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BHP Sells Stake in Pinto Valley - Analyst Blog

Posted
4/29/2013 1:50:00 PM
By: Zacks.com
Referenced Stocks:BHP;CCJ;PAL;USEG

The Australian mining giant, BHP Billiton Ltd. ( BHP ) announced the divestiture of its interests in Pinto Valley Mine and the associated San Manuel Arizona Railroad Company to the Canadian Mining company, Capstone Mining Corp. The sale, announced on Apr 29, is valued at US$650.0 million, payable in cash.

BHP Billiton owned Pinto Valley Mine is located about 125 kilometers east of Phoenix, in the Globe-Miami mining district in Arizona. The divestiture, subject to regulatory approvals, is expected to close in the second half of calendar year 2013.

Capstone will assume all the environmental obligations related to the mine. All the employees of Pinto Valley Mine will continue working as employees of Capstone. Subsequent to the divestiture, Pinto Valley will become the third operational copper mine for Capstone after Cozamin copper-silver-zinc-lead mine in Mexico and Minto copper-gold-silver mine in Canada.

The Pinto Valley Mine operations have been undergoing a volatile situation in its life time. After the start of its production in 1974, the operations of the mine were halted in 1998, due to reduced copper prices. The mining activities were resumed in 2007, only to be halted again in 2009. However, the mine was restarted in December last year with a production capacity of 60,000 tons of copper in concentrate.

Recently, BHP Billiton has been focusing on streamlining its operations by cutting down investments in assets apart from its core businesses. The divestiture of the mine increases the total worth of divested businesses over the last 12 months to US$5.0 billion.

With BHP Billiton's rigorous efforts in streamlining its businesses, it is reasonable to expect that the company would focus more on its core competencies and grow in the coming quarters. BHP Billion currently has a Zacks Rank #4 (Sell). Other mining stocks worth a look are Cameco Corporation ( CCJ ), carrying a Zacks Rank #1 (Strong Buy), whereas North American Palladium Ltd. ( PAL ) and US Energy Corp. ( USEG ); both carry a Zacks Rank #2 (Buy).



BHP BILLITN LTD (BHP): Free Stock Analysis Report

CAMECO CORP (CCJ): Free Stock Analysis Report

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US ENERGY CP-WY (USEG): Free Stock Analysis Report

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