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Glencore in talks to sell Peru, other mining royalties: sources

The logo of Glencore is pictured in front of the company’s headquarters in the Swiss town of Baar, November 13, 2012. (MICHAEL BUHOLZER/REUTERS)

Mining-trading group Glencore Plc has hired the Bank of Nova Scotia to sell a portfolio of royalty assets, including one for the Antamina copper-zinc mine in Peru, four people familiar with the process have told Reuters.

The Antamina mine royalty makes up the bulk of the value of the package and could fetch up to $250-million, the sources said. The portfolio includes several much smaller royalties from other mines and exploration assets owned by Glencore around the world, they added.

It is not clear whether Glencore will sell 100 per cent of the royalties, which gives the owner the right to receive a percentage of production from a mining operation, or retain a stake in them.

There is no certainty the process will result in a deal, the sources said. The people, whom Reuters spoke to over a period of several days, declined to be named as the talks were confidential.

Glencore declined to comment. Bank of Nova Scotia did not have an immediate comment.

The London-listed miner owns and operates nickel, zinc, copper and coal mines around the world and also owns royalties on several operations.

Glencore is looking to maximize the value of its assets as it moves from cost-cutting to pursuing growth. Following the commodities crash of 2015 and early 2016, the company sold off assets to cut debt after its earnings and shares were pummelled by a commodities downturn.

Potential buyers of the royalty portfolio could include mining royalty and streaming companies such as Canada-based Franco-Nevada Corp and Silver Wheaton Corp, the sources said. Streaming, like royalties, is a type of alternative finance for the mining sector.

Franco-Nevada is interested in looking at any royalty being offered, its chief executive officer, David Harquail, said. “It is only a question of price,” Harquail said in an emailed response to a question from Reuters.

Silver Wheaton declined to comment.

Glencore owns a 33.75 per cent stake in Antamina and has monetized a portion of the mine’s output. In November 2015, it agreed to sell future silver output from Antamina, a by-product of the mine, to Silver Wheaton for $900-million in cash to reduce debt. Franco-Nevada bought a $500-million precious metals stream from Glencore last year.

Glencore’s partners in Antamina are Anglo-Australian miner BHP Billiton Plc with a 33.75 per cent stake, Canadian miner Teck Resources Ltd, with 22.5 per cent and Japan’s Mitsubishi Corp with 10 per cent.