Antofagasta looking to double output after 2015

The Chilean miner's CEO says the group has already had informal discussions with banks about debt financing for Reko Diq and will also look at possible takeover targets

LONDON (Reuters) - 

Chilean copper miner Antofagasta Minerals (ANTO.L) aims to expand into a global player, doubling output after 2015 through takeovers and developing its own projects, from Pakistan to the United States.

The London-listed firm has already had informal discussions with banks about debt financing for its $3.3 billion Reko Diq project in Pakistan, Chief Executive Marcelo Awad told the Reuters Global Mining and Steel Summit in London.

The group is holding productive talks with the authorities in Pakistan about Reko Diq, which at its peak could produce by itself as much as the whole group churns out currently.

While the firm is keen to spread its wings geographically as it seeks takeovers, it wants to remain a pure copper play, with only modest contributions from other metals.

"We want good quality assets that can fly in any cycle," Awad said. "Our main targets are copper/gold or copper/moly (molybdenum) mines anywhere in world, we don't have any restrictions."

Antofagasta's strong balance sheet, with a cash balance of $1.6 billion, gives it firepower for acquisitions as rivals struggle to cut debt, but takeovers were more likely to be projects that have not yet launched production.

The group came close to a couple of takeovers during the downturn, but failed to go ahead at the last minute, judging that valuations were excessive, Awad said.

"I don't foresee any acquisitions of an existing operation (in the short-term). I don't rule out projects at an advanced stage."

INFORMAL TALKS WITH BANKS

Awad dismissed worries that regional officials might block the Reko Diq project in Pakistan, echoing optimism expressed on Tuesday by joint venture partner Barrick Gold Corp (ABX.TO) of Canada.

A provincial government official told Reuters in January that the project may be canceled, but Awad said that view was held by a small minority pressing for independence of the southwestern province of Baluchistan.

The national Pakistani government was very keen on the new mine, one of the biggest private investment projects since independence.

There have already been informal discussions with both Western and Islamic banks on debt financing, which is expected to include syndicated loans and denominations in both dollars and euros.

"The Islamic Development Bank, which is very similar to the World Bank in the Western world is also very interested to participate ... We have been very well supported by the Islamic banking sector."

Antofagasta and Barrick each have a 37.5 percent stake in the project, with the provincial government holding the remaining 25 percent.

That project, currently seeking an investment agreement and later a mining license, is hoped to launch production in 2015 and help Antofagasta meet its 1 million ton target.

The first phase, which would produce 200,000 tons of copper and 300,000 ounces of gold per year, would cost $3.3 billion.

"The copper resource is massive, at the highest point that resource can support up to half a million tons per year. That's why we plan to grow by modules," said Awad.

"We think that if everything goes well, we (Antofagasta) should be at close to 1 million tons after 2015," Awad said.

That compares with output of 442,500 tons last year and expected production of 540,000 tons in 2010 due to the expansion of its flagship Los Pelambres mine in Chile.

Based on 2008 production figures, a move to 1 million tons would make Antofagasta the world's fourth-biggest copper producer.

(Reporting by Eric Onstad; Editing by Rupert Winchester)

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