July 31, 2015 / 12:31 PM / 2 years ago

Zaldivar mine deal hits Antofagasta shares, bodes well for Anglo

* Nomura had valued Zaldivar stake at $600 mln

* Deal to increase Antofagasta output by almost 10 pct

* Antofagasta shares down 5 percent to 6-year low

By Silvia Antonioli

LONDON, July 31 (Reuters) - Barrick Gold Corp’s sale of half of its Zaldivar copper mine in Chile to Antofagasta for what analysts say is a pricey $1 billion hit Antofagasta’s shares on Friday, but could help Anglo American in its own copper assets sale.

Shares in Antofagasta fell by almost 5 percent on Friday to their lowest in six years, after the announcement late on Thursday that the Chilean copper mining firm had agreed to buy 50 percent of Zaldivar for $1 billion in cash.

Analysts put the fall down to what they see as an expensive price for a mine with a relatively short life of 14 years.

The price assumes significantly higher copper prices or operational improvements at Zaldivar, according to Jefferies.

Copper has lost almost half of its value since its 2011 highs of around $10,000 a tonne but it remains one of the metals with the more positive fundamentals due to supply constraints.

Nomura analyst Patrick Jones, who valued the stake at $600 million based on the mine’s net present value (npv), said the deal looked “incredibly expensive” and disappointed those investors who hoped Antofagasta would diversify outside Chile.

The company, controlled by Chile’s Luksic family, has been hit, together with its peers, by problems such as scarce water availability, higher taxes, costly power, and opposition from local communities.

The price however, could help global mining group Anglo American in negotiations to sell some of its unwanted copper assets in Chile that are up for sale, analysts said.

“It puts a marker on the ground in terms of valuations which shows you still have to pay for quality copper assets,” said Bernstein Research Paul Gait. “If I was Mick Davis or one of the other buyers I wouldn’t be happy.”

Under pressure from a slump in commodities prices, Anglo American if hoping to raise $1.4 billion from the divestment of some assets which include copper mines in Chile.

Anglo’s Mantos Blancos and Mantoverde copper mines in Chile, together with some nearby processing plants that Anglo is also looking to sell, could fetch up to $1 billion, banking sources say. They have attracted the interest of former Xstrata boss Mick Davis and mining and trading giant Glencore.

The Zaldivar stake acquisition, which puts to rest speculation that the Luksic family might want to get out of mining, will grow Antofagasta’s output by almost 10 percent.

It reduces the cash pile available to pay dividends but “helps a company that has been struggling to deliver growth cost effectively”, Investec said. (Additional reporting by Freya Berry; editing by David Evans)

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