By Alex MacDonald
LONDON--Chilean copper producer
Antofagasta PLC (ANTO.LN) could, if necessary, make a $10 billion acquisition by tapping the financial markets to supplement its large cash reserves, Chief Financial Officer Alejandro Rivera said Tuesday.
Antofagasta is forecast to have cash of about $4 billion by the end of this year, depending on copper prices, up from about $3 billion at the beginning of this year, Mr. Rivera told Dow Jones Newswires on the sidelines of an analyst meeting. The company could make a $10 billion acquisition by raising further funds through the debt or equity markets, he said.
Mr. Rivera said the miner's financing capacity doesn't indicate it is looking to make such a large purchase. He added that while the company has traditionally focused its mergers and acquisitions strategy on early stage exploration assets, it is now willing to consider investments in copper producing assets or projects that are under development.
Antofagasta Chief Executive Diego Hernandez told Dow Jones Newswires that the company is "looking more proactively" at mergers and acquisitions but there weren't many opportunities. Although a number of large miners have put their aluminum assets up for sale, copper disposals remain scarce due to the metal's constrained supply and strong demand outlook.
Mr. Rivera said the company is interested in projects in stable regions such as North America and Australia and some parts of Africa. Antofagasta remains focused on investment in copper assets but is open to entering other commodities via by-product output such as gold, nickel, and platinum group of metals, Mr. Rivera added.
The company is currently focused on growing its Chilean brownfield and greenfield projects with a budget of $800 million to invest in 2013, dropping to $500 million to $600 million in 2014, and $400 million in 2015, Mr. Rivera said. The figures exclude capital costs for Antofagasta's $1.86 billion Antucoya project which was suspended in December due to escalating costs and is under review.
At the end of 2012 the company had cash and cash reserves of $4.3 billion and a net cash position of $2.4 billion which will fall when it pays its special and final dividends later this year but will rise again as it generates more cashflow.
Antofagasta declared a two-fold increase in its full-year dividend Thursday to $0.985 a share, prompting the company's share price to rise 4% or 44 pence to 1,139 pence a share at 1530 GMT.
Write to Alex MacDonald at alex.macdonald@dowjones.com
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(END) Dow Jones Newswires
March 12, 2013 12:05 ET (16:05 GMT)
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