Anglo bets on zinc

During the report period ended Sept. 30, Anglo American completed its purchase from Toronto-listed junior Ivernia West of the 50% interest it didn’t already own in the underground Lisheen zinc mine in Ireland. Anglo paid just US$1.8 million and assumed all existing debt obligations relating to the mine, including outstanding project loans of US$73.19 million. Ivernia, meanwhile, will focus on its Magellan lead project near Wiluna in Western Australia, where plans for mine construction are well-advanced and first lead production is expected in early 2005.

On Sept. 12, Anglo American officially opened its US$454-million Skorpion open-pit zinc mine and hydrometallurgical refinery near Rosh Pinah in southern Namibia — the largest investment in Namibia since its independence. The mine produced its first metal in May and exported its first zinc consignment from the port of Luderitz in July. The mine is set to produce 150,000 tonnes per year of special high-grade zinc over a mine life of at least 15 years. The mine will ramp up to full capacity by the end of 2004 and, if all goes well, become one of the world’s lowest cost zinc producers.

In late September, Anglo launched a 300-million bond offering, with the bonds maturing in December 2010 and priced at 99.465, paying a coupon of 5.125%. Royal Bank of Scotland and HSBC Bank are joint lead managers and bookrunners, and proceeds are earmarked to repay existing bank borrowings.

Anglo is also proceeding with a US$150-million conversion and expansion of a paper machine at its Merebank paper mill in KwaZulu-Natal, South Africa.

Anglo ended the period down $1.08 at $18.15.