Metals Acquisition Corp. (NYSE:MTAL) announced in an 8-K this morning that it has secured a $135 million mezzanine facility and $15 million PIPE investment to support its combination with Glencore’s (LON:GLEN) CSA Copper Mine.

The facility from lender Sprott is to mature five years out from close and require quarterly payments with interest set at either the three month term SOFR rate or 2% plus a variable rate that will shift with commodity copper prices.

These shifts will determine both the interest rate margin for each quarter and also what proportions that each payment will be in cash or capitalized to the principal, assuming the combined entity is not already undergoing a default.

Should copper prices on the first day of the calendar quarter on the London Metals Exchange sit below $3.40 per lb, then the margin is to be 12% and 100% of the payment will be capitalized toward principal. If prices are between $3.40 and $3.85 the margin drops to 10% and the payment to a 60%/40% split of capitalized versus cash. These will shift further to an 8% margin at 100% cash if copper prices are over $3.85 to start the quarter.

The combined company may begin prepaying the facility two years out from close but must pay a 4% premium for doing so in the facility’s third year.

Sprott has also subscribed to purchase 1,500,000 ordinary shares in the company at $10 per share and will receive 3,187,500 warrants along with the purchase that are exerciseable at $12.50 per share. When the Sprott affiliates holding these warrants choose to exercise, the combined CSA Copper Mine will have the right to settle this exercise with cash or have Sprott offset the price against the oustanding principal in the facility.

CSA Copper Mine may opt to accelerate this exercise of the warrants should it trade at or above $25 for 20 days.

The additions put one more puzzle piece into place as Metals has been working to close the $1.1 billion deal announced a year ago this week. Glencore’s CSA copper and silver mine is among the Australia’s largest, having exploited about 41,000 metric tons of copper in 2021.

It announced earlier in the month that it had secured the $775 million in cash to be provided from a syndicated lending facility funded by Citibank (NYSE:C), Bank of Montreal (NYSE:BMO), Harris Bank, Bank of Nova Scotia (TSX:BNS) and the National Bank of Canada (TSX:NA).

These lenders will provide Glencore with $775 million in upfront cash, which may be expanded to $875 million depending on demand for the $125 million PIPE Metals is now attempting to raise at $10 per share. A further $150 million is now expected to come via two $75 million payments based on copper commodity prices and other contingencies.

These earlier debt commitments require CSA Copper Mine to abide by a number of convenants requiring the combined company to maintain a debt service coverage ratio of 1.2 and forecast cash flow coverage ratio of at least 1.25. Its senior debt to EBITDA ratio must stay below 2.5 and its total debt to EBITDA below 3.25 for its first 12 months post-close and 3.00 thereafter.

The company must further maintain cash or equivalents of at least $30 million at all times and have a reserve tail ratio projection of over 25% at the date of the agreement’s termination.

The transaction now appears to have now firmed up the bulk of the financing for its unique structure, which is more akin to a 100% cash buyout than SPAC merger for a minority stake along the lines of most deals the market has seen this cycle.

One extra factor that most de-SPACing processes have not had to consider as well has been the commodity price of copper. Copper prices were at about $4.70/lb when the deal was announced, but slid to about $3.61 by the time the team was tweaking financing terms last November. Prices have since rebounded to about $3.89 as of this writing, good for hitting the top rates in the mezzanine’s payment scheduling.