Capstone buys BHP Billiton’s mine for £420m

Suzie Neuwirth
FTSE 100-listed miner BHP Billiton yesterday announced that it has sold its Pinto Valley copper mine to Capstone Mining Corporation for $650m (£419m), as part of its on-going divestment of non-core assets.

The Australia-headquartered company said that its sale of Arizonan mine Pinto Valley, along with the associated San Manuel Arizona Railroad Company (SMARRCO), would bring the transaction value of its divestments over the last 12 months to $5bn.

The declining iron ore price last year prompted BHP Billiton to sell off parts of the business, in order to maintain a strong balance sheet and keep its ratings.

“Pinto Valley was on the list of assets we expected to be sold,” Hunter Hillcoat, mining analyst at Investec Securities, told City A.M.

“We think it will sell off up to $20bn-worth of assets, so it is about a quarter way through the strategy.”

The $650m sale price overshot Investec’s valuation of between $520 and $630m.

BHP Billiton employees working at Pinto Valley and SMARRCO will become employees of Capstone as part of the deal, which is expected to be completed in the second half of 2013.

“The sale of Pinto Valley is an excellent outcome for BHP Billiton shareholders,” said Peter Beaven, president of copper at BHP Billiton.

“We are pleased to have reached agreement with Capstone, particularly given their commitment to maintain our environmental and safety standards.”

The company announced earlier this month that it had maintained the bulk of its production guidance in the first quarter, although iron ore and coal output had been impacted by adverse weather conditions in Australia.