2008

Marubeni has entered into a definitive agreement with Antofagasta plc to acquire a 30% equity stake in Esperanza and El Tesoro projects in Chile

Apr. 25. 2008
Marubeni Corporation

 Marubeni Corporation (hereafter “Marubeni”) is pleased to announce it has agreed with Antofagasta plc (hereafter “Antofagasta”), one of the world leading copper producers, to acquire a 30% interest in both the Esperanza and El Tesoro projects (collectively hereafter, the “Projects”) for total cash consideration of US$1.31 billion, and be responsible for its share of development costs for the Esperanza project of approximately US$0.6 billion, which are currently estimated at approximately US$1.9 billion. Marubeni is therefore, will be investing a total of approximately US$1.9 billion for the Projects.

 Total reserves and resources of the Project are estimated to exceed 1,900 million tonnes. Esperanza is expected to produce 700,000 tonnes of concentrates annually, containing 200,000 tonnes of payable copper. Of this, Marubeni is entitled to sell 210,000 tonnes of concentrates which will account for 5% of Japanese copper imports. El Tesoro currently produces 90,000 tonnes of payable copper each year.

 Through this investment, Marubeni will be able to make a significant contribution toward securing copper resources for the national interest of Japan. Marubeni will also seek to advance discussions with Japan Bank for International Cooperation and Japan Oil, Gas and Metals National Corporation to further the transaction.

 The Republic of Chile, which accounts for over one third of the world’s copper production, is the largest copper producing country in the world with a number of large-scale copper deposits, a history of successful copper mining, and is recognized as a low-risk country suitable for investment in the mining industry. The Projects are located in the Sierra Gorda district in Chile’s II Region, which is a key area of focus for Antofagasta. The district has estimated combined mineral resources of approximately 3 billion tonnes, is a current producing copper area, and is also highly suitable for mining due to its dry environment. With the planned development of a single mining complex to process both sulphide and oxide ores from the Projects, the potential for further mining developments in this district is enhanced. 

 Antofagasta is one of the largest copper producers in the world and the only London Stock Exchange listed company among Chilean copper companies. Marubeni and Antofagasta have been co-operating on the Los Pelambres project in Chile, which is 60% owned by Antofagasta, and have established an excellent and long-lasting relationship. Marubeni believes that this transaction will only serve to enhance the relationship.

 Marubeni’s Metals & Mineral Resources division has developed a strategy to secure stable supplies of metal and mineral resources while maximizing profitability through investment in mine developments and smelting projects overseas. This transaction perfectly fits its investment philosophy. Total payable copper from Marubeni’s interests is expected to be 120,000 tonnes / year by 2011.


Appendix

1. Esperanza project

 
The Esperanza project is one of the few high-profile development copper projects remaining globally, and is expected to start the production of copper concentrates, which contains payable copper, by end-2010. Esperanza has proven & probable copper reserves of 480 million tonnes and expected average annual production of 700,000 tonnes of concentrates containing 195,000 tonnes of payable copper, 229,000 ounces of payable gold and 1,556,000 ounces of payable silver over the first ten years. Its operating cost competitiveness is favorable when measured against other copper mining projects currently in development.
 Marubeni is entitled to sell no less than 30% of the total concentrates from the Esperanza project, which will account for 5% of total copper imports into Japan This will contribute to securing copper resources for the national interest of Japan.
 Development of the Telégrafo deposit which is adjacent to Esperanza could extend the life of mine for the Esperanza project up to 2049, beyond the current end of mine life estimate of 2025.

Location: Sierra Gorda District, Region II of Chile (please refer to the map)
 (Approximately 160km Northeast of Antofagasta) 
Esperanza deposit
Reserves : 480 million tonnes
Production: Approximately 700,000 tonnes / year (concentrate)
Initial Production: 2010 4Q (plan)
Life of Mine: 2010-2025

Telégrafo deposit
Resources: Telégrafo Norte
                       404 million tonnes
                      Telégrafo Sur
                       898 million tonnes 
Initial Production: 2026
Life of Mine: 2026-2049

2. El Tesoro project

 
The El Tesoro copper mine began development in 1999, and commenced production in 2001 using surface mining and the SX-EW process. El Tesoro has already established a solid operating base and a strong track record, with 93,000 tonnes of payable copper produced and EBITDA of US$431 million in FY2007. El Tesoro has proven & probable ore reserves (including the Tesoro North-East project) of 127 million tonnes. Development of Tesoro North-East, a satellite deposit of Tesoro mine could extend the mine life to 2020.

Location: Sierra Gorda District, Region II of Chile
 (Approximately 160km Northeast of Antofagasta)
Reserves: 127 million tonnes
Production: Approximately 93,000 tonnes / year (2007)
Initial Production: 2001
Life of Mine: 2001-2020

3. New development in the Sierra Gorda District

 
Marubeni and Antofagasta have agreed to maximize the synergies between the two projects through utilization of the existing El Tesoro infrastructure for the Esperanza project. Furthermore, Marubeni and Antofagasta have agreed on a co-investment scheme for other new development projects in the Sierra Gorda District, with the aim of securing additional copper resources.

4. Overview of Antofagasta

Company name: Antofagasta plc
Headquarter: 5 Princes Gate, London, SW7 1QJ, United Kingdom
Establishment: 1888
Chairman: Jean-Paul Luksic
Sales: US$3,827 million (FY2007)
Total Assets: US$5,855 million (as of December 2007)

5. Overview of Marubeni

Company name: Marubeni Corporation
Headquarter: 4-2, Ohtemachi 1-chome, Chiyoda-ku, Tokyo, Japan
Establishment: December 1, 1949
President and CEO: Teruo Asada
Sales: \9,555 billion (FY2006)
Total Assets: \4,873 billion (as of March 2007)

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