Antofagasta has agreed to acquire a 50% interest in Barrick Gold’s Zaldivar copper mine, in Chile, for US$1,005 million in cash. Payment terms are US$980 million in cash upon closing and five annual payments of US$5 million per year, starting in 2016.
Antofagasta will fund the acquisition from its balance sheet. As at 31 December 2014, the company held cash of US$845.4 million and liquid investments valued at US$1,529.1 million. Long term debt at that date stood at US$2,050.5 million.
The transaction is expected to be immediately accretive to Antofagasta’s earnings and cash flow per share.
Zaldivar is an open-pit, heap-leach copper mine located in Northern Chile with over 20 years of operating history. In 2014, Zaldivar produced approximately 100 kt of copper at a net cash cost of US$1.79/lb, and generated US$244 million of income before income tax.
As at 31 December 2014, Zaldivar has 2.5 Mt of contained copper in reserves, which supports a current reserve life of approximately 14 years.
Barrick Gold, the world’s largest gold producer, is engaged in a process of selling non-core assets to reduce its debt position.
The transaction is subject to customary regulatory approvals, and is expected to close in the fourth quarter of 2015.
Antofagasta to pay US$1 billion for 50% of Barrick’s Zaldivar mine: ANTO