Retail investors are being offered the chance to buy shares in a fundraising by a UK-listed mining outfit looking to produce metals for electric vehicles.

ACG Acquisition Company (ACG) was launched in October 2022 as a SPAC (special purpose acquisition company) otherwise known as a cash shell. These are listed vehicles which have no assets apart from cash and are set up with the intention to buy businesses or assets.

ACG has found what it wants to purchase, agreeing to pay $1 billion for two Brazilian mines. These are a nickel sulphide asset called Santa Rita, operated by a company called Atlantic Nickel, and a producing copper mine called Serrote. They are both currently owned by resources-focused private equity firm Appian Capital.

Once this deal complete ACG will change its name to ACG Electric Metals and it is looking to raise $301 million to help cover the costs of the deal from retail and institutional investors.

The remainder of the money is coming from some heavyweight backers like Glencore (GLEN), car maker Stellantis (STLA:NYSE) and specialist mining investor La Mancha, each of which have agreed to subscribe for $100 million, as well as a $100 million prepayment for production from Volkswagen’s (VOW3:ETR) battery venture PowerCo, some debt and a royalty agreement with Royal Gold (RGLD:NASDAQ).

The plan is for the nickel concentrate to be refined at Glencore’s facilities in Europe and North America with the final product being incorporated into electric vehicle batteries by Stellantis, PowerCo and other manufacturers.

Retail investors have until 18 July to subscribe for the share offer. Though before they do there is some salient background to these assets and the whole venture which is worth considering.

The assets in question were in the process of being bought by South African mining giant Sibanye-Stillwater (SBSW:NYSE) before it pulled the plug on a $1 billion cash deal (with a 5% royalty on future output) in early 2022 thanks to a ‘geotechnical incident’ at Santa Rita, thought to be cracks which occurred during the open pit mining operation.

Appian disputed this was a major adverse event which justified cancelling the transaction and began legal proceedings for a $1.2 billion claim in the High Court in London. Atlantic Nickel is itself subject to litigation in Australia from Queensland’s Mining Standards International which previously tried to buy the Santa Rita mine.

ACG was set up by Artem Volynets, former CEO of small cap gold miner Chaarat Gold (CGH:AIM). 

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