| Thu 2 May 2002, 0:00 | | Anglo American Plc - Announcement |
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ANGLO AMERICAN PLC
JSE Code: AGL
ISIN Code: GB0004901517
News Release
Anglo American plc announces agreement to purchase Disputada
Anglo American plc ("Anglo American") has agreed, subject to fulfilment of
certain conditions precedent, to purchase 100% of the interests in the
Compa$!a Minera Disputada de Las Condes Limitada ("CMD") group from Exxon
Mobil Corporation ("ExxonMobil") for a total cash consideration of $1.3
billion.
CMD is a world class, integrated copper producer located in Chile and
comprising the Los Bronces and El Soldado mines and the Chagres smelter. In
2001, CMD produced 251,900 tonnes of copper at an average operating cash
cost of 47 US cents per lb.
Anglo American believes that substantial synergies with its existing Chilean
operations will arise from the transaction. These are currently estimated
to have a value to Anglo American in excess of $100 million over and above
the purchase price. In addition to mine life extension and growth potential
arising from the existing and potential future expansion projects, CMD's
70,000 hectare property which hosts the Los Bronces mine also has excellent
exploration and exploitation potential.
The acquisition is subject to the completion of due diligence, the execution
of a definitive sale and purchase agreement and such regulatory approvals as
may be required. It is currently anticipated that the transaction will be
completed by 30 June 2002 at which time further financial information on the
CMD group will be available.
The purchase price will be payable in cash on completion and will be funded
by Anglo American from existing resources. In addition to the purchase
price, a price participation arrangement has been agreed in terms of which
ExxonMobil will be entitled to a participation in, for a period of three and
a half years, incremental value accruing to Anglo American as a result of
the LME copper price exceeding certain levels. ExxonMobil will be entitled
to receive payments which will amount to between zero and a maximum of $120
million.
Anglo American has declared its firm commitment to strengthening its Base
Metals portfolio in a value additive manner through:
focusing on improving the performance of its existing asset base;
investing in value enhancing projects within its existing asset portfolio;
making selective acquisitions of high quality assets; and
identifying non core assets and disposing of them for value when market
conditions permit.
The acquisition of CMD represents a major step in upgrading the quality of
Anglo American's Base Metals portfolio. If Anglo American had owned the
assets in 2001, its attributable copper production from continuing (primary)
copper operations, (note i), would have been in excess of 625,000 tonnes at
an average operating cash cost of below 50 US cents per lb.
Tony Trahar, Chief Executive of Anglo American commented "The acquisition of
Disputada, a proven long life, low cost, copper business, constitutes a
major strategic strengthening of our Base Metals portfolio. It offers
attractive exploration and growth prospects, synergies with our existing
operations and reinforces our commitment to Chile and the region. The
Disputada mines are an excellent addition to Anglo American's portfolio of
world class mining and natural resource assets."
2 May 2002
For further information:
London:
Investor Relations Media Relations
Nick von Schirnding Kate Aindow
+44 20 7698 8540 +44 20 7698 8619
Johannesburg:
Investor Relations Media Relations
Anne Dunn Marion Dixon
+27 11 638 4730 +27 11 638 3001
Dresdner Kleinwort Wasserstein is acting as financial adviser to Anglo
American.
Background Notes for Editors:
Description of assets
Further exploration / exploitation potential
Purchase price / price participation
Synergies
Anglo American's existing Chilean operations
Note (i): Continuing (primary) copper operations excludes Konkola Copper
Mines
1. DESCRIPTION OF ASSETS
Los Bronces mine
Description: long life, low cost, open pit mine
Location: 65 km north east of Santiago in Chile
2001 production: 171,000 tonnes of copper in concentrate
12,000 tonnes of copper cathode
2001 cash costs: 43 c/lb
Reserves (31/12/00):457Mt @1.03%Cu, plus 741Mt @ 0.47%Cu leach ore
Life of mine: minimum 20 years, potential to 30 years. Grade profile
relatively flat over life of mine. Significant capital
expenditure not required to maintain production.
Added value potential:expansion projects currently
underway to expand production to 225,000 tpa by 2004
additional 200 million tonnes of resource grading 0.95% copper identified
immediately below or adjacent to existing pit (31/12/00)
further expansion potential
synergies
El Soldado mine
Description: medium life, medium cost, open pit mine and underground
mine
Location: 132 km north of Santiago
2001 production: 64,000 tonnes of copper in concentrate
5,000 tonnes of copper cathode
2001 cash costs: 57 c/lb
Reserves (31/12/00):115Mt @ 1.00%Cu
Life of mine: 16 years
Added value potential : nearby exploration synergies
Chagres Smelter
Description: recently modernised (1995) copper smelter
Location: 100 km north of Santiago
2001 production: 144,000 tonnes of copper (anode - 90% / blister -10%)
408,000 tonnes of acid
Process: Outokumpu flash furnace
Added value
potential : current capacity - 150,000 tonnes
further
debottlenecking - +10% increase synergies
2. FURTHER EXPLORATION / EXPLOITATION POTENTIAL
Los Bronces is located in a 70,000 hectare property owned by CMD which has
excellent exploration and exploitation potential. In addition to Los Bronces
mine reserves and the immediately adjacent resources, CMD has already
identified over 300 million tonnes of additional resources at an average
grade of 0.85% copper.
3. PURCHASE PRICE / PRICE PARTICIPATION
The CMD group is third party debt free.
A cash consideration of $1.3 billion is payable on completion, such
consideration including the assumption by Anglo American of certain
intercompany loan accounts.
The cash consideration will be funded by Anglo American from internal cash
resources.
Price Participation agreement:
ExxonMobil will be entitled to receive contingent payments, which will
amount to between zero and a maximum of $120 million if the average copper
price over the next three and a half years exceeds certain agreed threshold
levels as detailed below:
H2 2002 2003 2004 2005
Threshold 75 87 94 100
price
Ýc/lb
nominal¨
Should, in any period, the copper price exceed the threshold price, Anglo
American and ExxonMobil will share equally in the incremental revenues until
such time as ExxonMobil has been paid a total cumulative amount of $120
million. If, in any period, the average copper price does not exceed the
threshold price, no payments will be made to ExxonMobil. Should the full
$120 million not have been paid by the end of 2005, the shortfall will cease
to be payable.
In all years, the threshold levels in each period are higher than those used
by Anglo American in its valuation of CMD. Accordingly, price participation
payments will only be made to ExxonMobil if the value of CMD is greater than
that originally forecast by Anglo American.
4. SYNERGIES
The synergies between CMD and Anglo American's existing operations in Chile
are estimated to exceed a value of $100 million. These include:
the Mantos Blancos and CMD head offices will be combined into one head
office organisation which will act as a shared services facility for four
mines (Mantos Blancos, Mantoverde, Los Bronces, El Soldado) and the Chagres
smelter, as well as continuing to provide input and support to the 44% owned
Collahuasi;
procurement - sulphuric acid and strategic procurement;
marketing, sales and logistics;
exploration - the exploration work of the two companies will be integrated
further scope for substantial improvements in production, productivity and
costs.
5. ANGLO AMERICAN'S EXISTING OPERATIONS IN CHILE
Mantos Blancos comprises two 100% owned open pit copper mines. Mantos
Blancos is located in the Atacama desert near Antofagasta and Mantoverde is
located south of Antofagasta in the Copiapo region. In 2001, copper
production was 156,800 tonnes at an average operating cash cost of 57.7 US
cents per lb.
Collahuasi is an open pit copper mine located south east of Iquique in
Chile. Anglo American has a 44% interest and joint control of Collahuasi. In
2001, copper production was 452,700 tonnes at an average operating cash cost
of 39.5 US cents per lb. (Anglo American attributable production - 199,200
tonnes).
Anglo American plc is one of the world's largest mining and natural resource
groups. With its subsidiaries, joint ventures and associates, it is a global
leader in gold, platinum group metals and diamonds, with significant
interests in coal, base and ferrous metals, industrial minerals and forest
products. The group is geographically diverse, with operations in Africa,
Europe, South and North America and Australia. (www.angloamerican.co.uk)
