Under terms of the transaction, Codelco will pay $1.7 billion for the 24.5% stake, with the total rising to $1.8 billion, taking into account $100 million of dividends backdated to Jan. 1, which are associated with the stake and which have not been paid.

The stake is half the 49% that Codelco had claimed it was entitled to under the terms of an option agreement but will change hands at a sharp discount to the about $6 billion Codelco was offering for 49% of Anglo American Sur. Anglo American received $5.39 billion for a 24.5% stake sold to Mitsubishi Corp. in November.

"Whether or not you see this as a good deal depends on the starting point of your expectations. It certainly removes uncertainty," said Alison Turner, an analyst at Panmure Gordon & Co. plc in London. "It has been done at a discount and that seems to recognize that Anglo saw some legitimacy to Codelco's claims."

Despite the knockdown price, the deal appears a qualified victory for Anglo American CEO Cynthia Carroll. She will take in a total $7.36 billion for 49.9% of the copper project, almost 23% more than Codelco had been offering.

"Today's commercial agreement demonstrates Anglo American's and Codelco's focus on our future and potential as partners in the best interests of both companies, while we have both gained significant value for our shareholders and other stakeholders, and recognize Mitsubishi's contribution to facilitating today's agreement," Carroll said in a statement.

Carroll risked losing control of one of Anglo American's key assets when she struck the deal with Mitsubishi in an effort to derail Codelco's planned acquisition. Anglo American insisted that the 24.5% stake sold to the Japanese company reduced the size of Codelco's option on Anglo American Sur. Chilean state-backed Codelco argued that the stake sold to Mitsubishi should not reduce the 49% stake covered by its option and that Anglo American should therefore ultimately be left with just 25.5% of Anglo American Sur. It then launched legal action to claim its full 49% stake.

In a side deal, also announced Thursday, Anglo agreed to buy a 4.1% stake from Mitsubishi for $890 million and add a further 0.9%, before selling the 5% holding for $1.1 billion to Mitsui & Co. Ltd., another Japanese trading conglomerate. Mitsui had agreed to provide Codelco with $6.75 billion in financing to buy its 49% stake and had its own side agreement to then buy half of the holding.

Anglo American said it will pay Mitsubishi $40 million "in consideration for Mitsubishi's participation in the transaction."

Anglo and Codelco had been heading for a court battle over their competing claims but called a truce in June in an effort to find an out-of-court settlement. The deadline for those talks was due to expire late Friday.

Anglo American Sur's assets include the Los Bronces mine, the open pit El Soldado mine and the Chagres smelter, all of which are in Chile. The operations have proven and probable reserves of 2.3 billion tons and additional resources of about 6.4 billion tons. The unit posted Ebitda of $1.2 billion for 2011.

"I am very pleased that an agreement has been reached that fulfils our expectations in terms of value creation for Codelco, reinforces Codelco's standing as the main copper producer in the world and which sets the ground for an innovative partnership with Anglo American in AA Sur," Codelco CEO Thomas Keller said.

Codelco's option to buy a stake in Anglo American Sur is a legacy of an agreement struck between the operation's former owner, Exxon Mobil Corp., and Empresa Nacional de Minería, a Chilean state-owned mining company. Anglo American bought the mine from Exxon in 2002. Codelco in 2008 bought the option, which is available to be exercised in January once every three years.

Thursday's deal is subject to the lifting of an injunction by a Chilean court, which had banned trading in Anglo American Sur equity, and is expected to close Friday. Anglo American said proceeds from the sale will be used "for general corporate purposes."

Anglo American shares closed Thursday at 1,944 pence ($30.71), up 34 pence, or 1.4%, on their previous close.

Anglo American took legal counsel from a Shearman & Sterling LLP team led by George Casey and Michael McGuinness and including Rory O'Halloran and Heiko Schiwek. A Cleary Gottlieb Steen & Hamilton LLP team led by Jeffrey Lewis, Duane McLaughlin and Grant Binder served as counsel to Codelco.