Broker snap: Citi sees Anglo American's sale as a 'positive move'

10th Nov 2011 16:10

Citi has reiterated its buy rating for mining titan Anglo American saying that today's sale of a chunk of its Chilean assets is a "positive move".The company revealed on Thursday that it has sold off a 24.5% stake in its Chilean copper business, Anglo American Sur (AAS), for a reported $5.39bn to Japanese trading house Mitsubishi Corporation. Codelco said on 12 October that it is considering exercising an option to buy 49% in AAS. Citi notes that the option agreement means that Codelco can only buy the AAS shares left over after deducting 51% plus any additional stake held by a third party (e.g. the 24.5% stake Mitsubishi now owns). Therefore, Codelco can now only buy a maximum interest of the remaining 24.5%."We view this transaction as significantly value accretive and it reduces the potential impact of Codelco's option. We believe Anglo is compensated for the loss of a key strategic asset. It is too early to speculate what Anglo is going to do with excess cash, which potentially poses some risk," the US broker said.Citi's target price is left at 3,500p.Shares were 1.89% higher at 2,397.5p.BC