SYDNEY, AUSTRALIA: Orica, the world’s largest provider of commercial explosives and blasting systems, has announced a deal to acquire Cyanco, a US-based leader in the manufacture and distribution of sodium cyanide, for US$640 million.

Sodium cyanide is a key chemical used in the extraction of gold and other precious metals from ore. The acquisition of Cyanco will more than double Orica’s existing sodium cyanide production capacity to approximately 240,000 tonnes per annum and significantly increase its footprint in the North American gold mining industry.

Orica said the acquisition was in line with its strategy for growth beyond blasting and would create an integrated global mining chemicals business vertical. Cyanco operates two manufacturing plants in Nevada and Texas, which are strategically located to access cost competitive US natural gas-based manufacturing assets.

The acquisition purchase price represents an implied multiple of 7.5 times Cyanco’s expected earnings before interest, tax, depreciation and amortisation (EBITDA) for the calendar year 2023, before synergies, and 6.7 times after expected net cost synergies of about US$10 million.

Orica will fund the acquisition largely from its existing cash and undrawn committed debt facilities, alongside a A$400 million underwritten institutional placement. Orica will also undertake a non-underwritten share purchase plan capped at A$65 million to enable retail investor participation.

Orica said it would retain a prudent balance sheet post the acquisition and placement, with gearing expected to be at the lower end of its target range of 30 to 40 per cent. The acquisition and placement are expected to be mid-single digits earnings per share accretive in the first full year of ownership, before synergies.

Orica expects to complete the acquisition by the end of the financial year 2024, subject to regulatory approvals and customary closing conditions. Orica’s earnings outlook for the financial year 2024 remains unchanged from its announcement on 15 February 2024.

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.

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”.