Freeport-McMoRan Inc. (NYSE:FCX) announced today that it has entered
into a definitive agreement to sell its interests in TF Holdings Limited
(TF Holdings) to China Molybdenum Co., Ltd. (CMOC) for $2.65 billion in
cash and contingent consideration of up to $120 million, consisting of
$60 million if the average copper price exceeds $3.50 per pound and $60
million if the average cobalt price exceeds $20 per pound, both during
the 24-month period between 2018 and 2019.
TF Holdings is a Bermuda holding company that indirectly owns an 80
percent interest in Tenke Fungurume Mining S.A. (Tenke). FCX has a 70
percent interest in TF Holdings and an effective 56 percent interest in
In addition, FCX has agreed to negotiate exclusively with CMOC to enter
into definitive agreements to sell its interests in Freeport Cobalt,
including the Kokkola Cobalt Refinery in Finland, for $100 million and
the Kisanfu Exploration project in the Democratic Republic of Congo
(DRC) for $50 million.
Freeport Cobalt includes the large-scale cobalt refinery located in
Kokkola, Finland, and related world-wide sales and marketing business,
in which FCX holds an effective 56 percent interest. Kisanfu is a copper
and cobalt exploration project, located near Tenke in which FCX holds a
100 percent interest.
Richard C. Adkerson, FCX’s President and Chief Executive Officer,
said, “This transaction is another significant step to strengthen our
balance sheet and enhance value for shareholders. Since the start of
2016, we have announced over $4 billion in asset sale transactions. 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.”
Mr. Adkerson continued, “We congratulate our team on developing Tenke
Fungurume to its premier status as a highly successful mining operation.
We are confident that CMOC will continue to build on Tenke
Fungurume’s past success and future development potential, and will
continue a commitment to provide a safe, productive work environment and
a sustainable future with substantial benefits to the Congolese
government and local community. FCX is a proud partner of the DRC and is
committed to ensuring an effective transition through a services
agreement to provide continuity of operations.”
Freeport does not expect the transaction to impact Tenke’s operations,
employment, taxes and benefits provided to the DRC.
Since the project’s inception, Tenke has paid approximately $1.5 billion
in taxes and related payments to the Public Treasury and other public
administration services of the DRC. The current operation provides
employment to approximately 3,400 full time operational workers and
4,200 contractors. Approximately 98% of the operational employees and
93% of the contract work force are DRC citizens. As of December 31,
2015, Tenke had consolidated recoverable reserves totaling 7.2 billion
pounds of copper and 874 million pounds of cobalt. FCX reported
consolidated Tenke sales for the year 2015 totaling 467 million pounds
of copper and 35 million pounds of cobalt at a net unit cash cost of
$1.21 per pound of copper.
The TF Holdings transaction is expected to close in the fourth quarter
of 2016, subject to regulatory approvals, CMOC shareholder approval and
other customary closing conditions. The shareholders of CMOC holding
approximately 63% of the outstanding shares have undertaken to vote in
favor of the resolutions to approve the transaction. The transaction is
subject to Lundin Mining Corporation’s right of first offer (“ROFO"),
which will be open for 90 days from receipt of the ROFO notice.
Under the terms of the exclusivity agreement, Freeport has agreed to
negotiate exclusively with CMOC until December 31, 2016, with respect to
the sale of the Freeport Cobalt and Kisanfu interests in separate
transactions. The sale of the Freeport Cobalt interests would be subject
to a ROFO from Lundin Mining Corporation.
FCX does not expect a material gain or loss on the transaction and
expects to use the net proceeds to repay debt.
FCX is a premier U.S.-based natural resources company with an
industry-leading global portfolio of mineral assets, significant oil and
gas resources and a growing production profile. FCX is the world's
largest publicly traded copper producer.
FCX's portfolio of assets includes the Grasberg minerals district in
Indonesia, one of the world's largest copper and gold deposits;
significant mining operations in the Americas, including the large-scale
Morenci minerals district in North America and the Cerro Verde operation
in South America; the Tenke Fungurume minerals district in the DRC; and
significant U.S. oil and natural gas assets principally in the Deepwater
GOM and in California. Additional information about FCX is available on
FCX's website at "fcx.com."
Cautionary Statement Regarding Forward-Looking Statements: This
press release contains forward-looking statements, which are all
statements other than statements of historical facts, such as
expectations related to completion of the pending transaction. The words
“anticipates,” “may,” “can,” “plans,” “believes,” “estimates,”
“expects,” “projects,” "targets," “intends,” “likely,” “will,” “should,”
“to be,” ”potential" and any similar expressions are intended to
identify those assertions as forward-looking statements. FCX cautions
readers that forward-looking statements are not guarantees of future
performance and actual results may differ materially from those
anticipated, projected or assumed in the forward-looking statements.
Important factors that can cause FCX's actual results to differ
materially from those anticipated in the forward-looking statements
include the ability of the parties to secure regulatory approvals,
satisfy closing conditions and consummate the pending transaction and
other factors described in more detail under the heading “Risk Factors”
in FCX's Annual Report on Form 10-K for the year ended December 31,
2015, filed with the U.S. Securities and Exchange Commission (SEC) as
updated by FCX's subsequent filings with the SEC.
Investors are cautioned that many of the assumptions upon which FCX's
forward-looking statements are based are likely to change after the
forward-looking statements are made, including for example commodity
prices, which FCX cannot control, and production volumes and costs, some
aspects of which FCX may not be able to control. Further, FCX may make
changes to its business plans that could affect its results. FCX
cautions investors that it does not intend to update forward-looking
statements more frequently than quarterly notwithstanding any changes in
its assumptions, changes in business plans, actual experience or other
changes, and FCX undertakes no obligation to update any forward looking
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Source: Freeport-McMoRan Inc.