Freeport to buy back shares from Rio Tinto for $1billion

New Orleans-based mining giant Freeport-McMoRan Copper&Gold Inc (FCX) announced on Monday that it had agreed to acquire for cash all 23,931,100 FCX class B common shares owned by a subsidiary of Anglo-Australian mining giant Rio Tinto plc, at a market based price.

Rio Tinto acquired these shares in mid-1995 for US$20.90 per share in connection with FCX's spin-off from its former parent and Rio Tinto's participation in a major expansion project at FCX's principal operating subsidiary, PT Freeport Indonesia (PT-FI). Rio Tinto holds about a 12 percent stake in FCX.

The repurchase transaction, estimated to approximate $1.0 billion,said FCX, is conditioned on FCX's sale of convertible preferred equity securities. Rio Tinto's joint venture participations, whereby Rio Tinto has an interest in PT-FI's copper and gold production above specified levels and rights to participate in expansion and exploration activities, are not affected by this transaction.

FCX had commenced a private offering of approximately $1 billion of convertible perpetual preferred stock. The net proceeds from the offering will be used to acquire FCX?s shares owned by Rio Tinto.

Richard C. Adkerson, Chief Executive Officer of FCX, said, "This transaction allows our shareholders to participate to a greater extent in the value of our Grasberg copper and gold mining complex with no increase in our debt. Our actions in recent years to improve our balance sheet have positioned us to undertake this transaction. We look forward to continuing our partnership with Rio Tinto through their significant joint venture participation in our operations at the Grasberg mineral complex."

Leigh Clifford, Chief Executive of Rio Tinto said, "Through our significant direct interest in Grasberg, we will continue to benefit from our relationship with Freeport, the manager of the Grasberg operations. As our preference is to invest in large, long life low cost assets in which we have direct access to the operating cash flows, we do not generally hold long term minority positions in other listed companies."

FCX's common shares outstanding, following completion of the transaction, would approximate 177 million shares.

FCX controls one of the world?s biggest copper and gold mining complex in Indonesia?s easternmost province of Papua through its subsidiary PT-FI.(alex)