BHP Billiton to sell Pinto Valley copper mine to Capstone Mining for $650 mn
29 April 2013
BHP Billiton today agreed to sell its Pinto Valley copper mine and a railroad in Arizona to Capstone Mining Corp for $650 million, as oart of its plans to sell non-core assets amid a weak global commodities market.
The proposed sale by the world's largest mining company's comes two weeks after the London-based miner completed the sale of its Ekati Diamond Mine in Canada and Diamonds Marketing operations, to Dominion Diamond Corporation (formerly Harry Winston Diamond Corporation), for $500 million.
The Anglo-Australian miner said that it has signed a definitive agreement to sell its Pinto Valley mining operation and the San Manuel Arizona Railroad Company (SMARRCO) to Capstone Mining and expects to close the deal in the second half of this year.
The Pinto Valley Mine is located in the Globe-Miami mining district in Arizona. It is projected to produce 130-150 million pounds of copper in concentrate and approximately 10 million pounds of copper cathode annually, along with by-product molybdenum and silver, at an estimated cost $1.80 per pound for the first five years.
SMARRCO owns and operates a 47-km railway from San Manuel to Hayden, Arizona.
BHP Billiton president copper, Peter Beaven, said, ''The sale of Pinto Valley is an excellent outcome for BHP Billiton shareholders. We are pleased to have reached agreement with Capstone, particularly given their commitment to maintain our environmental and safety standards."
Without identifying the assets, BHP Billiton had last month said that it would sell about 10 assets in order to reduce debt and simplify its operations. (See: BHP Billiton eyes sales of 10 asset) But the miner had already started selling some non-core assets in order to cut costs and focus on assets that give better returns.
It sold its stake in the Browse petroleum joint venture to PetroChina for $1.63 billion and the sale of Pinto Valley copper mine takes BHP Billiton's total asset sales over the past 12 months to $5 billion.
Analysts expect the company to raise around $25 billion through asset sales this year.
The deal gives Vancouver-based Capstone its third producing mine and increases its copper production by 160 per cent.
Capstone has two producing copper mines, the Cozamin copper-silver-zinc-lead mine located in Zacatecas State, Mexico and the Minto copper-gold-silver mine in Yukon, Canada
The TSX-listed company also has two development projects, the large scale 70 per cent owned Santo Domingo copper-iron-gold project in Chile in partnership with Korea Resources Corporation and the wholly-owned Kutcho copper-zinc-gold-silver project in British Columbia, as well as exploration at properties in Canada, Chile, Mexico and Australia.
"Pinto Valley represents a unique opportunity to acquire a mid-sized producing copper mine in a well-established and low-risk mining jurisdiction with a significant mineral resource," said Darren Pylot, president and CEO of Capstone.
"This acquisition gives Capstone our third producing mine with a long mine life and is consistent with Capstone's strategy of building an intermediate copper producer focused in the Americas."