Hurtado Vicuña is selling participation in Quebrada Blanca and Teck is looking for partner
23-Jul-2012 La Tercera – News
-The mining company where Enami also has interests has a US$5,600 million project to move from mid-size to large-size mining classification
-Hurtado Vicuña will sell 13% of Quebrada Blanca to focus on Pucobre development
The Canadian Teck – company controller – is analyzing the way to obtain the US$5,600 million required for financing the Quebrada Blanca 2 project (or Hypogene project).
This decision has not been easy because the multinational is expecting to know the tidings about the sale process the Hurtado Vicuña group is going through for the Quebrada Blanca mine, where the company has participation through Inversiones Mineras.
Don Lindsay, Teck CEO, has recognized in a conversation with investors last April that this is an issue that is being dealt with and that the Canadian company is looking for a silent partner. “We are having some conversations with the rest of Quebrada Blanca share holders (where Enami holds 10%) regarding financing options for the Hypogene project which might include limited access to market and possibly bringing a silent partner”, he said.
The Hurtado Vicuña family process is being headed by JP Morgan and the operation is expected to be executed during the next weeks. As reported by some sources from mining industry, Hurtado Vicuña started the sale process two years ago when it was focused on making agreements with partners in Inversiones Mineras as it is the case of Manuel Cruzat and Juan Braun. In fact, a source reported that the group had already purchased the percentage Cruzat holds in the society and it is now in the process of purchasing the Juan Braun share. Thus Hurtado would add up 80% of the 13.5% it owns in the Quebrada Blanca society.
Some sources state there would be three or four interested parties in purchasing the Hurtado Vicuña stockholding, some Asian companies and financial institutions. However, sources indicated Teck has the first refusal option, i.e. preemptive right to submit an offer.
The driving reason for the group to leave Quebrada Blanca may be found in their interest in focusing on Pucobre development, as reported by some sources from mining industry. A strong investment plan is being made in Pucobre for US$1,200 million in order to become part of large-size mining companies in Chile. “Hurtado is to disburse US$700 million for the development Teck has planned for Quebrada Blanca 2 and, on the other hand, the group wants to invest US$1,000 million in Pucobre. Certainly, priority is set on their own company”, a source acquainted of the operation added.
Financing formula for the project located in I Region is non-negligible. Teck is responsible for 85% of financing and Inversiones Mineras’ responsibility is for 15%. Although Enami holds 10% ownership, the state-owned company has no participation in mining projects and only gets the interest. “Teck has to invest US$4,700 million in Quebrada Blanca 2”, Lindsay stated in the conversation held with investors.
Mineral Deposit Merits
In April Lindsay pointed out that Quebrada Blanca 2 has a great growth potential and that it is currently “one of best available projects for short-term development”. He also asserted that “chances exist to increase production by 50%”. He also added that the mine has reserves for 17 million copper tons and that last boring works have reported a 30% increase of reserves and resources within the Hypogene project design area. “This figure has tripled the pit design”, the Teck CEO stated.
The project is expected to produce about 250 thousand tons of copper and six thousand tons of molybdenum during the first five-year period. The project will allow Quebrada Blanca to move from mid-size to large size mining industry.
Thereafter yield pace will be reducing to reach 200 thousand tons of copper and 5 thousand tons of molybdenum. Startup is expected for second semester of 2016, however timing might extend. Recently Teck withdrew the environmental study from permit processing.
