Crosby Capital Partners - PE of 3 and so undervalued.

For immediate release - Friday, 23 December 2005
Antofagasta plc to enter into a joint venture with Tethyan Copper Company Limited
in relation to the Reko Diq copper-gold region in Pakistan
LONDON - 23 December 2005: Antofagasta plc (¡°Antofagasta¡±) is pleased to announce that it has
signed a binding Heads of Agreement (¡°HoA¡±) with Tethyan Copper Company Limited (¡°Tethyan¡±), a
company listed on the Australian Stock Exchange, involving the acquisition by Antofagasta of a 50%
equity interest in Tethyan¡¯s mineral interests in Pakistan and the concurrent subscription for a 19.95%
shareholding in Tethyan. Antofagasta, together with Tethyan, have also entered into a deed of
termination with BHP Billiton entities (¡°BHP Billiton¡±) whereby BHP Billiton¡¯s rights to claw-back a
material interest in certain of Tethyan¡¯s mineral interests (¡°Claw-back Right¡±) will be extinguished
(¡°BHP Billiton Termination Deed¡±).
Tethyan¡¯s principal assets are a 75% interest in the exploration licence encompassing the highly
prospective Chagai Hills region of North West Pakistan known as Reko Diq, which includes the
Tanjeel Mineral Resource and the Western Porphyries, and a 100% interest in certain other licences in
the region. This mining district hosts significant copper-gold porphyry deposits as part of an extended
copper-gold belt. Tethyan has reported total indicated and inferred mineral resource estimates at these
properties of 1,213 million tonnes with a copper grade of 0.58% and a gold grade of 0.28 grams per
tonne. The resource estimates include probable reserves at the Tanjeel Mineral Resource of 128.8
million tonnes with a copper grade of 0.7%. Reserve and resource estimates have been reported by
Tethyan to JORC standards.
Under the HoA, Antofagasta has agreed to:
• acquire a 50% equity interest in Tethyan¡¯s mineral interests in Pakistan through the subscription for
US$37.5 million of newly issued equity capital into a joint venture vehicle to be established;
• commit to funding further exploration and development expenditure and related joint venture costs
of up to US$75 million. In the event that Antofagasta spends less than this amount, its 50% equity
interest will be reduced on a pro-rata basis; and
• subscribe for 33 million new ordinary shares in Tethyan for a total subscription price of US$20.5
million, equating to 19.95% of Tethyan¡¯s enlarged issued share capital (17.3% on a fully diluted
basis).
Under the BHP Billiton Termination Deed, Tethyan have agreed to pay BHP Billiton a compensation
amount of US$50M in consideration for terminating the Claw-Back Right and other rights under the
Alliance Agreement between BHP Billiton and Tethyan, of which US$45M is payable at closing and
US$5M is payable in four equal instalments over the four years following closing.
It is expected that Antofagasta¡¯s total financial commitment under this transaction, including the
exploration and development expenditure commitment under the HoA, will amount to US$133 million.
Implementation of the proposed transactions under the HoA and the BHP Billiton Termination Deed
are subject to certain conditions precedent including due diligence, Tethyan shareholder approval,
necessary Pakistan and Balochistan authority approvals and receipt of all other necessary regulatory
and third party approvals.
Tethyan is currently subject to an unsolicited takeover offer from Skafell Pty Ltd (¡°Skafell¡±), a
subsidiary of Crosby Capital Partners Inc. and IB Daiwa Corporation. The Tethyan Board has
unanimously recommended that its shareholders reject the Skafell takeover offer and approve the
proposed transaction with Antofagasta, in the absence of a superior offer for Tethyan emerging.
Tethyan has agreed to pay Antofagasta a break fee in certain circumstances, including where the
Tethyan Board withdraws its recommendation for the proposed transaction with Antofagasta.
Marcelo Awad, CEO of Antofagasta Minerals S.A., stated, ¡°Our agreement with Tethyan Copper
Company provides Antofagasta with a window into a very prospective mining region and represents a
strategic investment opportunity for us. A partnership with Tethyan will allow Antofagasta to apply its
mining and development skills and its experience in large-scale projects, to evaluate the mineral
resources at Reko Diq and ensure that they are developed to their full potential to the mutual benefit of
the shareholders of both Antofagasta and Tethyan. Whilst Latin America, and Chile in particular, will
continue to be Antofagasta¡¯s primary region of focus, this investment is consistent with our long term
growth strategy and subject to our rigorous investment and risk evaluation criteria. Antofagasta
continues to look at opportunities globally to secure rights to world-class mining assets to enhance its
overall growth profile.¡±
The agreements referred to above were signed after the last time at which an announcement of the
transaction could have been made by Tethyan through the Australian Stock Exchange. A detailed
announcement is expected to be made by Tethyan at the opening of trading on the Australian Stock
Exchange on Wednesday 28 December 2005.