Barrick Gold Corporation says it has reached agreement to sell 50 percent interest in the Zaldívar copper mine in Chile to Antofagasta Plc for a total consideration of $1.005 billion in cash, forming a new partnership with one of the world’s leading copper companies.
According to the deal, Antofagasta will pay Barrick $980 million in cash upon closing and $25 million in additional cash payments over the next five years for a 50 percent stake in the Zaldívar mine. The transaction is expected to be completed in late 2015 and is subject to customary closing conditions.
Co-President of Barrick, Kelvin Dushnisky the sale of 50 percent of Zaldívar is consistent with the company’s strategy to create long-term value for our shareholders. He said by selling a stake in this non-core asset, they are strengthening the balance sheet while maintaining significant exposure to a strong cash-generating operation.
“Following a highly competitive auction process, we are pleased to reach an agreement with the ideal partner for Zaldívar. Antofagasta has an outstanding track record of building and operating mines in Chile, and we see this as the first step in an ongoing, collaborative partnership. There are many potential opportunities to benefit from Antofagasta’s experience as Barrick evaluates development projects in the future,” Dushnisky stated.
“We are enthusiastic about partnering with Barrick at Zaldívar. Together, we believe that we are well positioned to enhance the long-term value of the Zaldívar operation through our collective best practices,” said Diego Hernandez, CEO of Antofagasta. “We have consistently been impressed with the workforce at Zaldívar, and look forward to partnering with them. We also look forward to exploring other opportunities to collaborate with Barrick in the future.”
As joint venture partners, Barrick and Antofagasta will work together to maximize the value of the Zaldívar mine, leveraging the collective expertise and experience of both companies. Barrick has intimate knowledge of the Zaldívar operation and its potential.
Antofagasta will help to realize that potential by leveraging its deep operating expertise in Chile, including potential synergies with its existing portfolio. Such synergies may include the ability to leverage Antofagasta’s extensive in-country procurement programs, contractor relationships and administrative efficiencies.
Under the new ownership structure, Zaldívar will have a joint Barrick-Antofagasta Board of Directors consisting of three Barrick nominees and three Antofagasta nominees. Antofagasta will act as the operator of the mine and will be subject to oversight and direction by the Board. The initial Chairman of the Board will be appointed by Antofagasta and will hold the office of Chairman until January 1, 2017, at which point the right to appoint the Chairman will rotate between the parties on an annual basis on January 1 of each year.