VANCOUVER, BC, Dec. 9, 2024
/PRNewswire/ -- (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin
Mining Corporation ("Lundin Mining" or the
"Company") announces today it has signed a definitive
agreement to sell its Neves-Corvo operation in Portugal and Zinkgruvan operation in
Sweden to Boliden AB (OM: BOL)
("Boliden") for up to $1.52 billion
in total consideration (the "Transaction"). Unless otherwise
stated, all numbers are presented in United States dollars.
Under the terms of the agreement, Lundin Mining will receive
upfront cash consideration of $1.37
billion upon closing, based on a cash-free and debt-free
enterprise value of $1.3 billion as
of an August 31, 2024 lock box date
("Lock-Box"). In addition, Lundin Mining will receive up to
$150 million in contingent cash
consideration upon satisfaction of certain conditions outlined
below. The Transaction is not subject to shareholder approval or
any financing conditions.
The proceeds from the Transaction will strengthen the Company's
balance sheet and support its growth plans in the Vicuña
District.
Jack Lundin, President and
CEO, commented "Neves-Corvo and Zinkgruvan have played a
significant role in catalyzing the Company to become a multi-asset
base metals producer of global scale. I want to thank the teams for
their dedication and hard work over the years; the Company would
not be where it is today without these two long-life mining
operations. We believe these operations will be an excellent
strategic fit under Boliden's operatorship, and the employees and
local stakeholders will benefit from the new ownership and highly
experienced management team.
"The sale will further strengthen our balance sheet to support
the Company's growing portfolio in South
America and enable management to concentrate our focus in an
area which will provide the greatest long-term value for our
shareholders. It is an opportune time to optimize our portfolio
through this divestiture as we drive towards becoming a top-tier
copper-dominant mining company."
Transaction Summary
Boliden has agreed to acquire 100% of the shares of
Somincor–Sociedade Mineira de Neves-Corvo, S.A. ("Neves-Corvo") and
100% of the shares of each of Zinkgruvan Mining Aktiebolag and
North Atlantic Natural Resources Aktiebolag (together "Zinkgruvan")
from subsidiaries of Lundin Mining for up to $1.52 billion in cash, consisting of $1.37 billion in upfront cash consideration at
closing and up to $150 million in
contingent consideration. Total consideration at closing may also
be subject to other customary adjustments in the event of
non-permitted leakage from the Lock-Box.
Upfront Consideration
The terms of the agreement incorporate a Lock-Box completion
mechanism, with the purchase price based on a cash-free and
debt-free enterprise value of $1.3
billion, and assuming a normalized level of working capital.
Based on the Lock-Box financial statements as of August 31, 2024, the upfront cash consideration
to be paid at closing is $1.37
billion. The upfront cash consideration will also accrue
interest at a 5% annual interest rate from August 31, 2024 to closing and is payable to the
Company at closing.
Neves-Corvo Contingent Payment
Up to $100 million in contingent
payments at Neves-Corvo is tied to underlying copper and zinc
prices ("Neves-Corvo Contingent Payment"). Boliden will pay Lundin
Mining 60% of the incremental revenue realized in each of the three
calendar years between 2025 and 2027 where the average realized
price on a semi-annual calendar period exceeds $4.50/lb copper and/or $1.30/lb zinc as per the London Metal Exchange
("LME") reference prices. Incremental revenue is calculated using
total payable sales volumes of copper and/or zinc for the
semi-annual calendar period and tax affected using Portugal's current corporate income tax
rate.
Zinkgruvan Contingent Payment
Up to $50 million in contingent
payments at Zinkgruvan is tied to underlying zinc prices
("Zinkgruvan Contingent Payment"). Boliden will pay Lundin 50% of
the incremental revenue realized in each of the two calendar years
between 2025 and 2026 where the average realized zinc price on an
annual calendar year exceeds US$1.40/lb zinc, as per the LME reference prices,
provided a minimum annual production of 135 million pounds of
payable zinc is achieved. Incremental revenue is calculated using
total payable sales volumes of zinc for an annual calendar year
period and tax affected using Sweden's current corporate income tax rate.
The Zinkgruvan Contingent Payment is subject to a maximum payout of
$25 million per calendar year.
Indicative Timeline
The Transaction is anticipated to close in mid-2025, subject to
the completion of customary conditions and regulatory approvals,
including but not limited to merger control approvals by the EU
Commission and approval of the Swedish Inspectorate of Strategic
Products under the Swedish FDI Act, and the change of control
approval by the Portuguese Directorate-General for Energy and
Geology (Direção-Geral de Energia e Geologia) under the
Neves-Corvo Concession Contract.
About Lundin Mining
Lundin Mining is a diversified Canadian base metals mining
company with operations or projects in Argentina, Brazil, Chile, Portugal, Sweden and the
United States of America, primarily producing copper, zinc,
gold and nickel.
The information in this news release is information that Lundin
Mining is required to make public under the EU Market Abuse
Regulation. The information was submitted for publication, through
the agency of the contact persons set out below on December 9, 2024 at 1:00
am EST.
Cautionary Statement on Forward-Looking
Information
Certain of the statements made and information contained
herein are "forward-looking information" within the meaning of
applicable Canadian securities laws. All statements other than
statements of historical facts included in this document constitute
forward-looking information, including but not limited to
statements regarding the Company's plans, prospects and business
strategies; the completion of the Transaction and the timing
thereof; the conditions to close the Transaction; the terms of the
contingent payments and expectations related thereto; the
expectations for Boliden as a strategic fit and the benefits
expected for stakeholders; the expected benefits of the
Transaction for the Company, including the expectation to
strengthen the Company's balance sheet and support its growth plans
in the Vicuna District; the realization of prospects in the Vicuña
district; the identification of additional value creation
opportunities; the Company's guidance on the timing and amount of
future production and its expectations regarding the results of
operations; expected costs; permitting requirements and timelines;
anticipated exploration and development activities at the Company's
projects; expansion projects and the realization of additional
value; the Company's integration of acquisitions and expansions and
any anticipated benefits thereof; the Company's ability to become a
top tier copper producer; and expectations for other economic,
business, and/or competitive factors. Words such as "believe",
"expect", "anticipate", "contemplate", "target", "plan", "goal",
"aim", "intend", "continue", "budget", "estimate", "may", "will",
"can", "could", "should", "schedule" and similar expressions
identify forward-looking information.
Forward-looking information is necessarily based upon various
estimates and assumptions including, without limitation, the
expectations and beliefs of management, including that the Company
can access financing, appropriate equipment and sufficient labour;
assumed and future price of copper, zinc, nickel, gold and other
metals; anticipated costs; that the conditions to close the
Transaction will be satisfied; the ability to achieve goals and
identify and realize opportunities; that the political environment
in which the Company operates will continue to support the
development and operation of mining projects; and assumptions
related to the factors set forth below. While these factors and
assumptions are considered reasonable by Lundin Mining as at the
date of this document in light of management's experience and
perception of current conditions and expected developments, these
statements are inherently subject to significant business, economic
and competitive uncertainties and contingencies. Known and unknown
factors could cause actual results to differ materially from those
projected in the forward-looking information and undue reliance
should not be placed on such information. Such factors include, but
are not limited to: the failure to obtain required approvals for
the Transaction; global financial conditions, market volatility and
inflation, including pricing and availability of key supplies and
services; risks inherent in mining including but not limited to
risks to the environment, industrial accidents, catastrophic
equipment failures, unusual or unexpected geological formations or
unstable ground conditions, and natural phenomena such as
earthquakes, flooding or unusually severe weather; uninsurable
risks; volatility and fluctuations in metal and commodity demand
and prices; significant reliance on assets in Chile; reputation risks related to negative
publicity with respect to the Company or the mining industry in
general; delays or the inability to obtain, retain or comply with
permits; risks relating to the development of the Josemaria
Project; health and safety laws and regulations; risks associated
with climate change; risks relating to indebtedness; economic,
political and social instability and mining regime changes in the
Company's operating jurisdictions, including but not limited to
those related to permitting and approvals, nationalization or
expropriation without fair compensation, environmental and tailings
management, labour, trade relations, and transportation; inability
to attract and retain highly skilled employees; risks inherent in
and/or associated with operating in foreign countries and emerging
markets, including with respect to foreign exchange and capital
controls; project financing risks, liquidity risks and limited
financial resources; health and safety risks; compliance with
environmental, unavailable or inaccessible infrastructure,
infrastructure failures, and risks related to ageing
infrastructure; changing taxation regimes; the inability to
effectively compete in the industry; risks associated with
acquisitions partnerships; expansions and related integration
efforts, including the ability to achieve anticipated benefits,
unanticipated difficulties or expenditures relating to integration
and diversion of management time on integration; risks related to
mine closure activities, reclamation obligations, environmental
liabilities and closed and historical sites; reliance on key
personnel and reporting and oversight systems, as well as third
parties and consultants in foreign jurisdictions; information
technology and cybersecurity risks; risks associated with the
estimation of Mineral Resources and Mineral Reserves and the
geology, grade and continuity of mineral deposits including but not
limited to models relating thereto; actual ore mined and/or metal
recoveries varying from Mineral Resource and Mineral Reserve
estimates, estimates of grade, tonnage, dilution, mine plans and
metallurgical and other characteristics; ore processing efficiency;
community and stakeholder opposition; regulatory investigations,
enforcement, sanctions and/or related or other litigation;
financial projections, including estimates of future expenditures
and cash costs, and estimates of future production may not be
reliable; enforcing legal rights in foreign jurisdictions; risks
associated with the use of derivatives; risks relating to joint
ventures and operations; environmental and regulatory risks
associated with the structural stability of waste rock dumps or
tailings storage facilities; exchange rate fluctuations; compliance
with foreign laws; potential for the allegation of fraud and
corruption involving the Company, its customers, suppliers or
employees, or the allegation of improper or discriminatory
employment practices, or human rights violations; risks relating to
dilution; risks relating to payment of dividends; counterparty and
customer concentration risks; activist shareholders and proxy
solicitation matters; estimation of asset carrying values;
relationships with employees and contractors, and the potential for
and effects of labour disputes or other unanticipated difficulties
with or shortages of labour or interruptions in production;
conflicts of interest; existence of significant shareholders;
challenges or defects in title; internal controls; risks relating
to minor elements contained in concentrate products; the threat
associated with outbreaks of viruses and infectious diseases;
mining rates and rehabilitation projects; mill shut downs; and
other risks and uncertainties, including but not limited to those
described in the " Risks and Uncertainties" section of the
Company's MD&A for the three months ended March 31, 2024 and the "Risks and Uncertainties"
section of the Company's Annual Information Form for the year ended
December 31, 2023, which are
available on SEDAR+ at www.sedarplus.com under the Company's
profile.
All of the forward-looking information in this document are
qualified by these cautionary statements. Although the Company has
attempted to identify important factors that could cause actual
results to differ materially from those contained in
forward-looking information, there may be other factors that cause
results not to be as anticipated, estimated, forecasted or intended
and readers are cautioned that the foregoing list is not exhaustive
of all factors and assumptions which may have been used. Should one
or more of these risks and uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary
materially from those described in forward-looking information.
Accordingly, there can be no assurance that forward-looking
information will prove to be accurate and forward-looking
information is not a guarantee of future performance. Readers are
advised not to place undue reliance on forward-looking information.
The forward-looking information contained herein speaks only as of
the date of this document. The Company disclaims any intention or
obligation to update or revise forward–looking
information or to explain any material difference between such and
subsequent actual events, except as required by applicable
law.
For further information, please contact: Stephen Williams, Vice President, Investor
Relations: +1 604 806 3074, Robert
Eriksson, Investor Relations Sweden: +46 8 440 54
50
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