Freeport-McMoRan has signed an agreement to sell its stake in TF Holdings which owns stake in mining operations in Africa, for $2.65bn.


TF Holdings indirectly owns 80% stake in Tenke Fungurume Mining (Tenke) in Congo will sell its stake to China Molybdenum.

US based Freeport-McMoRan has 70% stake in TF Holdings and an effective 56% interest in Tenke.

Lundin Mining holds a 24% interest while La Générale des Carrièe;res et des Mines (Gécamines), the Congolese state mining company, holds a 20% free carried interest in the project.

According to the company, Tenke mine, located in Katanga province, had consolidated recoverable reserves of 7.2 billion pounds of copper and 874 million pounds of cobalt, as of 31 December, 2015.

Freeport-McMoRan reported sales of 467 million pounds of copper and 35 million pounds of cobalt at a net unit cash cost of $1.21 per pound of copper during that year.

The company is selling its stake in the African copper operations as it looks to cut its debt amidst falling copper prices. By the end of March, the company had a reported debt of about $20.8bn.

Freeport-McMoRan president and CEO Richard C. Adkerson said: "This transaction is another significant step to strengthen our balance sheet and enhance value for shareholders.

"Since the start of 2016, we have announced over $4 billion in asset sale transactions. We are committed to our immediate objective of reducing debt while retaining a large portfolio of high quality assets and resources and a leading position in the global copper industry."

The deal is subject to regulatory approval and approval from shareholders of China Molybdenum and expected to be completed in the fourth quarter of 2016.

The deal is also be subject to Lundin Mining’s right of first offer ("ROFO"), which will be open for 90 days from receipt of the ROFO notice.

Lundin Mining said in a statement: "The Company is currently in the process of reviewing the formal ROFO notice that was received from Freeport. Upon reviewing the details of the proposal, Lundin will carefully evaluate all options for its stake in Tenke and will update the market in due course."

In addition, Freeport-McMoRan will enter into a negotiation to sign a deal with e exclusively with China Molybdenum to sell its stake in Freeport Cobalt, including the Kokkola Cobalt Refinery in Finland, for $100m.

It is also looking to sell its interest in Kisanfu Exploration project in Congo for $50m.

Freeport-McMoRan said that the deal will not have any material gain or loss on the transaction and expects to use the net proceeds to repay debt.

It is the second major deal for China Molybdenum which last month agreed to buy the niobium and phosphate assets in Brazil for $1.5bn.

Image: Freeport-McMoRan sells stake in TF Holdings for $2.65bn. Photo courtesy of "Jonathan Zander (Digon3)"/Wiki.