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| Aerial view of the Las Bambas project site in Peru. Startup is targeted for 2015, with full copper production at the 140,000-mt/d mine and mill scheduled to begin in 2017. (Photo courtesy of MMG and Glencore Xstrata) |
MMG Ltd. and Glencore Xstrata announced on April 14 the signing of an agreement by a consortium owned 62.5% by MMG, 22.5% by Guoxin International Investment Corp., and 15% by Citic Metal Co. for purchase of Glencore Xstrata’s Las Bambas copper project in Peru. The purchase price is $5.85 billion, payable in cash on closing.
In addition, the consortium will pay all capital expenditure and other costs incurred by Glencore Xstrata in developing Las Bambas from January 1, 2014, to closing. At the end of March, these costs amounted to about $400 million. The transaction is expected to close before the end of the third quarter of 2014.
China Minmetals, a Chinese state-controlled company that holds approximately 74% of the share capital of MMG, has committed to vote in favor of the transaction. The government of China made the sale of Las Bambas a condition of its approval of the merger of Glencore and Xstrata that was completed in May 2013.
The transaction remains subject to regulatory approvals in China and Peru; however, MMG Executive Director and CEO Andrew Michelmore said in a conference call announcing the transaction that he did not expect these approvals to present barriers to the completion of the transaction.
MMG is headquartered in Melbourne, Australia, and is listed on the Hong Kong Stock Exchange. The company owns and operates the Century, Golden Grove, and Rosebery mines in Australia and the Kinsevere mine in the Democratic Republic of the Congo. It also owns and operates the Sepon mine in Laos in partnership with the government of Laos. Its major development projects include Dugald River, based on a high-grade zinc-lead-silver deposit in northwest Queensland, Australia, and the Izok Corridor base metals project in Nunavut, Canada. The company is one of the world’s largest producers of zinc and produces significant amounts of copper, lead, gold and silver.
The Las Bambas project is located in the Apurimac region of Peru and is one of the world’s largest copper projects currently under construction. The project is about 56% complete. Startup is planned for 2015, with full production by 2017; however, Michelmore said, the company will provide an update on the project schedule and future capital expenditure requirements upon transaction completion.
Las Bambas development includes a large, open-pit mine and a conventional concentrator with capacity to process about 140,000 metric tons per day (mt/d) of
ore. Production is forecast at more than 400,000 mt/y of copper in concentrate during the first five years of full production. Life-of-mine cash costs are forecast at $0.79/lb.
The project has 10.5 million mt in mineral resources grading 0.62% copper and 6.9 million mt in reserves grading 0.73% copper. Mine life is projected at more than 20 years.
“The project has an excellent development team in place, and we value their experiences and knowledge of the project,” Michelmore said. “Our goal is to effect a smooth transition of ownership without a disruption to project development, and we look forward to working closely with the existing team to bring Las Bambas into production.”
