Jan. 28 (Bloomberg) — Codelco, the world’s largest copper producer, sold its stake in a Chilean electricity company controlled by GDF Suez SA for $1.04 billion as part of a plan to raise funds for expansion.

Chile‘s state-owned copper company sold 424 million shares in E-CL SA, or a 40 percent shareholding, at 1,200 pesos apiece after a book-building process led by Larrain Vial SA, Codelco wrote in a statement distributed by e-mail today.

Codelco plans to spend $16.5 billion in the next five years to ramp up production from its aging mines after the metal’s price jumped 30 percent last year to record levels. Chile’s government will allow Codelco to retain all proceeds from the sale, Chairman Gerardo Jofre said on Jan. 7.

“With this sale we’ve completed our financing program for this year,” Thomas Keller, Codelco’s vice-president of finance and administration, told reporters today after a share placement ceremony at the Santiago stock exchange. “We could return to debt markets by the end of the year but that will obviously depend on market conditions.”

E-CL supplies power to northern Chile’s mining region. Its shares fell 5.2 percent to the sale price of 1,200 pesos at 8:27 a.m. New York time in Santiago trading. The stock trades at 4.69 times trailing profit, making it the second-cheapest electricity company in Chile, according to data compiled by Bloomberg.

IM Trust set a yearend price estimate of 1,490 pesos and recommended its clients participate in the Codelco sale for as much as 1,180 pesos per share, according to an e-mailed note, citing prospects for mining projects to boost energy demand.

Banco BICE began coverage of E-CL with a “buy” rating and an yearend share price estimate of 1,610 pesos, according to a Jan. 21 note. Banco Penta also rates the company “buy” and forecasts shares to reach 1,596 pesos, it said on Jan. 24.

–Editors: James Attwood, Dale Crofts