TORONTO – Canadian mining giant Barrick Gold Corporation said it has reached an agreement to sell a 50 percent stake in the Zaldivar copper mine in northern Chile to Santiago-based conglomerate Antofagasta PLC for $1 billion.
Barrick said in a statement Thursday that the sale of an ownership interest in Zaldivar to Antofagasta entails forming a partnership with one of the world’s leading copper companies.
Under the terms of the agreement, Antofagasta will pay Barrick $980 million in cash upon closing and an additional $25 million in cash over the next five years.
“As joint venture partners, Barrick and Antofagasta will work together to maximize the value of the Zaldivar mine, leveraging the collective expertise and experience of both companies,” the Toronto-based company said in a news release.
“Antofagasta will help to realize that potential by leveraging its deep operating expertise in Chile, including potential synergies with its existing portfolio. Such synergies may include the ability to leverage Antofagasta’s extensive in-country procurement programs, contractor relationships and administrative efficiencies,” Barrick said.
Zaldivar’s board under the new ownership structure will consist of three Barrick nominees and three Antofagasta nominees.
Antofagasta “will act as the operator of the mine” and appoint the first chairman of Zaldivar’s board, although the right to appoint the chairman will rotate between the two partners on an annual basis.
The transaction is expected to close in late 2015.
“The sale of 50 percent of Zaldivar is consistent with our strategy to create long-term value for our shareholders,” said Kelvin Dushnisky, Barrick’s co-president.
“We are pleased to reach an agreement with the ideal partner for Zaldivar. Antofagasta has an outstanding track record of building and operating mines in Chile, and we see this as the first step in an ongoing, collaborative partnership,” Dushnisky added.
Antofagasta CEO Diego Hernandez said for his part that the company was “enthusiastic” about its partnership with Barrick at Zaldivar.
“Together, we believe that we are well positioned to enhance the long-term value of the Zaldivar operation through our collective best practices,” Hernandez said.