financial information:

 

(in thousands of US dollars)

 

Metals Acquisition Corp  Cobar Management Pty.
Limited		  Three months
ended March
31, 2023		   Year ended
December 31,
2022		 
Operating and formation costs  Administrative expenses   (1,204)   (2,117)
Acquisition costs  Administrative expenses   (3,383)   (7,625)
Stock compensation  Administrative expenses   -    (224)
Bank Fee  Administrative expenses   (1)   (5)
Interest expense  Finance costs   (41)   - 
Change in foreign exchange  Net foreign exchange gains/(losses)   (1)   - 

 

The following table provides a reconciliation of the reclassification of certain balances on the statement of financial position of MAC as at March 31, 2023 to conform to the presentation used by CMPL and as applied in preparing the pro forma financial information:

 

(in thousands of US dollars)
 
Metals Acquisition Corp  Cobar Management Pty.
Limited		  Three months
ended March 31,
2023		 
Cash  Cash and cash equivalents   35 

 

Reclassifications of CMPL’s historical financial statement line items to pro forma financial

 

The following table provides a reconciliation of the reclassification of certain balances on the statement of profit or loss and other comprehensive income for the three months ended March 31, 2023, and for the year ended December 31, 2022, to conform historical CMPL line items to those used by New MAC on a go-forward basis and as applied in preparing the pro forma financial information:

 

(in thousands of US dollars)    
     
Cobar Management Pty. Limited  Pro Formas   Three months
ended March 31,
2023		    Year ended
December 31,
2022		 
Revenue from related party  Revenues  $65,227   $219,705