28th Apr 2016 09:55
LONDON (Alliance News) - Anglo American PLC shares rose on Thursday after the miner struck a deal to sell its niobium and phosphates businesses to China Molybdenum Co Ltd for a total cash consideration of USD1.50 billion as it continues to progress its restructuring and debt reduction plans.
Anglo American was the best performer on the FTSE 100 on Thursday morning, as its shares were trading up 2.6% to 715.30 pence per share.
Anglo is downsizing its business and offloading its non-core business units, and the niobium and phosphates businesses were one of the first to be put up for sale as part of the company's restructuring programme, alongside coal, iron ore and nickel assets.
The significant downsizing will eventually lead to Anglo American focused solely on its stake in diamond giant De Beers, its copper segment and its platinum arm which is conducted through Anglo American Platinum.
Anglo American made USD2.10 billion of asset sales in 2015 and is hoping to make between USD3.00 to USD4.00 billion in total before the end of this year, with the sale Thursday set to make a material contribution to that target.
"The proceeds from this transaction, together with the ongoing productivity and cost improvements we are driving through the business, will enable us to continue to reduce our net debt towards our targeted level of less than USD10.00 billion at the end of 2016," said Chief Executive Mark Cufitani.
That target level of debt, if achieved, will have fallen from USD12.90 billion at the end of 2015.
The two businesses contributed combined revenue of USD544.0 million, earnings before interest, tax, depreciation and amortisation of USD146.0 million and a pretax profit of USD69.0 million in 2015.
That revenue represented around 2.7% of Anglo American's overall revenue in 2015 and 3.3% of the company's overall Ebitda last year. The two businesses managed to make that combined pretax profit in the year despite Anglo American making a hefty overall USD5.45 billion pretax loss in 2015.
Both businesses are based in the states of Goias and Sao Paulo in Brazil and hold total gross assets of USD1.27 billion - over 18% lower than the sale price.
The phosphates business consists of a mine, beneficiation plant, two chemical complexes and two further mineral deposits, whilst the niobium business consists of one mine and three processing facilities, two non-operating mines, two further mineral deposits, and sales and marketing operations that are located in the UK and Singapore.
The deal is subject to approval from China and from shareholders of China Molybdenum Co. Notably, Anglo American said two major shareholders in the Chinese-firm have already pledged to approve the deal using their combined 63.0% stake.
China Molybdenum Co is primarily interested in mining tungsten and molybdenum, the mining and processing of copper and the production of gold and silver. The company also operates the fourth largest copper producing asset in Australia, Northparkes, and also operates the Sandaozhuang mine in China.
By Joshua Warner; [email protected]; @JoshAlliance
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