International – Anglo American has reached agreement to sell its interest in its Norte copper business for an up-front cash consideration of $300 million, with potential upside to up to $500 million.
Norte, which consists of the Mantoverde and Mantos Blancos copper mines located in northern Chile, will be sold to an investor consortium led by Audley Capital Advisors, with Orion Mine Finance as the principal co-investor.
The sale entails a total consideration of $300 million in cash payable to Anglo American at closing and a number of additional future payments totalling up to $200 million, contingent upon factors including the average London Metals Exchange copper price performance and any future decision to pursue the sulphide life extension of the Mantoverde mine.
In line with Anglo American’s strategic objectives, it is focusing its diversified portfolio on its largest and most value accretive assets, which include the Los Bronces and Collahuasi copper mines in Chile and the Quellaveco copper project in Peru.
“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 programme,” says Anglo American chief executive Mark Cutifani.
“Audley CEO John MacKenzie’s longstanding knowledge of these two mines and his appreciation for the operating environment in Chile stand him and the team on the ground in good stead for the future,” he adds.
MacKenzie commented: “I know both of these operations well and can see the scope to further enhance the business under our ownership, particularly in terms of their life extension potential to meet our expected view of constrained copper supply in the medium and longer term. I have a high regard for the team of people who work at these operations, and believe that Chile remains one of the most attractive destinations for mining investment.”
This transaction, which is not subject to any regulatory conditions, is expected to close in the third quarter of 2015.