23rd Apr 2007 14:02
Anglo American PLC23 April 2007 News Release 23 April 2007 Anglo American and MMX agree on sale of 49% interest in MMX Minas-Rio Iron Ore Project Anglo American plc ("Anglo American") and MMX Mineracao e Metalicos S.A. ("MMX") are pleased to announce that they, together with Centennial Asset MiningFund LLC ("Centennial Asset"), a company controlled by Eike Batista, MMX'scontrolling shareholder, have entered into an agreement in principle pursuant towhich a wholly-owned Luxembourg subsidiary of Anglo American would agree topurchase 100% of the shares of Centennial Asset Participacoes Minas-Rio S.A. ("Centennial Minas-Rio"), and subscribe for additional shares of MMX Minas-RioMineracao e Logistica Ltda. ("MMX Minas-Rio"), in a transaction that wouldresult in Anglo American owning a consolidated 49% ownership interest in MMXMinas-Rio. MMX Minas-Rio is owned 70% by MMX and 30% by Centennial Asset. MMX Minas-Rio isdeveloping an integrated iron ore project consisting of (i) a number of iron oredeposits in the State of Minas Gerais, Brazil, (ii) one or more slurry pipelinesand (iii) the ongoing development of an iron ore terminal in the state of Rio deJaneiro to handle cape-size vessels (collectively the "Minas-Rio Project"). The transaction, which involves the purchase of 100% of Centennial Minas-Rio andthe making of capital contributions by Anglo American to MMX Minas-Rio, issubject to final approvals by all parties including the independent members ofMMX's Board of Directors. This will result in Anglo American acquiring a 49%interest in MMX Minas-Rio for an economic value and effective price of US$1.15billion. The value paid by Anglo American would be divided into a cash paymentof US$704 million to Centennial Asset and subscription for MMX Minas-Rio sharesat the same price per share as paid to Centennial Asset. The Minas-Rio Project is currently under development. Work is proceeding onsecuring the permits required for the commencement of construction for the firstphase, with a planned annual production capacity of 26.5 million tonnes of ironore per annum ("Phase I") for start-up in the fourth quarter of 2009. It isanticipated that approximately US$2.35 billion of capital expenditure will berequired to complete Phase I of the Minas-Rio Project, to be provided from debtfinancing and shareholders equity. An expansion is planned to double the Minas-Rio Project capacity ("Phase II"),subject to certain conditions, including MMX Minas-Rio confirming sufficientreserves and obtaining the relevant permits. Upon confirmation of Phase II of the Minas-Rio Project, Anglo American wouldmake an additional payment to Centennial Asset and a capital contribution to MMXMinas-Rio, in the same manner as the initial payment, with a total economicvalue and effective price of US$600 million, increasing Anglo American'sparticipation in MMX Minas-Rio to 50%. This would result in a total economicvalue of $3.5 billion for 100% of the project, prior to giving effect of thecapital contributions described herein. Signing of the definitive purchase agreements is subject to negotiation of thetransaction documents, customary regulatory approvals and completion of thereorganization of MMX Minas-Rio with the creation of LLX Minas-Rio, as announcedby MMX on March 22, 2007. This will result in Anglo American owning identicalshareholdings in both MMX Minas-Rio and LLX Minas-Rio, the companies that willown the Minas-Rio Project mining and logistics assets, respectively. Eike Batista, Chairman & CEO of MMX said: "We have always had a strong beliefthat the Minas-Rio Project is one of the best development-stage iron ore assetsglobally. Anglo American's agreement today confirms our views. MMX's associationwith Anglo American would combine MMX's skill sets in Brazil with AngloAmerican's globally renowned capabilities to develop and operate assets of thedimension of the Minas-Rio Project. It was not only Anglo American's uniquereputation as a mining company but also the fact that we share common valuesregarding environmental and social responsibility issues that made MMX decide tochoose Anglo American as the partner for its premier asset. I have beenimpressed with the innovative, responsive and transparent approach that AngloAmerican has shown. I look forward to building on the relationship that we haveestablished with Anglo American which I am confident will lead to great successfor both parties." Cynthia Carroll, CEO of Anglo American said: "Iron ore is core to AngloAmerican's future growth strategy and we are pleased to have taken thisimportant step in securing this partnership with MMX to develop such an excitingiron ore project in Brazil, a country where we have long standing experience andwhich is a major iron ore producing region of the world. The Minas Rio Projecthas an extensive reserve base, a long projected mine life and will be a low costoperation. I believe we are starting from an excellent platform with MMXmanagement who share our vision and values. MMX management are very experiencedoperators and have achieved significant progress in a short period of time. Thisproject, together with the planned Kumba expansions, will add significantly toAnglo American's iron ore production resulting in consolidated iron oreproduction in excess of 100 million tonnes per annum in the next five years.Anglo American and MMX will continue to evaluate the substantial expansionpotential of this deposit, in particular taking into account the extremelypositive long term prospects for the iron ore industry". Credit Suisse and Itau BBA are the exclusive financial advisors to MMX andCentennial Asset, and UBS Pactual is the exclusive financial advisor to AngloAmerican. For further information: Anglo American plc Investor Inquiries Nick von Schirnding Head of Investor and Corporate Affairs Tel: +44 207 968 8540 Charles Gordon Tel: +44 207 968 8933 Anna Poulter Tel: + 44 207 968 2155 Media Inquiries Kate Aindow Tel: +44 207 968 8619 Anne Dunn Tel: +27 11 638 4730 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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