UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 6, 2014
FREEPORT-McMoRan INC.
(Exact name of registrant as specified in its charter)
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Delaware | | 001-11307-01 | | 74-2480931 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification Number) |
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333 North Central Avenue | |
Phoenix, AZ | 85004-4414 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (602) 366-8100
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On October 6, 2014, Freeport Minerals Corporation (formerly known as Freeport-McMoRan Corporation) (“FMC”), a wholly owned subsidiary of Freeport-McMoRan Inc. (“FCX”), and LMC Candelaria SpA and LMC Ojos del Salado SpA (each, a “Buyer” and collectively, “Buyers”), each a wholly owned subsidiary of Lundin Mining Corporation (“Lundin”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”).
Upon the terms and subject to the conditions set forth in the Stock Purchase Agreement, FMC has agreed to sell to Buyers, and Buyers have agreed to purchase from FMC, all of the issued and outstanding shares of Series A and Series C stock in each of Compañia Contractual Minera Candelaria and Compañia Contractual Minera Candelaria (collectively, the “Companies”), representing FMC’s entire 80% beneficial ownership interest in the Companies, for a purchase price of approximately $1.8 billion in cash and contingent consideration of up to $0.2 billion calculated as 5% of net copper revenues in any annual period over the next five years when the average realized copper price exceeds $4.00 per pound. Lundin has guaranteed the prompt and full discharge of Buyers’ obligations under the Stock Purchase Agreement.
The Stock Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions, including, among others, a covenant that requires each of the Companies to conduct its business in the ordinary course of business, consistent with past practice and to comply with certain covenants regarding the operations of its business from the date of the Stock Purchase Agreement until closing.
At the closing, the Stock Purchase Agreement provides for FMC and Lundin Mining Chile SpA, a wholly owned subsidiary of Lundin, to enter into a transition services agreement, pursuant to which FMC will provide transitional services to Lundin Mining Chile SpA following closing.
The closing is subject to customary closing conditions, including certain regulatory approvals. In addition, the Stock Purchase Agreement provides for certain termination rights of FCX and Buyers, including termination by any party if the Closing has not been consummated on or before December 26, 2014 (but only if the party terminating the Stock Purchase Agreement has not breached the agreement and thereby caused the failure of closing to occur before December 26, 2014).
The foregoing description of the Stock Purchase Agreement does not purport to be a complete description and is qualified in its entirety by reference to the full text of the Stock Purchase Agreement, a copy of which will be filed as an exhibit to FCX's Quarterly Report on Form 10-Q for the quarter ending September 30, 2014.
Affiliates of FCX own an effective 56 percent interest in Tenke Fungurume Mining S.A.R.L. (“TFM”), with the remaining ownership interests held by affiliates of Lundin (an effective 24 percent interest) and La Generale des Carrieres et des Mines (Gecamines), which is wholly owned by the government of the Democratic Republic of Congo (“DRC”) (a 20 percent non-dilutable interest). TFM holds copper and cobalt mining concessions in the Katanga province of the DRC, and affiliates of FCX operate the mine. Affiliates of FCX also own and operate a cobalt chemical refinery in Kokkola, Finland, and related sales and market business, through a joint venture with affiliates of Lundin and Gecamines, with ownership interests similar to the interests in TFM.
Item 8.01 Other Events.
On October 6, 2014, FCX issued a press release announcing the execution of the Stock Purchase Agreement. A copy of the press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The Exhibit included as part of this Current Report is listed in the attached Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FREEPORT-McMoRan INC.
By: /s/ C. Donald Whitmire, Jr.
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C. Donald Whitmire, Jr.
Vice President and Controller -
Financial Reporting
(authorized signatory and
Principal Accounting Officer)
Date: October 7, 2014
Freeport-McMoRan Inc.
Exhibit Index
Exhibit
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| | Press release dated October 6, 2014, titled “Freeport-McMoRan Announces Agreement to Sell Its Interests in Candelaria/Ojos for $1.8 Billion in Cash Plus up to $0.2 Billion in Contingent Consideration.” |
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333 North Central Avenue Phoenix, AZ 85004 | Financial Contacts: | | | | Media Contact: |
| Kathleen L. Quirk (602) 366-8016 | | David P. Joint (504) 582-4203 | | Eric E. Kinneberg (602) 366-7994 |
Freeport-McMoRan Announces Agreement to
Sell Its Interests in Candelaria/Ojos for $1.8 Billion in Cash
Plus up to $0.2 Billion in Contingent Consideration
PHOENIX, AZ, October 6, 2014 - Freeport-McMoRan Inc. (NYSE: FCX) announced today that it has entered into a definitive agreement to sell its 80 percent ownership interest in the Candelaria/Ojos del Salado copper mining operations and supporting infrastructure to Lundin Mining Corporation (TSX:LUN)(OMX:LUMI) for $1.8 billion in cash and contingent consideration of up to $0.2 billion, calculated as 5% of net copper revenues in any annual period over the next five years when the average realized copper price exceeds $4.00 per pound. FCX estimates after-tax net proceeds from the transaction of approximately $1.5 billion, excluding contingent consideration.
James R. Moffett, Chairman of the Board; Richard C. Adkerson, Vice Chairman, and FCX President and Chief Executive Officer; and James C. Flores, Vice Chairman, and FM O&G President and Chief Executive Officer, said, “This transaction represents another important step in our ongoing debt reduction plan and follows the completion of our $3.1 billion sale of Eagle Ford shale assets in June. We remain committed to our balance sheet objectives while focusing on our large portfolio of high quality assets and resources, which provide strong current cash flows and have attractive growth characteristics.”
Mr. Adkerson continued: “We congratulate our team on developing Candelaria to be a highly successful mining operation and for contributing to the Company’s success over many years. We are pleased that Lundin Mining will continue to build on Candelaria’s past success, and continue a commitment to provide a safe, productive work environment and a sustainable future. We look forward to our continued investments in Chile through opportunities for a major expansion of the El Abra operation. We are positive about our portfolio of copper assets, our large scale growth projects currently in progress and opportunities for additional expansion and development provided by our sizeable copper resource base.”
The interests include all of FCX’s interests in the Candelaria/Ojos mining district. As of December 31, 2013, Candelaria/Ojos had consolidated recoverable reserves totaling 4.0 billion pounds of copper and 1.1 million ounces of gold. Consolidated production for the first six months of 2014 totaled 169 million pounds of copper and 42 thousand ounces of gold.
The transaction has an effective date of June 30, 2014, and is expected to close by year-end 2014, subject to regulatory approvals and customary closing conditions.
FCX expects to record an approximate $450 million after-tax gain on the transaction.
FCX is a premier U.S.-based natural resources company with an industry-leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. FCX is the world's largest publicly traded copper producer.
FCX's portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America; the Tenke Fungurume minerals district in the Democratic Republic of Congo; and significant oil and natural gas assets in North America, including reserves in the Deepwater Gulf of Mexico (GOM), onshore and offshore California and in the Haynesville natural gas shale play, and an industry-leading position in the emerging shallow water Inboard Lower Tertiary/Cretaceous natural gas trend on the Shelf of the GOM and onshore in South Louisiana. Additional information about FCX is available on FCX's website at "www.fcx.com."
Cautionary Statement Regarding Forward-Looking Statements: This press release contains forward-looking statements, which are all statements other than statements of historical facts, such as expectations relating to completion of the pending transaction. The words “anticipates,” “may,” “can,” “plans,” “believes,” "potential," “estimates,” “expects,” “projects”, "targets," “intends,” “likely,” “will,” “should,” “to be,” and any similar expressions are intended to identify those assertions as forward-looking statements. FCX cautions readers that forward-looking statements are not guarantees of future performance and its actual results may differ materially from those anticipated, projected or assumed in the forward-looking statements. Important factors that can cause FCX's actual results to differ materially from those anticipated in the forward-looking statements include the ability of the parties to satisfy customary closing conditions and consummate the proposed transaction and other factors described in more detail under the heading “Risk Factors” in FCX's Annual Report on Form 10-K for the year ended December 31, 2013, filed with the U.S. Securities and Exchange Commission (SEC) as updated by FCX’s subsequent filings with the SEC.
Investors are cautioned that many of the assumptions on which FCX's forward-looking statements are based are likely to change after its forward-looking statements are made, including for example commodity prices, which FCX cannot control, and production volumes and costs, some aspects of which FCX may or may not be able to control. Further, FCX may make changes to its business plans that could or will affect its results. FCX cautions investors that it does not intend to update forward-looking statements more frequently than quarterly notwithstanding any changes in FCX's assumptions, changes in business plans, actual experience or other changes, and FCX undertakes no obligation to update any forward-looking statements.
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