Chile’s state-owned Codelco, the world’s largest copper producer, sold its first bond in the local market in about a decade to pay down debt and fund expansion plans as it seeks to maintain production from its aging mines amid a slump in the metal’s price.
The company sold the equivalent of $390 million in 10-year, inflation-linked bullet bonds Thursday to yield 2.09 percent, according to data from the Santiago stock exchange.
"There’s no money, understand. There isn’t a single f-----g peso," Codelco Chief Executive Officer Nelson Pizarro said at a conference this week when he outlined the urgency of cost and spending cuts. His statement was backed by Finance Minister Rodrigo Valdes who told reporters that "Pizarro is absolutely right by telling the country the truth: Codelco today has very, very little resources."
The rest of the article is well worth reading if you want deeper knowledge about copper fundamentals.
IMO, the long and short of it is that Codelco cannot continuing produce as per normal with the Cu price down at these levels. Many other second, third and fourth quartile companies will be in the same boat.
Thankfully, AVB are a first quartile company and can weather these parts of the cycle while still moving forward with exploration and development.
AVB Price at posting:
5.0¢ Sentiment: Buy Disclosure: Held
