Sale of Pinto Valley brings BHP's offloads to $5bn

BHP Billiton has signed a definitive agreement to sell its Pinto Valley mining operation (Pinto Valley) and the associated San Manuel Arizona Railroad Company (SMARRCO) to Capstone Mining Corp. (Capstone) for an aggregate cash consideration of $650 million.

The Pinto Valley Mine is located in the Globe-Miami mining district in Arizona, approximately 125 kilometres east of Phoenix. It is projected to produce 130 – 150 million pounds of copper in concentrate and approximately 10 million pounds of copper cathode annually, along with by-product molybdenum and silver, at an estimated cash cost of approximately $1.80 per pound, net of by-product credits, for the first five years of production.

The transaction is subject to regulatory approval, and other customary conditions, and is expected to be completed in the second half of the 2013 calendar year.

Under the terms of the agreement, Capstone will assume the business’s environmental liabilities. BHP Billiton employees working at Pinto Valley and SMARRCO will become employees of Capstone as part of the transaction.

BHP Billiton President Copper, Peter Beaven, said: “The sale of Pinto Valley is an excellent outcome for BHP Billiton shareholders. It is consistent with our strategy and it takes the transaction value of divestments announced over the last 12 months to US$5.0 billion. We are pleased to have reached agreement with Capstone, particularly given their commitment to maintain our environmental and safety standards."

"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," said Darren Pylot, President and CEO of Capstone. "This acquisition gives Capstone our third producing mine with a long mine life and is consistent with Capstone's strategy of building an intermediate copper producer focused in the Americas."