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Phelps Dodge has announced agreements for debt financing facilities totalling US$450mn in connection with the expansion of the Sociedad Minera Cerro Verde copper mine near Arequipa, Peru.

Phelps Dodge is the majority owner and operator of Cerro Verde and has guaranteed a pro rata share of the project financing debt until completion of construction.

The agreements permit Cerro Verde to borrow as much as US$450mn to finance the US$850mn expansion, which was announced in October 2004. Copper market conditions and internally generated cash will determine actual borrowings.

Phelps Dodge’s partners in Cerro Verde are Compania de Minas Buenaventura and Sumitomo Metal Mining, and Sumitomo Corp.
The US$443mn recently invested by these companies to increase or establish their ownership interests in Cerro Verde is the major source of equity for the project.

Export credit agencies and commercial banks supporting the debt financing facility are the Japan Bank for International Cooperation (JBIC), the KfW banking group of Germany, Calyon’s New York branch, Mizuho Corporate Bank of Japan, Scotia Capital of Canada and Royal Bank of Scotland.
The JBIC facility also includes Sumitomo Mitsui Banking and Bank of Tokyo-Mitsubishi.

The expansion will allow Cerro Verde to mine a primary sulfide ore body beneath the oxide ore body currently in production. Mining of the primary sulphide ore body is scheduled to begin in late 2006 and will increase copper production from 100,000 short tons to 300,000 short tonnes per year when full production is achieved.