Antofagasta Regulatory News (ANTO)

24 Apr 2008 17:23

Antofagasta PLC24 April 2008 Antofagasta plc Antofagasta brings a partner to Minera Esperanza and Minera El Tesoro London, 24 April 2008 Antofagasta plc ("Antofagasta") is pleased to announce that it has entered intoan agreement with Marubeni Corporation ("Marubeni") under which Marubeni willacquire a 30% interest in each of Minera Esperanza and Minera El Tesoro ("theMarubeni Transaction"). Minera Esperanza and Minera El Tesoro hold, or will holdat closing, the Esperanza and Telegrafo deposits and the El Tesoro mine andTesoro North-East deposits, respectively. Marubeni will pay a combined cashconsideration of US$1.31 billion (plus interest thereon from signing tocompletion and subject to other closing adjustments) for its stake in bothentities, and will be responsible (from and after 1 January 2008) for its shareof development costs for the Esperanza project, which are currently estimated atapproximately US$1.9 billion. Antofagasta in turn will fund its retained share(70%) of the development costs of the Esperanza project (after projectfinancing), as well as the costs of acquiring through Antomin Limited("Antomin") certain mining properties required for the development of theEsperanza project and the extension of the El Tesoro mine (as described below),in amounts essentially equivalent to the proceeds resulting from the MarubeniTransaction. Closing of the Marubeni Transaction, which is subject to a numberof conditions including receipt of necessary environmental approvals atEsperanza and the completion of the transfer of certain mining properties toMinera Esperanza and Minera El Tesoro, is expected to occur in the third quarterof 2008. The Esperanza project and the El Tesoro mine are located in the Sierra Gordadistrict in Chile's II Region, which is a key area of focus for Antofagasta.This district has estimated combined mineral resources (including Esperanza,Telegrafo, El Tesoro and Tesoro North-East) of approximately 3 billion tonnes,with the potential for development as a single mining complex for the processingof both sulphide and oxide ores. The Marubeni Transaction also permitsAntofagasta to introduce further properties in the Sierra Gorda district to theventure with Marubeni in the future. To facilitate the Marubeni Transaction, Antofagasta has also entered into anagreement with Mineralinvest Establishment ("Mineralinvest"), which currentlyowns approximately 49% of Antomin. The remaining approximately 51% of Antomin isowned indirectly by Antofagasta. Pursuant to this agreement, Antofagasta willacquire Mineralinvest's interest in properties required for the MarubeniTransaction together with other properties including part of the Antucoyaproject (the "Antomin Transaction"). The properties required for the MarubeniTransaction comprise mainly the Tesoro North-East deposit and certain Esperanzamining properties. The Esperanza and Tesoro North-East properties will in turnbe transferred to Minera Esperanza and Minera El Tesoro respectively. Theconsideration will be US$240 million (plus interest from signing to completion),an amount that reflects the portion of value to be paid to Antofagasta byMarubeni as part of the Marubeni Transaction which can be ascribed to propertiesrequired by the Marubeni Transaction, which are the subject of the AntominTransaction. Completion of the Antomin Transaction is conditional on closing ofthe Marubeni Transaction. Mineralinvest is an entity ultimately controlled bythe Luksic family, which has a significant indirect interest in Antofagasta. TheAntomin Transaction has, therefore, been approved by a committee of independentdirectors of Antofagasta. Marcelo Awad, CEO of Antofagasta Minerals S.A., commented: "We are delightedthat Marubeni will be joining us as a partner in the Sierra Gorda district. Theyare one of our longstanding partners at Los Pelambres and we look forward toextending this relationship to Esperanza and El Tesoro." Rothschild and Sullivan & Cromwell LLP are advising Antofagasta in relation tothe Marubeni Transaction. Rothschild and Clifford Chance LLP are advising Antofagasta in relation to theAntomin Transaction. +------------------------------------+-----------------------------------------+|Enquiries - London |Enquiries - Santiago || | |+------------------------------------+-----------------------------------------+|Antofagasta plc |Antofagasta Minerals S.A. || | |+------------------------------------+-----------------------------------------+|Tel: +44 20 7808 0988 |Tel: + 56 2 798 7000 || | |+------------------------------------+-----------------------------------------+|www.antofagasta.co.uk |Marcelo Awad || | |+------------------------------------+-----------------------------------------+|Desmond O'Conor |Email: mawad@aminerals.cl || | ||Email: doconor@antofagasta.co.uk |Alejandro Rivera || | ||Hussein Barma |Tel: +56 2 798 7145 || | ||Email: hbarma@antofagasta.co.uk |Email: arivera@aminerals.cl || | |+------------------------------------+-----------------------------------------+|Press Enquiries - London | || | ||Bankside Consultants | || | ||Tel: +44 20 7367 8873 / +44 7885 356| ||639 | ||Tel: +44 207 367 8874 / +44 7811 168| ||822 | ||Keith Irons | || | ||Email: keith@bankside.com | || | ||Oliver Winters | || | ||Email: oliver.winters@bankside.com | || | |+------------------------------------+-----------------------------------------+ About Antofagasta plc Antofagasta plc is listed on the London Stock Exchange and is a constituent ofthe FTSE-100 index with interests in mining, transport and water distribution.Its principal mining assets include the Los Pelambres, El Tesoro and Michillamines and the Esperanza and Antucoya projects in Chile and the Reko Diq jointventure in Pakistan. It also has exploration programmes in Chile (mainly in theSierra Gorda district), Latin America and Africa. Asset-related reserves and resources and financial information Detailed reserves and resources information for Antofagasta, includingEsperanza, Telegrafo, El Tesoro (including Tesoro North-East) and Antucoya, isincluded on pages 144 to 147 of the 2007 Antofagasta Annual Report. The gross assets relating to the 30% interest in Minera Esperanza and Minera ElTesoro to be acquired by Marubeni were US$357 million (including approximatelyUS$160 million of cash) as at 31 December 2007. The profit before tax relatingto the 30% interest in Minera Esperanza and Minera El Tesoro was US$120 millionfor the year ended 31 December 2007. Completion of the transaction will result in Antofagasta recognising a profit ondisposal based on the transaction proceeds of US$1.31 billion (plus interestfrom signing to completion and other closing adjustments) less the value of thenet assets disposed of at the date of disposal and related transaction costs. Asa result of the completion of the Marubeni Transaction, Antofagasta'sattributable share of the costs and profits of the Esperanza project and the ElTesoro mine will reduce from 100% to 70%. About the Esperanza project and the Telegrafo deposit As was reported in the 2007 Antofagasta Annual Report, the Esperanza project,which received board approval in June 2007, remains on schedule withpre-stripping and early works having begun following receipt of provisionalenvironmental authorisation in December 2007. First production is expected atthe end of 2010, and in its first ten years of operation, Esperanza is expectedto produce an annual average of approximately 700,000 tonnes of concentratescontaining 195,000 tonnes of payable copper, 229,000 ounces of payable gold and1,556,000 ounces of payable silver. Esperanza has a 15 year mine life based onproven and probable ore reserves of 480 million tonnes of 0.57% copper, 0.236 g/tonne gold and 0.010% molybdenum, based on a cut-off grade of 0.2% equivalentcopper. Capital costs are estimated at US$1.9 billion (based on the previousestimate of US$1.5 billion plus escalation, but before financing costs orworking capital requirements), which includes approximately US$275 million forthe seawater pipeline system to enable all the project's water needs to besupplied by seawater. It is expected that an average of 6,000 people up to apeak of 10,000 will be employed during the construction phase and 1,500 peoplewill be employed during the operation of the mine. The Telegrafo deposit is adjacent to Esperanza and could extend the life of theEsperanza plant and facilities beyond the current mine plan. Preliminaryestimated resources are 404 million tonnes of 0.41% copper, 0.1 g/t of gold and0.013% of molybdenum at Telegrafo Norte and 898 million tonnes of 0.45% copper,0.17 g/t of gold and 0.013% of molybdenum at Telegrafo Sur, both based on a 0.3%cut-off grade for copper. About El Tesoro and Tesoro North-East The El Tesoro copper mine in the Sierra Gorda mining district within Chile's IIRegion has been operated and managed by Antofagasta since development began in1999 and copper cathode production commenced in 2001. Cathode production during2007 was 93,000 tonnes. El Tesoro's proven and probable ore reserves (includingthe Tesoro North-East project) are 127 million tonnes of 0.80% copper, based ona cut-off grade of 0.41%. The El Tesoro mine plan was revised in 2007 toincorporate Tesoro North-East, a satellite deposit located approximately 1 kmfrom the existing open pit, with ore reserves of 28.5 million tonnes and anaverage copper grade of 1.03%. Its inclusion in El Tesoro's mine plan will helpto mitigate the decline in grades that would otherwise occur from miningexclusively from the existing open pit and extends the mine life by three yearsto 2020. Pre-stripping of Tesoro North-East began in December 2007 and isexpected to be completed during 2009, at a cost (including equipment) ofapproximately US$80 million. About Antomin Antofagasta currently holds approximately a 51% interest in Antomin, which ownsa number of copper exploration properties in Chile's II and IV Regions. Itacquired its interest in Antomin pursuant to an agreement in 2001 for a nominalconsideration from Mineralinvest, which continues to hold the remainingapproximately 49% of Antomin. Mineralinvest is a company which is controlled bythe Luksic family. The immediate parent of Antofagasta is MetalinvestEstablishment, which is controlled by E. Abaroa Foundation, in which members ofthe Luksic family are interested. Mineralinvest is a related party ofAntofagasta for the purposes of the Listing Rules. Due to the size of thetransaction it falls within the modified requirements for smaller related partytransactions set out in Listing Rule 11.1.10. The Antomin properties being acquired by Antofagasta principally include theTesoro North-East properties, a portion of the Esperanza properties and the BueyMuerto properties, which form part of the Antucoya project. The remainingproperties currently owned by Antomin will be separated into newly createdindirect subsidiaries of Antofagasta, which will continue to be ownedapproximately 51% by Antofagasta and approximately 49% by Mineralinvest. Under the terms of the Antomin Transaction, Antofagasta Minerals S.A., a whollyowned subsidiary of Antofagasta, will, following separation of the assets (andsubject to completion of the Marubeni Transaction), acquire Mineralinvest'sAntomin shares for a cash payment of US$240 million, plus interest thereon fromsigning to completion. Additionally, with respect to the newly created indirectsubsidiaries into which the remaining properties will be transferred,Antofagasta will have the exclusive right to acquire at fair value under certainconditions, the shareholding of Mineralinvest in those entities, or theunderlying properties, for a period of five years from completion of theseparation of the assets. About Marubeni Corporation The Marubeni Corporation is one of Japan's largest general trading companies.Marubeni has 11 business divisions: Food; Lifestyle; Forest Products; Chemicals;Energy; Metals & Mineral Resources; Transportation Machinery; Power Projects &Infrastructure; Plant, Ship & Industrial Machinery; Real Estate Development; andFinancial Technology, Logistics Technology, Information Technology & InnovativeBusiness. Marubeni is an existing partner of Antofagasta at Minera Los Pelambresin which it has an interest of 8.75%. This information is provided by RNS The company news service from the London Stock Exchange