* Sale price at least 25 pct above broker forecasts
* Acquisition will more than double Capstone's output
MELBOURNE, April 29 BHP Billiton has
agreed to sell its Pinto Valley copper mine and a railroad in
Arizona to Capstone Mining Corp for $650 million,
reaping far more than expected as the top global miner tightens
its belt in a weaker market.
BHP and its global mining peers have put billions of dollars
worth of mines, projects and aluminium operations up for sale as
they look to slash costs, cut debt and focus on their highest
returning assets as commodity prices slump.
Pinto Valley takes BHP's total asset sales over the past 12
months to $5 billion.
The Australian company flagged earlier this year that it was
looking to sell around 10 more assets, without naming them.
Analysts had said Pinto Valley was a likely target, along with
aluminium, manganese and some petroleum operations.
There has been speculation the major miners would find it
tough to find buyers for their unwanted assets as smaller miners
are strapped for cash and even Chinese companies hungry to
expand have become more choosy, under pressure from Beijing.
But BHP managed to fetch much more than expected for Pinto
Valley. Deutsche Bank had estimated the mine could sell for
around $274 million, while UBS estimated it was worth $500
"It's a better price than expected. Shareholders should be
happy with that," said Tim Barker, a portfolio manager at BT
Investment Management, which owns shares in BHP.
BHP declined to comment on how big a profit it would book on
the sale, which is expected to be completed in the second half
of this year.
The deal gives Vancouver-based Capstone its third producing
mine. With forecast production of 130-150 million pounds of
copper in concentrate and about 10 million pounds of copper
cathode a year, the mine will more than double the company's
Cash costs at the mine, which restarted operating in
December 2013, are estimated at $1.80 a pound, Capstone said.
Copper is currently trading at around $3.19 a pound.
"Pinto Valley represents a unique opportunity to acquire a
mid-sized producing copper mine in a well-established and
low-risk mining jurisdiction with a significant mineral
resource," Darren Pylot, President and CEO of Capstone, said in