Orica to buy Cyanco

Australia’s Orica is to buy Cyanco from an affiliate of Cerberus Capital Management for $640 million, 7.5x 2023 EBITDA, on a cash-free, debt-free enterprise value basis. This will be funded by existing cash and undrawn committed debt facilities, plus an A$400 million underwritten institutional placement.

Synergies of about $100 million are expected three years after completion. This is expected to be at the end of the 2024 financial year, subject to the expiration of certain regulatory waiting periods and other customary closing conditions.

Cyanco makes sodium cyanide mainly at facilities in Texas and Nevada for gold mining in the US, Canada, Mexico, Latin America and Africa. Orica, which manufactures at Yarwun, Australia, plans to create a Mining Chemicals business vertical and create an integrated global sodium cyanide manufacturing and distribution network.

Orica managing director and CEO Sanjeev Gandhi described Cyanco as “a highly complementary business” that will add 240,000 tonnes/year of capacity to its capacity, roughly doubling it. The deal also takes Orica into the North American market, notably the Nevada gold mining region.

Demand for sodium cyanide is expected to grow at 4%/year globally to 2028 but at 5-7%/year in North America. There are no commercially viable substitutes, according to Orica.