23rd Dec 2005 09:28
Antofagasta PLC23 December 2005 ANTOFAGASTA PLC For immediate release Antofagasta plc to enter into a joint venture with Tethyan Copper Company Limited in relation to the Reko Diq copper-gold region in Pakistan LONDON - 23 December 2005: Antofagasta plc ("Antofagasta") is pleased toannounce that it has signed a binding Heads of Agreement ("HoA") with TethyanCopper Company Limited ("Tethyan"), a company listed on the Australian StockExchange, involving the acquisition by Antofagasta of a 50% equity interest inTethyan's mineral interests in Pakistan and the concurrent subscription for a19.95% shareholding in Tethyan. Antofagasta, together with Tethyan, have alsoentered into a deed of termination with BHP Billiton entities ("BHP Billiton")whereby BHP Billiton's rights to claw-back a material interest in certain ofTethyan's mineral interests ("Claw-back Right") will be extinguished ("BHPBilliton Termination Deed"). Tethyan's principal assets are a 75% interest in the exploration licenceencompassing the highly prospective Chagai Hills region of North West Pakistanknown as Reko Diq, which includes the Tanjeel Mineral Resource and the WesternPorphyries, and a 100% interest in certain other licences in the region. Thismining district hosts significant copper-gold porphyry deposits as part of anextended copper-gold belt. Tethyan has reported total indicated and inferredmineral resource estimates at these properties of 1,213 million tonnes with acopper grade of 0.58% and a gold grade of 0.28 grams per tonne. The resourceestimates include probable reserves at the Tanjeel Mineral Resource of 128.8million tonnes with a copper grade of 0.7%. Reserve and resource estimates havebeen reported by Tethyan to JORC standards. Under the HoA, Antofagasta has agreed to: • acquire a 50% equity interest in Tethyan's mineral interests in Pakistanthrough the subscription for US$37.5 million of newly issued equity capital intoa joint venture vehicle to be established; • commit to funding further exploration and development expenditure andrelated joint venture costs of up to US$75 million. In the event thatAntofagasta spends less than this amount, its 50% equity interest will bereduced on a pro-rata basis; and • subscribe for 33 million new ordinary shares in Tethyan for a totalsubscription price of US$20.5 million, equating to 19.95% of Tethyan's enlargedissued share capital (17.3% on a fully diluted basis). Under the BHP Billiton Termination Deed, Tethyan have agreed to pay BHP Billitona compensation amount of US$50M in consideration for terminating the Claw-BackRight and other rights under the Alliance Agreement between BHP Billiton andTethyan, of which US$45M is payable at closing and US$5M is payable in fourequal instalments over the four years following closing. It is expected that Antofagasta's total financial commitment under thistransaction, including the exploration and development expenditure commitmentunder the HoA, will amount to US$133 million. Implementation of the proposedtransactions under the HoA and the BHP Billiton Termination Deed are subject tocertain conditions precedent including due diligence, Tethyan shareholderapproval, necessary Pakistan and Balochistan authority approvals and receipt ofall other necessary regulatory and third party approvals. Tethyan is currently subject to an unsolicited takeover offer from Skafell PtyLtd ("Skafell"), a subsidiary of Crosby Capital Partners Inc. and IB DaiwaCorporation. The Tethyan Board has unanimously recommended that itsshareholders reject the Skafell takeover offer and approve the proposedtransaction with Antofagasta, in the absence of a superior offer for Tethyanemerging. Tethyan has agreed to pay Antofagasta a break fee in certaincircumstances, including where the Tethyan Board withdraws its recommendationfor the proposed transaction with Antofagasta. Marcelo Awad, CEO of Antofagasta Minerals S.A., stated, "Our agreement withTethyan Copper Company provides Antofagasta with a window into a veryprospective mining region and represents a strategic investment opportunity forus. A partnership with Tethyan will allow Antofagasta to apply its mining anddevelopment skills and its experience in large-scale projects, to evaluate themineral resources at Reko Diq and ensure that they are developed to their fullpotential to the mutual benefit of the shareholders of both Antofagasta andTethyan. Whilst Latin America, and Chile in particular, will continue to beAntofagasta's primary region of focus, this investment is consistent with ourlong term growth strategy and subject to our rigorous investment and riskevaluation criteria. Antofagasta continues to look at opportunities globally tosecure rights to world-class mining assets to enhance its overall growthprofile." The agreements referred to above were signed after the last time at which anannouncement of the transaction could have been made by Tethyan through theAustralian Stock Exchange. A detailed announcement is expected to be made byTethyan at the opening of trading on the Australian Stock Exchange on Wednesday28 December 2005. Antofagasta plc is a Chilean-based mining group listed on the London StockExchange and is a constituent of the FTSE-100 index. Its principal miningassets include the Los Pelambres, El Tesoro and Michilla mines and the Esperanzacopper project. In addition to copper mining, Antofagasta's interests includerail and road transport operations and water distribution. Rothschild is advising Antofagasta in relation to this transaction. Enquiries - London Enquiries - SantiagoAntofagasta plc Antofagasta Minerals S.A. Tel: +44 20 7808 0988 Tel: +562 377 5102 www.antofagasta.co.uk Marcelo Awad Desmond O'Conor Email: [email protected] Email: [email protected] Tel: +562 377 5145 Issued byBankside Consultants Alejandro Rivera020 7367 8888 Email: [email protected] Keith IronsTel: +44 20 7367 8873 / +44 7885 356 639Email: [email protected] Oliver WintersTel: +44 20 7367 8874 / +44 7811 168 822Email : [email protected] This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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