China Molybdenum Co Ltd subsidiary CMOC Limited has continued its recent acquisition activity through the intended purchase of a 56% interest in a world-class producing copper-cobalt mine in the Democratic Republic of the Congo (DRC).

CMOC aims to acquire Freeport-McMoRan’s interest in Freeport-McMoRan DRC Holdings Ltd, which holds 56% of the Tenke Fungurume mine.

The agreed purchase price is US$2.65 billion in cash plus contingent consideration of up to US$120 million, which consists of a US$60 million payment if the average realized copper price exceeds US$3.50 per pound, and a US$60 million payment if the average realized cobalt price exceeds US$20 per pound, both during the two-year period ending December 31, 2019.

The consideration will be funded in cash and undrawn credit facilities from CMOC’s existing financial resources. CMOC anticipates that the transaction will be completed in the fourth quarter of 2016.

In addition, Freeport has granted CMOC the exclusive option to acquire its interests in the Kokkola Cobalt Refinery in Finland for US$100 million and the Kisanfu exploration project, in the DRC, for US$50 million, subject to the parties’ entering into definitive agreements with respect to such separate transactions before December 31, 2016.

CMOC chairman Steele Li said, “We are pleased to have the opportunity to acquire this renowned copper and cobalt mine that is uniquely large-scale, low-cost and long-lived.

“Tenke is well positioned to generate strong cash flow throughout the commodity cycle and, by virtue of its substantial mineral endowment, to continue producing high-grade copper for decades to come. In addition, as a leading cobalt producer, Tenke positions CMOC to benefit from the highly favourablenear-term and long-term fundamentals of the cobalt market.

“This acquisition is consistent with our strategic objective to expand and diversify our international portfolio with high-quality assets in prolific mining regions that are conducive to significant long-term growth.

“We are enthusiastic about participating in the DRC, which hosts one of the largest known copper belts in the world and some of the highest grade and most prospective mineral deposits ever discovered.”

CMOC International CEO Kalidas Madhavpeddi said, “This transaction is particularly exciting for me and the other CMOC executives who have a long history with Tenke, the DRC and joint venture partner, Lundin Mining, through our tenure at Phelps Dodge, which initially led the development of Tenke during our time there.

“We have a deep respect for the management and employees of this world-class operation, and are committed to retaining the entire workforce and preserving the industry-leading operating practices that have been employed by Freeport, with a principal focus on health, safety and the environment.

“We recognize the importance of Tenke to the Government of the DRC, local communities and our partners Gécamines and Lundin Mining, and are committed to continuing and deepening those longstanding relationships.”

Tenke is within the prolific Central African Copperbelt. In 2015, Tenke produced 204,000 thousand tonnes of copper and 16,000 tonnes of cobalt at a net cash cost of approximately US$1.21 per pound of copper.

As of December 31, 2015, Tenke had proven and probable mineral reserves of 3.8 million tonnes of contained copper and 500,000 tonnes of contained cobalt, which support a reserve life of approximately 25 years, and, in addition, measured and indicated resources of 13.1 million tonnes of contained copper and 1.3 million tonnes of contained cobalt, and inferred resources of 11.6 million tonnes of contained copper and 1.3 million tonnes of contained cobalt (100% basis), which represent substantial upside potential.

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