Rio Tinto and Portuguese government privatization agency Empresa de Desenvolvimento Mineiro (EDM), which had owned 49% and 51% interests, respectively, in Neves Corvo, received participation rights in the copper-price premium above a base price. EuroZinc bought Neves Corvo for EU128 million (US$155 million).
The share was equivalent to half of total quarterly production multiplied by the difference between that quarter’s average London Metal Exchange spot price and the base prices. Those base prices were US$1,984.16 per tonne (US90 per lb.) in the first year after closing and US$2,094.39 per tonne (US95 per lb.) in the second through fourth years.
Rio gets US$22 million in quarterly instalments starting at the end of January. The amount of the January payment will be either the price participation payment for the last quarter of 2004 or US$10 million, whichever is larger. EuroZinc has taken out a US$45-million loan to acquire the rights from both Rio Tinto and EDM, which bears interest at the London US$ interbank offer rate (currently 2.56%) plus 3.5%.
EuroZinc says talks to buy out EDM’s share of the participation right are under way.
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