Anglo American Adds Latin American Assets

Anglo American Adds Latin American Assets

In late April 2007, Anglo American announced plans for two acquisitions having a combined value of more than $1.55 billion that have the potential to add significantly to the company’s minerals production in Latin America. On April 23, Anglo agreed to acquire a 49% interest in the Minas-Rio iron ore project in Brazil through transactions valued at $1.15 billion. On April 30, in Peru, Anglo won a government auction of the Michiquillay copper project with a bid of $403 million.

The Minas-Rio project is owned 70% by MMX Minas-Rio, a subsidiary of MMX Mineração e Metálicos, and 30% by Centennial Asset Mining Fund. Anglo American will acquire its interest in the project by purchasing all of the shares of Centennial Asset, plus additional shares of MMX Minas-Rio sufficient to raise its interest to 49%.

Minas-Rio is an integrated iron ore project, consisting in its first phase of a mine in the state of Minas Gerais that will produce 26.5 million mt/y of iron ore pellet-plant feed, one or more slurry pipelines to a shipping terminal at Açu Port in the state of Rio de Janeiro, and a 7-million mt/y pelletizing plant in the port area. About 19 million mt/y of the mine’s production will be exported to overseas pellet plants.

Capital cost for the first phase of Minas-Rio development is estimated at $2.34 billion. Current project activity is focused on securing permits required for construction. Start of production is scheduled for the fourth quarter of 2009.

Planning is already in progress for a phase-two expansion to double Minas- Rio production. If MMX Mineração e Metálicos and Anglo American elect to proceed with phase two, Anglo will make additional payments to Centennial Asset and MMX Minas-Rio having a combined value of $600 million, which will increase Anglo’s participation in MMX Minas-Rio to 50%.

In Peru, the Michiquillay project is a large, advanced, porphyry copper exploration project located 35 km east of Newmont-Buenaventura’s Yanacocha gold operations and 12 km south of Northern Peru Copper’s Galeno copper-gold-silvermolybdenum project in Cajamarca state. Asarco discovered the Michiquillay deposit in the late 1950s and conducted exploration work on it from 1959 to 1965. From 1972 to 1976, a Japanesecontrolled company, Michiquillay Mining, performed additional exploration work and completed a 40,000-mt/d feasibility study. Historic exploration work on the property has included 159 diamond drill holes totaling 41,600 m and underground tunneling totaling 2,500 m.

The Peruvian government estimates Michiquillay reserves at 544 million mt, grading 0.69% copper, more than 0.1 g/mt gold, and more than 2 g/mt silver, using a 0.40% copper cutoff. Anglo American believes that the deposit has significant additional exploration potential.

Anglo American also is developing its Quellaveco copper project in southern Peru. A feasibility study of the project is scheduled for completion during the first half of 2008.