Freeport-McMoRan To Sell Its Stake In TF Holdings For $2.65 Billion

Freeport-McMoRan Inc.

revealed that it struck a definitive deal to divest its interests in TF Holdings Limited to China Molybdenum Co., Ltd. (CMOC) for $2.65 billion in cash. The agreement also said that there was a contingent consideration of a maximum of $120 million, consisting of $60 million if the average copper price exceeds $3.50 per pound and $60 million if the average cobalt price tops $20 per pound. According to the company, the contingency is enforceable during the 24-month period 2018 and 2019. Freeport-McMoRan has a 70% stake in TF Holdings, which was a Bermuda holding company that indirectly owns an 80 percent interest in Tenke Fungurume Mining S.A. (Tenke). It also has an effective 56 percent interest in Tenke. Aside from that, the company has agreed to negotiate with CMOC to enter into definitive agreements exclusively to sell its interests in Freeport Cobalt. That included the Kokkola Cobalt Refinery in Finland, for $100 million and the Kisanfu Exploration project in the Democratic Republic of Congo (DRC) for $50 million. Freeport's President and CEO, Richard Adkerson, said, "This transaction is another significant step to strengthen our balance sheet and enhance value for shareholders. Since the start of 2016, we have announced over $4 billion in asset sale transactions. We are committed to our immediate objective of reducing debt while retaining a large portfolio of high quality assets and resources and a leading position in the global copper industry." The CEO continued to say that "We congratulate our team on developing Tenke Fungurume to its premier status as a highly successful mining operation. We are confident that CMOC will continue to build on Tenke Fungurume's past success and future development potential, and will continue a commitment to provide a safe, productive work environment and a sustainable future with substantial benefits to the Congolese government and local community. FCX is a proud partner of the DRC and is committed to ensuring an effective transition through a services agreement to provide continuity of operations." The company disclosed that under the terms of the exclusivity agreement, it agreed to negotiate with CMOC until December 31 current year exclusively with respect to the sale of the Freeport Cobalt and Kisanfu interests in separate transactions. The company added that the divestment of interests would be subject to a ROFO from Lundin Mining Corporation. The company does not expect any material gain or loss on the transaction and expects to use the net proceeds to repay debt. On Friday, the stock traded 4.5% higher.