LONDON (Reuters) - Anglo American (L:AAL) is to sell two Chilean copper mines to investment firm Audley Capital for $300 million (£191.5 million), the company said on Monday, as it delivers its balance sheet to help combat a global slump in commodity prices.
Orion Mine Finance Group is principal co-investor with Audley for the open-pit Mantos Blancos and Mantoverde mines. The deal includes conditional future payments which could boost the eventual price tag by $200 million (£128 million), Anglo American said.
Following a review last year Anglo American said it would divest assets that did not meet its return criteria. The investment by Audley Capital was led by John Mackenzie, a former chief executive of Anglo's copper business.
The potential follow-up payments are contingent on the copper price and also on whether the new investors decide to extend the sulphide life of the Mantoverde mine.
Banking sources had initially touted the mines as having a price tag of up to $1 billion. But as the copper price slid sources told Reuters that they could be worth less than $500 million (£319 million), despite attracting interest from Glencore (L:GLEN) and X2, the investment vehicle led by former Xstrata CEO Mick Davis.
"The sale of our Norte copper assets to the Audley consortium represents a good outcome for Anglo American, both in terms of the up-front value achieved, the potential upside geared to the copper price and the continued delivery of our asset disposal programme," said Mark Cutifani, chief executive of Anglo American.
Three-month copper
The mines are also closer to the end of their lives than the Zaldivar copper mine, in which Barrick Gold Corp (TO:ABX) sold a 50 percent stake last month for what analysts labelled as an expensive $1 billion.
Mantos Blancos has a reserve life of 10 years and Mantoverde five.
Amid a global commodity price slump, many miners have embarked on a series of asset sales in order to shore up balance sheets and maintain credit ratings.
"Although the transaction is only a modest step in delivering the balance sheet, the fact that Anglo American got another transaction done is a positive sign," Morgan Stanley (NYSE:MS) analysts said in a note.
Anglo American shares were trading down 5.2 percent at 0705 GMT (8.05 a.m. BST), making them the third biggest loser on the FTSE 100 (FTSE) after Glencore and Rio, as mining stocks were hammered by concerns over China.
The transaction is not subject to any regulatory conditions and is expected to close in the third quarter of this year.
Goldman Sachs and Morgan Stanley advised Anglo on the deal, while Macquarie advised the buyer consortium.
