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By Nicole Mordant
July 30 (Reuters) - Barrick Gold Corp agreed on Thursday to sell 50 percent of its Zaldivar copper mine in Chile to copper miner Antofagasta Plc for $1 billion in cash, and both parties stressed that this was just the start of more cooperation.
The emergence of family-owned, Chilean-based Antofagasta as the winner of the competitive bidding process for a mine once dubbed the “Andean ATM” is a surprise after market speculation centered on either a Chinese or global miner as the buyer.
Both Barrick and Antofagasta said the deal was a launch pad for future co-operation, likely in Chile where Barrick owns large, unbuilt projects such as Pascua-Lama and Cerro Casale.
“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,” Barrick Co-President Kelvin Dushnisky said in a statement.
Barrick spokesman Andy Lloyd declined to comment on any specific projects for future partnerships.
Antofagasta would become the operator of Zaldivar, an open pit mine, and would be overseen by a board consisting of three nominees from each company.
Zaldivar is situated in northern Chile’s main copper-producing area right next to BHP Plc and Rio Tinto-owned Escondida, the world’s largest copper mine. Both BHP and Escondida itself had been tipped as potential buyers, as was China Molybdenum Luoyang Co.
Zaldivar last year produced around 100,000 tonnes of copper at a net cash cost of $1.79 a pound and generated $244 million before tax. That cash cost is still well below spot copper prices, which were last at $2.38 a pound, near six-year lows.
The purchase of Zaldivar “represents a rare opportunity to acquire a substantial interest in an established, low-cost mining operation that generates strong cash flow,” Diego Hernandez, Antofagasta’s chief executive, said in a statement.
Barrick, the world’s biggest gold producer, said that including the sale of Zaldivar, it has now announced debt-reduction related deals worth around $1.85 billion.
The Toronto-based company has said it wants to reduce its debt by at least $3 billion this year. The latest deal brings it to nearly two-thirds of that total.
Barrick also said it was “actively exploring” a number of other joint venture and sales opportunities. It would update the market on Aug. 5 when it releases its second-quarter results, the miner said.
M. Klein and Company and TD Securities Inc. were Barrick’s financial advisers. Citi advised Antofagasta. (Reporting by Nicole Mordant in Vancouver, additional reporting by Rosalba O‘Brien in Santiago; editing by Grant McCool and Cynthia Osterman)