Anglo American CEO Mark Cutifani
JOHANNESBURG (miningweekly.com) – Diversified miner Anglo American has agreed to sell another 21.9% equity interest in its Quellaveco copper project, in Peru, to Mitsubishi, increasing the Japanese group’s interest in the project to 40%.
Mitsubishi will pay $600-million for the additional interest in Quellaveco, implying a valuation of $2.74-billion for the greenfield copper project, Anglo American reported on Thursday.
“The successful syndication of a 21.9% interest in Quellaveco confirms the world-class quality of our copper asset in Peru,” CEO Mark Cutifani said.
The miner previously indicated that it may reduce its interest in the project to between 50% and 70%, from 81.9%.
The $600-million will be settled upon closing by way of a primary share subscription in Anglo American Quellaveco SA by Mitsubishi subsidiary MCQ Copper, which will pre-fund a portion of Anglo American’s share of the required capital expenditure for the development of Quellaveco.
London-based investment broker SP Angel’s John Meyer said in a statement that the sale of an additional stake should allow Anglo American to retain overall control of the project, while reducing its exposure to the capital cost of the development, which he said was estimated to be in the range of $5-billion to $6-billion.
The transaction is expected to close in the third quarter, once regulatory approvals are obtained and the Anglo American board approves the development of the project. Cutifani previously said that the feasibility study would be brought to the board for review around mid-year.
Quellaveco is one of the world’s most significant undeveloped copper deposits. With ore reserves estimated at 1.3-billion tonnes, containing 7.5-million tonnes of copper, it is expected to operate in the lower half of the industry cost curve. Quellaveco is expected to produce about 220 000 t/y over the life of mine.
The project involves the mining of this extensive copper and molybdenum deposit which is located at an altitude of around 3 500 m in the Moquegua region of southern Peru.
The operation will use openpit mining and processing by flotation to produce copper concentrate, as well as molybdenum and silver by-products. The copper concentrate will be transported to the coast for export.