Xstrata Entertains Chile Copper Sale

Swiss miner Xstrata says it has received overtures for its 70% stake in the El Morro copper and gold project in Chile. A company spokeswoman says Xstrata is evaluating the approaches it has received, though no decisions have been made on whether or not to divest El Morro or dilute its stake. El Morro is a minor project for Xstrata and is not yet in production, according to a mining analyst. And while some press reports say El Morro could be worth $700m, it is difficult to say how much the project could be worth since that would depend on the buyer’s expectation for copper prices 5-10 years, he adds. Using copper’s average price this year of $2 per pound, the project could actually have a negative valuation, says the analyst, who declines to be named. Xstrata has indicated that developing this project would require capex of about $2bn. Xstrata, which is also trying to push Anglo American into a merger, is in the process of paying down $13bn in debt.