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Mantos Copper sells mine stake to Mitsubishi to finance expansion

Santiago, Chile — Copper producer Mantos Copper has agreed to sell a minority stake in its Mantoverde mine in northern Chile to Mitsubishi Materials ahead of major investment at the site, the companies reported Friday

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Under the deal, the Japanese company will pay $236 million for a 30% stake in the mine, helping to finance a $731 million investment to begin concentrates production from sulfide resources at the mine and extend the existing SXEW operation.

Mantos Copper said the project would produce an average of 105,000 mt/year of copper during its first ten years of production, including 29,000 mt/year of cathode and 76,000 mt/year of copper in concentrates.

The deal which is conditional on a financing package for the development project, is expected to close by the end of October.

"This transaction is a step forward in Mantos Copper's strategy of expanding and extending the life of our high-quality copper assets while moving them down the cost curve," said Chairman John McKenzie, welcoming Mitsubishi to the project.

Mitsubishi said that the deal, which includes an offtake agreement covering 30% of production from Mantoverde, would ensure a supply of high-quality copper concentrate with low levels of impurities for its copper smelters in Japan.

Talks on the potential partnership have been continuing for some time, the company said.

The deal also foresees further possible expansion of the mine with Mitsubishi required to pay another $20 million to Mantos Copper if authorization is obtained to expand the tailing storage facility at the mine significantly beyond the currently permitted capacity.

Environmental authorities approved the plan to install a concentrator at the copper mine almost two years ago, but development was stalled by a challenge by local indigenous groups which was thrown out by the environmental court for northern Chile in November last year.

Owned by Audley Mining Advisors and private equity firm Orion Mine Finance, Mantos Copper acquired the Mantos Blancos and Mantoverde copper mines from Anglo American in 2015 for $300 million.

The two mines produced a total of 83,500 mt of copper last year.

Last year, the company launched a debottlenecking project at the Mantos Blancos mine, partly financed through the sale of production royalties.