London 09/05/2016 - Freeport-McMoRan will pull out of mining operations in Africa as well as sell its cobalt assets in a two-pronged deal with China Molybdenum Co that could total $2.92 billion when completed.
Freeport has agreed to sell its interest in the Tenke Fungurume mining complex to China Molybdenum in a $2.65-billion cash deal with a consideration of up to $120 million and is also in exclusive talks to sell its Kokkola Cobalt Refinery and cobalt mining assets to the same company for a total of $150 million, it said on Monday.
Tenke in the Democratic Republic of Congo is one of Freeport's tier top assets - it sold 467 million pounds (212,000 million tonnes) of copper and 30 million pounds (13,607 tonnes) of cobalt in 2015.
The deals mark Freeport's exit from Africa after it announced a $4.2-billion loss in the first quarter of 2016.
Freeport's effective 56-percent interest in Tenke, which mines copper and produces refined SX/EW cathodes as well as cobalt, will be transferred through the sale of Freeport's 70-percent interest in Bermuda holding company TF Holdings Ltd, which in turn owns 80 percent of Tenke.
The remainder of the complex is owned by Lundin (24 percent) and Gécamines (20 percent).
The deal's add-ons total up to $120 million, the company said, with $60 million contingent on the average copper price exceeding $3.50 per pound and another $60 million if the average cobalt price exceeds $20 per pound in the 24 months of 2018 and 2019.
China Molybdenum is also in the driving seat to secure Freeport's 56-percent interest in Freeport Cobalt, which includes the large-scale Kokkola Refinery in Finland, its marketing teams globally and the Kisanfu exploration project in DRC for $100 million and $50 million respectively.
"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," Freeport CEO Richard Adkerson said.
(Editing by Mark Shaw)