BHP sells mine to Xstrata for $1.2b

SYDNEY - Global miner BHP Billiton has agreed to sell its Peruvian Tintaya copper mine to Swiss-based miner Xstrata for US$750 million ($1.2 billion).

The sale price comprises US$634 million for the shares, plus US$116 million of debt, BHP told the Australian Stock Exchange yesterday.

BHP said that in addition to the upfront payment, the agreement included a deferred payment component which would be determined shortly after completion of the sale. BHP said, based on current prices, that payment would be in the order of US$60 million.

The sale includes the nearby undeveloped deposits of Antapaccay and Corrocohuayco.

The company said in February that it planned to sell Tintaya, where it had run into conflicts with area residents.

Operations at Tintaya, Peru's third biggest copper mine, were halted from May 25 to June 20 last year after residents of the nearby town of Espinar invaded the mining camp demanding higher social investment by the company in the area.

BHP Billiton produced 72,700 tonnes of copper concentrate from Tintaya in the production-disrupted 2005 financial year, ended June 30.

The company said it would maintain an active presence in Peru through exploration and its 33.8 per cent interest in the Antamina copper and zinc mine.

Additional payments will be made by Xstrata to BHP Billiton in specified circumstances if LME copper prices reach certain levels between July 2008 and June 2009, or the development of Antapaccay or Corrocohuayco goes ahead before 2020.

BHP shares fell 72c to A$29.93 yesterday.

- REUTERS