Enters Exclusive Negotiations for the Sale
of its Interests in Freeport Cobalt and Kisanfu Exploration Project
for $150 Million
Freeport-McMoRan Inc. (NYSE:FCX) announced today that it has
entered into a definitive agreement to sell its interests in TF
Holdings Limited (TF Holdings) to China Molybdenum Co., Ltd. (CMOC)
for $2.65 billion in cash and contingent consideration of up to
$120 million, consisting of $60 million if the average copper price
exceeds $3.50 per pound and $60 million if the average cobalt price
exceeds $20 per pound, both during the 24-month period between 2018
and 2019.
TF Holdings is a Bermuda holding company that indirectly owns an
80 percent interest in Tenke Fungurume Mining S.A. (Tenke). FCX has
a 70 percent interest in TF Holdings and an effective 56 percent
interest in Tenke.
In addition, FCX has agreed to negotiate exclusively with CMOC
to enter into definitive agreements to sell its interests in
Freeport Cobalt, including the Kokkola Cobalt Refinery in Finland,
for $100 million and the Kisanfu Exploration project in the
Democratic Republic of Congo (DRC) for $50 million.
Freeport Cobalt includes the large-scale cobalt refinery located
in Kokkola, Finland, and related world-wide sales and marketing
business, in which FCX holds an effective 56 percent interest.
Kisanfu is a copper and cobalt exploration project, located near
Tenke in which FCX holds a 100 percent interest.
Richard C. Adkerson, FCX’s President and Chief Executive
Officer, 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.”
Mr. Adkerson continued, “We congratulate our team on
developing Tenke Fungurume to its premier status as a highly
successful mining operation. We are confident that CMOC will
continue to build on Tenke Fungurume’s past success and future
development potential, and will continue a commitment to
provide a safe, productive work environment and a sustainable
future with substantial benefits to the Congolese government and
local community. FCX is a proud partner of the DRC and is committed
to ensuring an effective transition through a services agreement to
provide continuity of operations.”
Freeport does not expect the transaction to impact Tenke’s
operations, employment, taxes and benefits provided to the DRC.
Since the project’s inception, Tenke has paid approximately $1.5
billion in taxes and related payments to the Public Treasury and
other public administration services of the DRC. The current
operation provides employment to approximately 3,400 full time
operational workers and 4,200 contractors. Approximately 98% of the
operational employees and 93% of the contract work force are DRC
citizens. As of December 31, 2015, Tenke had consolidated
recoverable reserves totaling 7.2 billion pounds of copper and 874
million pounds of cobalt. FCX reported consolidated Tenke sales for
the year 2015 totaling 467 million pounds of copper and 35 million
pounds of cobalt at a net unit cash cost of $1.21 per pound of
copper.
The TF Holdings transaction is expected to close in the fourth
quarter of 2016, subject to regulatory approvals, CMOC shareholder
approval and other customary closing conditions. The shareholders
of CMOC holding approximately 63% of the outstanding shares have
undertaken to vote in favor of the resolutions to approve the
transaction. The transaction is subject to Lundin Mining
Corporation’s right of first offer (“ROFO"), which will be open for
90 days from receipt of the ROFO notice.
Under the terms of the exclusivity agreement, Freeport has
agreed to negotiate exclusively with CMOC until December 31, 2016,
with respect to the sale of the Freeport Cobalt and Kisanfu
interests in separate transactions. The sale of the Freeport Cobalt
interests would be subject to a ROFO from Lundin Mining
Corporation.
FCX does not expect a material gain or loss on the transaction
and expects to use the net proceeds to repay debt.
FCX is a premier U.S.-based natural resources company with an
industry-leading global portfolio of mineral assets, significant
oil and gas resources and a growing production profile. FCX is the
world's largest publicly traded copper producer.
FCX's portfolio of assets includes the Grasberg minerals
district in Indonesia, one of the world's largest copper and gold
deposits; significant mining operations in the Americas, including
the large-scale Morenci minerals district in North America and the
Cerro Verde operation in South America; the Tenke Fungurume
minerals district in the DRC; and significant U.S. oil and natural
gas assets principally in the Deepwater GOM and in California.
Additional information about FCX is available on FCX's website at
"fcx.com."
Cautionary Statement Regarding Forward-Looking
Statements: This press release contains forward-looking
statements, which are all statements other than statements of
historical facts, such as expectations related to completion of the
pending transaction. The words “anticipates,” “may,” “can,”
“plans,” “believes,” “estimates,” “expects,” “projects,” "targets,"
“intends,” “likely,” “will,” “should,” “to be,” ”potential" and any
similar expressions are intended to identify those assertions as
forward-looking statements. FCX cautions readers that
forward-looking statements are not guarantees of future performance
and actual results may differ materially from those anticipated,
projected or assumed in the forward-looking statements. Important
factors that can cause FCX's actual results to differ materially
from those anticipated in the forward-looking statements include
the ability of the parties to secure regulatory approvals, satisfy
closing conditions and consummate the pending transaction and other
factors described in more detail under the heading “Risk Factors”
in FCX's Annual Report on Form 10-K for the year ended December 31,
2015, filed with the U.S. Securities and Exchange Commission (SEC)
as updated by FCX's subsequent filings with the SEC.
Investors are cautioned that many of the assumptions upon which
FCX's forward-looking statements are based are likely to change
after the forward-looking statements are made, including for
example commodity prices, which FCX cannot control, and production
volumes and costs, some aspects of which FCX may not be able to
control. Further, FCX may make changes to its business plans that
could affect its results. FCX cautions investors that it does not
intend to update forward-looking statements more frequently than
quarterly notwithstanding any changes in its assumptions, changes
in business plans, actual experience or other changes, and FCX
undertakes no obligation to update any forward looking
statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20160509005622/en/
Freeport-McMoRan Inc.Financial Contacts:Kathleen L. Quirk,
602-366-8016orDavid P. Joint, 504-582-4203orMedia Contact:Eric E.
Kinneberg, 602-366-7994
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