Anglo American Sells Chilean Copper Mines for $300 Million -- Update
24 August 2015 - 9:42PM
Dow Jones News
By Alex MacDonald
LONDON--Anglo American PLC (AAL.LN) said Monday it has agreed to
sell two Chilean copper mines to a consortium led by investment
firm Audley Capital Advisors LLP for $300 million in cash as it
seeks to sell non-core assets to pay down debt and turnaround the
company's operating performance.
Investment firm Orion Mine Finance Group acted as the principal
co-investor for the Mantoverde and Mantos Blancos open pit mines in
northern Chile. The consortium has agreed to pay an additional $200
million if certain criteria are met.
The deal is forecast to close in the third quarter of this year,
subject to regulatory approvals.
Anglo American announced last year that it was considering
selling certain non-core assets, including the Chilean copper
assets, to focus on more profitable assets. The globally
diversified miner is selling the two smaller mines to Audley
Capital, an investment firm whose mining team is run by John
MacKenzie, a former senior Anglo executive that headed Anglo's
copper business.
The consortium said it will pay extra cash depending on the
copper price performance and if the operating life of the
Mantoverde mine is extended.
The two mines were valued at a minimum of $1 billion last year,
a person familiar with the matter told the Wall Street Journal in
November. The deal attracted interest from investors such as QKR
Corp, a London-based investment group set up by Lloyd Pengilly, a
former J.P. Morgan Chase & Co banker and Magris Resources Inc.,
a Toronto-based firm run by Aaron Regent, the former CEO of Barrick
Gold Corp.
However, a steep slump in the copper price since then prompted
some investors to reassess their price expectations for certain
assets. Copper fell on Monday to a fresh six-year low on renewed
fears of an economic slowdown in China, the world's largest
consumer of the red metal.
Mark Cutifani, Chief Executive of Anglo American said in a
statement that "The sale of our Norte copper assets to the Audley
consortium represents a good outcome for Anglo American, both in
terms of the up-front value achieved, the potential upside geared
to the copper price and the continued delivery of our asset
disposal program.
"Although the transaction is only a modest step in delevering
the balance sheet, the fact that Anglo American got another
transaction done is a positive sign," said Investment bank Morgan
Stanley in a note. Investec Securities also said that the outcome
was good, adding that the $300 million price tag was higher than
expected.
The deal follows Barrick Gold Corp's (ABX) agreement in July to
sell a 50% stake in the Chilean Zaldívar copper mine to U.K.-listed
Antofagasta for $1 billion, a deal that some analysts described as
pricey.
The Mantoverde and Mantos Blancos have a shorter operating life
than the Chilean Zaldívar copper mine. Whereas the Zaldivar mine
has a 14-year life span, the Mantos Blancos and Mantoverde mines
have only have 10 and five years respectively.
Anglo American's shares were down 6% at 689 pence a share as of
1020 GMT while the FTSE 350 mining index was down 5.2%. Mining
equities worldwide were pummeled Monday by escalating fears over
the health of China, the resources sector's biggest customer.
Write to Alex MacDonald at alex.macdonald@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
August 24, 2015 07:27 ET (11:27 GMT)
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