Cobre Elevates Stake in Sierra Atacama to Majority Ownership
Cobre Limited’s Chilean subsidiary has increased its stake in the Sierra Atacama Copper Project from 45% to over 54% through a $12 million capital raise, with a clear path to majority control by year-end.
- Ownership rises to 54.38% after $12 million capital raise
- Option to increase stake to 63.5% by December 2026
- Final option to acquire 100% with revised trigger and pricing
- Governance changes grant minority shareholder director rights
- Strategic timing follows positive cash flow turnaround
Cobre Advances Majority Control in Sierra Atacama
Cobre Limited (ASX:CBE) has taken a decisive step to cement its position as the dominant shareholder in the Sierra Atacama Copper Project in Chile. Its Chilean subsidiary, Sierra Cobre SpA, has executed amendments to key agreements that will see its ownership rise from 45% to 54.38% through a $12 million capital injection into Sierra Atacama SpA.
This capital raise involves the issuance of convertible non-voting Preference Shares to Cobre Chile, which, upon conversion, will rank equally with existing ordinary shares. The move is contingent on the minority shareholder opting not to exercise pre-emptive rights, a factor that could influence the final ownership split.
Pathway to Increased Control by Year-End
Beyond this immediate increase, Cobre Chile holds a Control Option allowing it to boost its stake further to 63.5% in both Sierra Atacama and Bergbau Wagen SpA by acquiring additional shares from Minera Salara Blanco (MSB) for $12 million. This option must be exercised by 31 December 2026, signaling a strategic deadline for investors to watch.
Should this option be exercised, Cobre would hold majority control over the project companies, a significant milestone that enhances its influence over operational and strategic decisions.
Revised Final Option and Governance Adjustments
The agreement also revises the trigger for Cobre Chile’s Final Option to acquire 100% ownership. The trigger now occurs when MSB’s stake falls to 25% or less, or upon board approval of the 2028 business plan, which requires MSB’s favorable vote. The purchase price is set at $68 million if exercised by the end of 2027, or the greater of $68 million or fair market value thereafter.
Governance arrangements have been updated to allow MSB to retain certain director and voting rights while it remains a shareholder, balancing control with minority protections.
Strategic Timing Follows Operational Turnaround
CEO Adam Wooldridge highlighted the significance of this ownership increase, noting it follows Cobre’s recent success in restoring Sierra Atacama to positive operating cash flow. This financial turnaround provides a stronger foundation for Cobre to assess its turnaround strategy before deciding on exercising the Final Option.
The timing aligns with ongoing efforts to optimise and expand the project, which has seen improvements in operational metrics and cash generation in recent months.
Bottom Line?
Cobre’s incremental ownership boost and clear pathway to majority control set the stage for critical decisions on full acquisition by year-end.
Questions in the middle?
- Will the minority shareholder participate in the capital raise, affecting Cobre’s final stake?
- How will Cobre’s operational improvements influence the decision to exercise the Final Option?
- What impact will revised governance rights have on strategic decision-making within Sierra Atacama?
