Inmet’s put option allows it to sell the interest to Noranda at US$15 million, a sum that increases to US$20 million at the beginning of 2003 and to US$22.5 million in July 2003. Noranda’s call option is for US$24 million in cash up to the end of 2003, when both options expire.
Says Inmet President Richard Ross: “This transaction crystalizes the value of our Antamina interest and provides a source of financing for our growth strategy.”
Rio Algom and Inmet won the right to develop Antamina in 1996 through a privatization bidding process administered by the Peruvian government’s mining agency, Centromin. The pair had until Sept. 16, 1998, to make a production decision. With the deadline looming and the Asian economic meltdown in full swing, Inmet sold its half-interest to Teck and Noranda for US$48 million plus future payments equivalent to 3.3% of free cash flow from the project. Noranda picked up a further 12.5% interest from Rio on an earn-in basis, and Rio was absorbed by
Antamina reached commercial production in early October. The massive mine was completed four months ahead of schedule and slightly under budget. At a capital cost of US$2.3 billion, including acquisition, Antamina is one of the largest greenfield mines ever built. Compania Minera Antamina is the operator, with ownership shared among Noranda and BHP Billiton, each with 33.75%,
The operation is expected to generate US$700 million in revenue during its first year of operation, 30% less than originally forecast.
At a daily design capacity of 70,000 tonnes of ore, Antamina is scheduled to average, on an annual basis, 306,000 tonnes copper (contained in 1 million tonnes of copper concentrate) and 283,000 tonnes zinc (contained in 490,000 tonnes of zinc concentrate). These figures apply to the first 10 years of a mine life that is expected to exceed 22 years. Cash costs are to average US$640 per tonne copper (net of byproduct credits) in the first 10 years and US$770 per tonne over the entire mine life.
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