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MARCH 2016 • E&MJ; 9 www.e-mj.com NEWS-LEADING DEVELOPMENTS Sumitomo Adds to Morenci Interest Freeport-McMoRan (Freeport) has entered into a definitive agreement to sell an addi- tional 13% interest in its Morenci joint venture to Sumitomo Metal Mining for $1 billion in cash. Morenci is currently owned 85% by Freeport and 15% by Sumitomo Metal Mining Arizona. The open-pit copper mining complex is located 200 miles east of Phoenix, Arizona. The companies expect the transaction to close in mid-2016. Following comple- tion, the joint venture will be owned 72% by Freeport, 15% by Sumitomo Metal Mining Arizona and 13% by a fully owned affiliate of Sumitomo Metal Mining. Freeport will record an approximate $550 million gain on the transaction. The company plans to use the proceeds to repay borrowings under its bank term loan and revolving credit facility. A Morenci mill expansion project that started operations in May 2014 success- fully achieved design production rates in the second-quarter of 2015. The project expanded mill throughput capacity from 50,000 mt/d to approximately 115,000 mt/d. Production is forecast to average approximately 900 million lb/y of copper in concentrate over the next five years. In 2015, Freeport's 85% share of Morenci revenues totaled $2.2 billion, while production and delivery costs totaled $1.5 billion. Regarding the Sumitomo transaction, Freeport President and CEO Richard C. Adkerson said, "We are pleased to expand our partnership at Morenci with Sumitomo. This transaction represents an important initial step toward our objective to acceler- ate debt reduction and restore our balance sheet, while retaining a portfolio of high- quality assets and resources. "Our Morenci partnership with Sumi- tomo was first established 30 years ago, and both companies are confident of the operation's long-term future. With its long- lived reserves, substantial resource posi- tion, attractive cost structure, and best-in- class operating team, the Morenci joint venture is positioned to be a continuing strong contributor to the success of Freeport-McMoRan and Sumitomo." Royal Nickel Buys Into 2 Producing Mines Royal Nickel agreed in early February to acquire a 100% interest in VMS Ventures in Canada and a 67% interest in Salt Lake Mining in Australia in separate cash-and- shares transactions. Prior to the acquisi- tions, Royal Nickel's primary asset was its advanced-stage, open-pit Dumont nickel development project in western Quebec. VMS Ventures is a public company whose main asset is a 30% interest in the Reed copper mine in the Flin Flon/Snow Lake greenstone belt in central Manitoba. Hudbay Minerals owns the other 70% and is the mine operator. Royal Nickel is esti- mating that its 30% share of Reed pro- duction in 2016 will total 4,000 to 4,500 mt of copper and 500 to 750 oz of gold in concentrates. Royal Nickel's acquisi- tion values VMS at about C$11.4 million. Salt Lake Mining is a private company whose main asset is its 100% interest in the Beta Hunt mine, a low-cost nickel and gold producer in the Kambalda mining dis- trict in Western Australia. Production dur- ing 2016 on a 100% basis is forecast at 3,500 to 4,500 mt of nickel in concentrate and 35,000 to 45,000 oz of gold. Royal Nickel's acquisition values its 67% share of the company at about C$7.7 million. Royal Nickel will continue to consider its options for development of the Dumont nickel project, which are currently con- strained by the limited availability of mine financing. Royal Nickel will add VMS Ventures' 30% interest in the Reed copper mine, pictured here, to its assets in an acqui- sition deal valued at approximately C$11.4 million. (Photo: VMS Ventures) Upon completion of a proposed $1 billion transaction, the Morenci joint venture copper operation will be owned 72% by Freeport, 15% by Sumitomo Metal Mining Arizona and 13% by an affiliate of Sumitomo Metal Mining. (Continued on p. 28)