TORONTO, March 27, 2023 /CNW/ - (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or the "Company") is pleased to announce it has entered into a binding purchase agreement with JX Nippon Mining & Metals Corporation and certain of its subsidiaries (collectively, "JX"), to acquire fifty-one percent (51%) of the issued and outstanding equity of SCM Minera Lumina Copper Chile ("Lumina Copper"), a wholly owned subsidiary of JX which operates the Caserones copper-molybdenum mine ("Caserones") located in Chile (the "Acquisition"). JX will receive upfront cash consideration from Lundin Mining of $800 million, and in addition, $150 million in deferred cash consideration will be payable by Lundin Mining in installments over a six-year period following the closing date. Lundin Mining will also have the right to acquire up to an additional 19% interest in Caserones for $350 million over a five-year period commencing on the first anniversary of the date of closing. Additional details are provided below.
Lundin Mining will host a conference call and webcast at 8:00 am ET, 14:00 CET on March 28, 2023, to discuss the Acquisition. Call details are outlined at the end of this news release.
Acquisition Rationale
Aligned with strategic goals – delivers a large-scale, long-life copper operation with favorable cash flow generation, complementing Lundin Mining's existing operations and overall copper-dominant portfolio of high-quality base metal mines.
Enhances copper production profile – increases exposure to a highly desired base metal and on a pro forma basis would have increased Lundin Mining's 2022 copper production by 50%1. This will further solidify Lundin Mining's position as a meaningful copper producer globally.
Immediate free cash flow contribution – underpinned by competitive cash costs and modest capital expenditures, and significantly accretive to operating cash flow per share metrics.
Continued balance sheet strength – remains a high priority for Lundin Mining, and financial leverage continues to be low in relation to internal targets and to comparable mining peers. The Company retains healthy liquidity headroom on its $1.75 billion revolving facility after accounting for the upfront cash consideration for the Acquisition.
Upside opportunities – through expected operational improvements under Lundin Mining's management, including initiating drill programs. The producing operation comes with a mineral property package in a highly prospective district and Lundin Mining believes significant exploration potential exists.
Potential synergies – proximity to Lundin Mining's Candelaria operations (~160 km from Caserones) introduces opportunities to realize additional savings and implement effective supply, logistical and management strategies.
Chile is a well-established Tier-1 mining jurisdiction – Lundin Mining has made a significant investment in the region and the country, and can leverage its operating experience, as well as local regulatory and community relationships.
Attractive call option – clear path for Lundin Mining to increase ownership up to 70% and strengthen its presence in a leading copper mining district.
Strengthening partnerships – JX has extensive operational knowledge, which will help Lundin Mining to realize the full potential of the Caserones mining operation.
1 Based on 2022 actual production as reported by the Company and Caserones and is on a 100% basis.
Commenting on the transaction, Peter Rockandel, CEO, said, "Upon closing of the Acquisition of Caserones, we add another long-life copper mine of material size and with significant growth potential to our portfolio, in a region in which we have considerable knowledge and experience. The Caserones team has achieved meaningful operational improvements in recent years, and we will work to unlock additional upside through our strong technical resources and existing presence in the region. The initial controlling interest increases our exposure to what we believe is a growing top-tier copper mining district. We retain the option to further increase our ownership over the next few years at an attractive price. The Acquisition further solidifies Lundin Mining's position as a growing global producer of copper as the world shifts to a lower carbon future."
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