Freeport's Sale of Candelaria Bodes Well For RMC JVFreeport announced yesterday it has sold its 80 % ownership interest in the Candelaria/Ojos del Salado mine in Chile to Lundin for after-tax net proceeds of about $1.5 billion. In the NR, Moffett and Adkerson of Freeport commented that the transaction was part of their plan to reduce debt and focus on FCX's large portfolio of high quality assets and resources "which have attractive growth characterisitics" (Moffett) and "we are positive about our portfolio of copper assets...and opportunities for additional expansion and development provided by our sizeable copper resource base" (Adkerson).
This is now the second non-essential copper mine operation Freeport has sold in the past 12 months, during the same time it has been aggresively trying to negotiate a sweeter deal for itself in the JV with RMC. To me, these sales are necessary for Freeport if in fact it is going to embark on developing a large, world-class copper mine in Serbia-- it is part of the requisite groundwork management has to do before committing to a new, large CAPEX.
To put things in perspective, Candelaria/Ojos consisted of three mines whose total reserves are 4 billion pounds of copper and 1.1 million ounces of gold. The high grade discovery alone at Cukaru Peki is 3.4 billion pounds of copper and 3.1 million ounces of gold for a CuEq of about 7.7 billion pounds of copper, all at very high grade and therefore significantly more profitable to mine. And these numbers for Cukaru Peki factor in zero (0) for the known porphyry discovery which in all likelihood is quite substantial. It also factors in nothing for a potential district scale operation.
Freeport is positioning itself with its institutional shareholder base in order to move forward with building a mine in Serbia.