Antofagasta sells 40 per cent of the Los Pelambres Mine for US$ 256 million.

NEW YORK--(BUSINESS WIRE)--May 16, 1997--Antofagasta Holdings P.L.C. (Antofagasta) announced today that it has entered into conditional agreements with two Japanese consortia, the first comprising Nippon Mining & Metals Co. Ltd., Marubeni Corporation and Mitsui & Co., Ltd. and the second comprising Mitsubishi Material Corporation and the Mitsubishi Corporation , under which specially formed companies owned by each consortia will acquire a 25 per cent and 15 per cent equity interest respectively, in the Los Pelambres project company, Minera Los Pelambres, for an aggregate cash purchase price of US$ 256 million ( plus an interest adjustment calculated to the completion date). The proceeds of this disposal will be used to fund Antofagasta's equity financing obligations in respect of its retained 60 per cent interest in the project.

The two agreements and the necessary equity fund-raising are conditional, inter-alia, on the approval of shareholders of Antofagasta. It is expected that a circular, including listing particulars, will be sent to shareholders later this year giving full details of the proposals and convening an extraordinary general meeting to approve them. The two agreements are also conditional on the appropriate level of debt and equity being in place.

In addition, Nippon Mining & Metals Co. Ltd. and Mitsubishi Materials Corporation have conditionally agreed to purchase 400,000 tons per year of copper concentrates from the project on a long term basis of approximately 12 years.

Reasons for the Sale

The size and scale of the Los Pelambres project called for the participation of prestigious partners able to guarantee a market for a substantial part of the project's long term production. The Antofagasta board of directors believes it has found such partners within the two Japanese consortia. The entering into of these conditional agreements provides the cornerstone and the first step towards achieving a successful financing of the Los Pelambres project and its development as a major world class producer of copper concentrates.

Information Relating to Los Pelambres

The existing operation at Los Pelambres has a current throughput of 5,500 tons per day (tpd) and began originally in 1986 as a smaller pilot operation, reaching its present production levels in 1992. The Los Pelambres mine, which has been operated by the Group since 1992 and wholly owned by Antofagasta since 1995, is a large world-class copper porphyry located 200 kilometers north or Santiago, in Chile's IV region at an elevation of 3,100 meters above sea level, with its processing plant and site offices at an elevation of 1600 meters above sea level.

Based on the Bechtel International, Inc. feasibility study completed in October 1996, ('Bechtel feasibility study'), the mining plan for the first thirty years of operations envisages the extraction and treatment of 932 million tons with an average copper grade of 0.75 per cent and 0.021 per cent of molybdenum. The total geological resource of the deposit is 3.9 billion tons at an average grade of 0.52 per cent copper.

The planned production from Los Pelambres for the first ten years is forecast by the Company to average 743,000 tons per year of copper concentrates yielding approximately 246,000 tons per year of fine copper and, in addition, molybdenum concentrates containing 4,400 tons per year of molybdenum. The copper concentrates are also estimated by the Company to contain an average of 32,000 ounces of gold and 1.28 million ounces of silver per year over the first ten years of production.

Financial Information Relating to Minera Los Pelambres

In 1996, Compaa Minera Los Pelambres Limitada was split into two companies, Minera Los Pelambres and Minera El Chacay.

Minera Los Pelambres, the Los Pelambres project company, is the company subject to disposal. Minera El Chacay, which will continue to be owned 100 per cent by Antofagasta, has continued with the existing operation which will be phased out over the next three years. This will facilitate the construction of the Los Pelambres 85,000 tpd open pit operation over El Chacay's existing areas of operation.

The audited net assets of Minera Los Pelambres and Minera El Chacay were 46.0 million and 18.7 million respectively, at December 31, 1996. The Los Pelambres project has not generated revenue to date, and the associated expenses have all been capitalized.

Development Costs

The development cost including the construction and initial operation of the project is estimated at approximately US$ 1.3 billion. This amount is based on the Bechtel feasibility study and financial costs estimated by N M Rothschild & Sons Limited, financial advisors to the project and its partners. It is currently anticpated that this amount will be funded by a combination of equity finance from Antofagasta and its new partners, and long term limited recourse loans from import finance source sources, export credit agencies and commercial bank loans. Discussions are now well underway with agroup of commercial banks and credit agencies regarding the raising of limited recourse project finance.

CONTACT: Antofagasta Holdings P.L.C., London

Philip J. Adeane

Managing Director

Christopher Jowett

Financial Controller

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Telex: 895428 ANRAIL G

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Norman Weissman / Ray McNulty

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