The $320m sale of BHP’s Cerro Colorado copper mine in northern Chile to private equity fund EMR Capital has collapsed following the latter’s failure to meet the financing conditions for the deal within the agreed timeline.
As per the agreement reached in June this year, the total consideration for the deal comprised $230m in cash, $40m in proceeds from copper inventories and a further $50m depending on changes to copper prices.
An unnamed BHP spokesperson was quoted by Reuters as saying: “The decision to call off the deal was agreed upon by both parties after it became clear that financing conditions would not be met within the agreed upon timeline.”
BHP, which is focused on copper projects owing to the growing demand for the metal from electric vehicle manufacturers, operates two more mines in Chile, apart from Cerro Colorado.
However, the company is only interested in large-scale projects and deems Cerro Colorado as small-scale, according to Reuters.
Located in the Atacama Desert, Cerro Colorado produced 65,000t of copper cathode for the 2017 fiscal year, which is significantly less than the output from BHP’s Escondida mine, located in the region.
The environmental licence for the mine is set to expire in 2023, but it could be extended.
EMR was quoted by Bloomberg as saying: “The decision to terminate the Cerro Colorado agreement was mutually agreed after it became clear that the financing conditions of the transaction would not be satisfied within this timeframe.”
Last month, BHP announced the discovery of a potential new iron oxide, copper, gold (IOCG) mineralised system, located near its operations at Olympic Dam in South Australia.