ANGLO AMERICAN PLC - Anglo American agrees to increase Mitsubishis interest in Quellaveco by 21.9% for $600m

Release Date: 14/06/2018 08:00
Code(s): AGL
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Anglo American agrees to increase Mitsubishi’s interest in Quellaveco by 21.9% for $600m

Anglo American plc (the “Company”)
Registered office: 20 Carlton House Terrace, London SW1Y 5AN
Registered number: 3564138 (incorporated in England and Wales)
Legal Entity Identifier: 549300S9XF92D1X8ME43
JSE Share Code: AGL
NSX Share Code: ANM


14 June 2018

Anglo American agrees to increase Mitsubishi’s interest in Quellaveco by 21.9% for $600m

Anglo American plc (“Anglo American”) announces that it has entered into a Heads of Agreement
with Mitsubishi Corporation (“Mitsubishi”) in relation to Mitsubishi’s proposed acquisition of a
21.9% equity interest in Anglo American Quellaveco S.A., (“AAQSA”), which owns the
Quellaveco copper project in Peru (“Quellaveco”), for a total consideration of $600 million (the
“Proposed Transaction”). Mitsubishi already holds an 18.1% interest in AAQSA and, following
closing of the Proposed Transaction, Mitsubishi’s interest will increase to 40%, while Anglo
American will retain 60%.

The total consideration of $600 million is comprised as follows:

      •     $500 million upon closing of the Proposed Transaction;
      •     $50 million upon total ore treatment rates at Quellaveco reaching at least 150 thousand
            tonnes per day(1); and
      •     $50 million upon total ore treatment rates at Quellaveco reaching at least 180 thousand
            tonnes per day(1).

The total consideration implies a valuation for 100% of Quellaveco of $2.74 billion. The
consideration will be settled upon closing by way of a primary share subscription(2) in AAQSA by
MCQ Copper Ltd., a wholly owned subsidiary of Mitsubishi, which will pre-fund a portion of Anglo
American’s share of the required capital expenditure for the development of Quellaveco.

Mark Cutifani, Chief Executive of Anglo American, said: “The successful syndication of a 21.9%
interest in Quellaveco confirms the world-class quality of our copper asset in Peru and aligns with
our disciplined approach to how we allocate capital. We are pleased to be able to extend our
longstanding partnership with Mitsubishi and look forward to its ongoing contribution and strong
support for the development of Quellaveco.”

Closing of the Proposed Transaction is expected in Q3 2018 and is subject to a number of
conditions, including required regulatory approvals, approval by Mitsubishi’s Board, and approval
to develop the Quellaveco project by Anglo American’s Board.

The Proposed Transaction is a Smaller Related Party Transaction under the UK Listing Rules,
as Mitsubishi is a related party of Anglo American. The Proposed Transaction is therefore subject
to the requirements of the UKLA Listing Rule 11.1.10R.

1.    Achieving throughput rates of 150 thousand and 180 thousand tonnes per day will be subject to future permitting
2.    The total subscription by Mitsubishi for new shares in AAQSA will be $833 million (in order for Mitsubishi to attain a
      40% share of the total number of AAQSA shares following the issue of new shares), of which $500 million will be
      consideration to pre-fund a portion of Anglo American’s capital contributions to AAQSA for the development of the
      Quellaveco project. The total subscription consideration will be subject to customary balance sheet adjustments
      using a valuation date of 1 July 2018.
3.    Estimates as at 31 December 2017. For a breakdown of the classification categories, refer to the Anglo American
      Ore Reserves and Mineral Resources Report 2017. TCu = Total Copper.

For further information, please contact:

 Media                                                             Investors
 UK                                                                UK
 James Wyatt-Tilby                                                 Paul Galloway                     
 Tel: +44 (0)20 7968 8759                                          Tel: +44 (0)20 7968 8718

 Marcelo Esquivel                                                  Robert Greenberg                      
 Tel: +44 (0)20 7968 8891                                          Tel: +44 (0)20 7968 2124

 South Africa                                                      Sheena Jethwa
 Pranill Ramchander                                                                    Tel: +44 (0)20 7968 8680
 Tel: +27 (0)11 638 2592

 Ann Farndell
 Tel: +27 (0)11 638 2786

Notes to editors:
Quellaveco is one of the world’s largest undeveloped copper deposits and is located in the
Moquegua region in the south of Peru. With Ore Reserves estimated at 1.3 billion tonnes,
containing approximately 7.5 million tonnes of copper (at 0.57% TCu), Quellaveco has a Reserve
Life of 30 years, with potential for further extension given its estimated additional Mineral
Resources of 1.6 billion tonnes, containing 6.0 million tonnes of copper (at 0.37% TCu)3. The
Quellaveco project will use open pit mining and processing by flotation to produce copper
concentrate, as well as molybdenum and silver by-products. At its initial nameplate throughput
rate of 127.5 thousand tonnes per day, Quellaveco is expected to produce an average of
approximately 300,000 tonnes per year over its first ten years of operation, at a C1 cash cost of
approximately $1.10 per pound of copper.

The project has been granted all its major permits required for construction, and benefits from a
high level of acceptance from the local communities and the local, regional and national
governments. Quellaveco will be operated by Anglo American and, subject to the approval of
Anglo American’s Board, Quellaveco would begin its development phase during the second half
of 2018, with first copper production expected in 2022.

Anglo American is a global diversified mining business and our products are the essential
ingredients in almost every aspect of modern life. Our portfolio of world-class competitive mining
operations and undeveloped resources provides the metals and minerals to meet the growing
consumer-driven demands of the world’s developed and maturing economies. With our people
at the heart of our business, we use innovative practices and the latest technologies to discover
new resources and mine, process, move and market our products to our customers around the

As a responsible miner – of diamonds (through De Beers), copper, platinum and other precious
metals, iron ore, coal and nickel – we are the custodians of what are precious natural resources.
We work together with our key partners and stakeholders to unlock the sustainable value that
those resources represent for our shareholders, the communities and countries in which we
operate and for society at large. Anglo American is re-imagining mining to improve people’s lives.

The Company has a primary listing on the Main Market of the London Stock Exchange and
secondary listings on the Johannesburg Stock Exchange, the Botswana Stock Exchange, the
Namibia Stock Exchange and the SIX Swiss Exchange.

RAND MERCHANT BANK (A division of FirstRand Bank Limited)

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