Because the government of the Democratic Republic of Congo has a free 20% carried interest, costs are split 70%-30% with Lundin Mining.
Lundin has 90 days to match the Chinese offer. Both stocks are down, FCX -9.25% at $10.70 and LUN off 3.55% at $4.07C.
From Barron's Emerging Markets Daily:
Freeport-McMoRan (FCX) said Monday it will sell its interests in an African copper-and-cobalt mining business to China Molybdenum for $2.65 billion in cash, and possibly will sell other assets as it struggles with its ill-timed U.S. energy acquisition.
Freeport stock was down nearly 4% in pre-market trading.
Freeport is selling its 70% stake in TF Holdings, which has an 80% interest in Tenke Fungurume, the mining asset in The Democratic Republic of Congo. According to a description of the operation, mining has been a challenge in Congo due to “conflict minerals” including tin, tantalum, tungsten and gold, according to Freeport’s partner in Tenke Fungurume, Lundin Mining.
These metals, according to Lundin’s website, caused concern in the past about mineral sales by “rebel groups who frequently use the proceeds to purchase weapons fuelling both regional conflicts and attacks against innocent civilians.”In its first-quarter earnings release, Lundin said that Tenke operations “continue to perform well,” adding:
“Lundin’s attributable share of first quarter production included 11,988 tonnes of copper cathode and 1,032 tonnes of cobalt in hydroxide … [with] an average realized [copper] price of $2.10 per pound and … $6.32 per pound [for cobalt]. Tenke’s operating cash costs for the first quarter of 2016 were $1.31 per pound of copper sold, in-line with the latest guidance. Cash distributions received by Lundin Mining in the quarter from Tenke were $0.8 million. An additional $2.4 million was received from the Freeport Cobalt operations, for total Tenke related distributions to the company of $3.2 million for the first quarter of 2016.”Freeport may also sell other assets to China Molybdenum, according to its press release:...MORE