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Chilean President Sebastian Pinera

Chile warns Anglo to honour Codelco option

Reuters | Sun, 30 Oct 2011 17:24

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[] -- CHILE cautioned Anglo American on Friday that the company must honour state copper giant Codelco's option to buy a 49% stake in key properties in south-central Chile, which is seen bruising a surprised Anglo.

The board of Chile's Codelcohas signed off on its option to buy the stake in Anglo American Sur, which it has a 30-day window to exercise starting on Jan. 1, the miner said in a statement to Chile's regulator earlier on Friday.

"Anglo American has a duty not to resort to any act or omission that would put Codelco's right at risk," Finance Minister Felipe Larrain said at a news conference with Codelco CEO Diego Hernandez.

It is thought that global financial turbulence led Anglo to underestimate the likelihood that Codelco would exercise its option, having passed on it in 2008, market sources said.

Codelco's option gives it a stake in Anglo's properties in southern Chile, which include the flagship expansion project Los Bronces, El Soldado mine, the Chagres smelter and Los Sulfatos and San Enrique Monolito exploration projects, reinforcing the state miner's position as the world's top copper producer.

Anglo has invested around $2.8bn to develop Los Bronces. Codelco on Thursday raised $1.15bn by placing a new 10-year bond at a 4.084% yield, which will be used to refinance liabilities and finance investments in 2012, the company said.

The state miner said earlier this month it had secured a $6.75bn bridging loan from Japan's Mitsui & Co to allow it to exercise its option.

Codelco said at the time it had reached a second accord that gives it the right, but not the obligation, to pay off part of the loan extended by Mitsui via the sale of an indirect stake of half the shares in Anglo Sur acquired.

It said such a sale would be based on the 49% stake in Anglo American Sur's shares being valued at around $9.76bn.

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