Mining giant BHP has agreed to offload its Cerro Colorado copper mine in Chile to EMR Capital, a specialist resources private equity manager, in a deal worth up to $320m.
Located in the Atacama Desert in northern Chile, the Cerro Colorado copper mine produced 65,000 tonnes of copper cathode in 2017.
As per the terms of the deal, BHP will be paid $230m by EMR Capital, upon closing of the transaction. It will also be paid nearly $40m in proceeds from the post-closing sale of certain Cerro Colorado copper inventory along with up to $50m of contingent payment in the future, based on copper price performance.
The transaction is expected to be completed during the fourth quarter of 2018, subject to meeting of financing and customary closing conditions, said BHP.
The company, in a statement, said: “BHP and EMR Capital are committed to working together to facilitate a smooth transition of ownership.”
The Cerro Colorado copper mine is one of two copper mining operations of BHP’s Pampa Norte division. The other copper mine that is fully owned by the Pampa Norte division is the Spence mine, which had produced 174kt of copper cathode in FY2016.
BHP produces copper cathode from the two mines by using the oxide and sulphide ore treatment which involves leaching, solvent extraction and electrowinning processes.
The mining major has interest in another Chilean copper mine – the Escondida mine, which is also located in the Atacama Desert. BHP, with a stake of 57.5%, is the operator of the copper mine, which is a copper porphyry deposit that also produces gold and silver.
BHP’s decision to sell the Cerro Colorado copper mine comes days after its announcement to move forward with the development of the $3.4bn South Flank iron ore project in Australia’s Pilbara region.
The mining giant will be investing $2.9bn in the iron ore project in Western Australia, which will totally replace production from the 80Mtpa Yandi iron ore mine.