ANTO

Chileans bankroll Tethyan copper plan
By Robin Bromby
From The Australian :
December 29, 2005

CHILEAN copper giant Antofagasta will bankroll Perth company Tethyan Copper's massive Pakistan project, a move that will finally see off a troublesome takeover bid for Tethyan.

The London-listed but Chilean-owned Antofagasta will initially inject $US133 million ($183 million) into Tethyan in return for a 50 per cent stake in the Reko Diq project and 17.3 per cent of Tethyan itself.
As a result, Tethyan shares added 11c to 71c, comfortably above the 64c a share being offered by Hong Kong-based Crosby Capital Group. But that hostile bid, announced last May, was already dead in the water, even though it remains open until January 19. The predators hold just 1.31 per cent of Tethyan. Tethyan managing director David Moore said yesterday the hostile bid had hamstrung the company for more than half a year. "It's stifled our share price."

Reko Diq, located in a sliver of western Pakistan that protrudes between Afghanistan and Iran, has 4.8 million tonnes of contained copper and 9 million ounces of gold - and there are 14 unexplored mineralised zones within Tethyan's licence area.

BHP Billiton pulled out of Reko Diq in 2000 because it considered the project too small but retained a clawback right. BHP Billiton will surrender that right for $US50 million.

Antofagasta has sufficiently deep pockets to take on the Reko Diq project. It produces about 450,000 tonnes of copper a year from three mines in Chile, has cash reserves of over $US1 billion and is a FTSE 100 member.


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Antofagasta started in 1888 when the company raised money in London to build the port of Antofagasta in northern Chile and a railway to La Paz, Bolivia. The company today operates railways associated with its copper mines. In 2000 it commissioned the $US1.36 billion Los Pelambres mine high in the Andes.
Mr Moore said one of the best things about the deal was that Tethyan retained a half-share.

"We're not just a junior partner stuck on the sidelines," he said.

Antofagasta will pay for the next $US75 million of exploration and feasibility work to earn its 50 per cent.

It will also pay $US20.5 million for 33 million Tethyan shares at about 83c a share.

On top of that, there will be another $US37.5 million to bankroll a new joint venture company, most of that money going to pay off BHP.