Glencore Xstrata sold its entire interest in the Las Bambas copper mine project to a consortium owned 62.5% by MMG Ltd., 22.5% by Guoxin International Investment Corp. Ltd. and 15% by CITIC Metal Co., Ltd., for approximately $5.85 billion, payable to Glencore in cash on closing. In addition, all capital expenditure and other costs incurred in developing Las Bambas since the beginning of the year, approximately $400 million, through to closing will also be payable by the consortium.
The proceeds from the sale will immediately and materially de-gear Glencore’s balance sheet, according to the company. The transaction is subject to certain regulatory approvals. China Minmetals Non-Ferrous Metals Co. Ltd., which holds approximately 74% of the share capital of MMG Ltd., has irrevocably committed to vote in favor of the transaction. The transaction is expected to close prior to the end of Q3 2014.
“This is a transformational acquisition for MMG,” said MMG CEO Andrew Michelmore. “We are pleased to lead this joint venture and establish a strong platform in one of the world's most prospective mineral precincts. Our investment in this project of national importance is the first step in what we see as a long-term relationship with Peru. MMG has the ability to add value to the asset through its operating strength, progressive leadership, commitment to world-class standards and unique partnership with its major shareholder.”
“Since we acquired Xstrata [May 2, 2013], our team has taken decisive steps to de-risk Las Bambas, which has culminated in this compelling offer from the consortium,” said Ivan Glasenberg, CEO of Glencore. “Our willingness to sell reflects the level of the offer and our conviction that we can utilize the sale proceeds to create additional shareholder value.” BMO Capital Markets Ltd. and Credit Suisse Securities (Europe) Ltd. are acting as financial advisors to Glencore in connection with the sale.
Las Bambas is a long-life copper development project with prospective exploration options. Located in Cotabambas, Apurimac Region of Peru, the project is at an advanced stage of construction and is scheduled to commence production in 2015.