JOHANNESBURG (miningweekly.com) After Anglo has done all the hard yards at its promising new Los Bronces project in Chile, Codelco is using a 33-year-old piece of paper to justify paying only $6.75-billion for 49% of Anglo American Sur SA – a multibillion-dollar discount.
Goldman Sachs estimates the net asset value of Anglo’s interests in Chile at $18-billion to $19-billion, giving a 49% stake a value of $8-billion to $9-billion – considerably higher than the Codelco offer.
Other analysts said the true value of Anglo’s assets in Chile could be significantly higher, given Los Bronces’ large planned growth.
RBC’s equity research team has lowered its target share price for Anglo from £38/share to £36/share on the probability of the deal going through.
Is this nationalisation by stealth and do South African shareholders, some of them previously disadvantaged South Africans with pension funds and provident funds tied up in Anglo, stand to lose?
Codelco is tapping Japan’s Mitsui for the money in exchange for 30 000 t of copper a year and the choice of vending half of the 49% back to Mitsui.
Thrown into the deal too are a copper smelter and two exploration prospects.
With the Anglo unit producing 450 000 t/y, Codelco stands to get 10% more copper, on an option that Exxon gave Empresa Nacional de Mineria way back in 1978.
While Anglo tailends its $2.5-billion capital investment to turn Los Bronces into the world’s fifth-largest copper mine, Codelco has been able to watch it from over the fence where it has its own neighbouring Andina mine.
One wonders why Codelco was not as eager to develop Los Bronces in the days when the copper price was in the doldrums.
RBC says that Codelco’s purchase would deprive Anglo of a major part of its copper growth in 100%-owned Los Broncos.
Los Broncos’ has significant exploration upside potential. Codelco’s exercising of the option would deprive Anglo of growth in copper, currently a favourable commodity, which RBC sees as being negative.
The option still has to be exercised, and there could be some delay in finalising the price.
Shares in Anglo have fallen on the news of the Codelco opportunity.
