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Lundin Mining Exercises Option to Increase Ownership in Caserones to 70% and Receives Commitments to Increase the Term Loan by $350 Million

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Lundin Mining Exercises Option to Increase Ownership in Caserones to 70% and Receives Commitments to Increase the Term Loan by $350 Million

 

 

 

 

 

Lundin Mining Corporation  (TSX: LUN) (Nasdaq Stockholm: LUMI) is pleased to announce that the Company has provided notice to exercise its option to acquire an additional 19% interest in the issued and outstanding equity of SCM Minera Lumina Copper Chile, which owns the Caserones copper-molybdenum mine located in Chile, from JX Advanced Metals Corporation1 for consideration of $350 million. Closing of the additional interest in Lumina Copper is expected to occur on or around July 2, 2024.

 

Jack Lundin, President and CEO, commented “We are pleased to expand our ownership in a long-life operation characterized by robust cash flow generation, further enhancing Lundin Mining’s presence in the region and strengthening our overall copper-dominant portfolio of high-quality base metal mines. Exercising our option early provides significant benefits to both parties: we secure additional copper production at an attractive acquisition price, while our partners receive an upfront payment and retain a meaningful 30% equity position in Caserones. This strategic move underscores our commitment to disciplined, scalable copper growth.”

 

The consideration for the Call Option Exercise will be paid for in cash and will consist of a payment of $350 million for an additional 19% interest in Caserones, bringing the Company’s ownership to 70%. In connection with the Call Option Exercise, Lundin Mining and JX have agreed to amend certain aspects of the original shareholders agreement, which will allow Lundin Mining to exercise the call option early and provide Lundin Mining the rights to 70% of the distributions retroactively from January 1, 2024. Upon closing of the call option, Lumina Copper will declare a distribution of cash estimated to be approximately $150 million of which 70% will be distributed to Lundin Mining and 30% to JX.

 

As part of the shareholders’ agreement with JX, Lundin Mining is entitled to an annual operator fee in the form of a preferred dividend. With the Call Option Exercise the parties have agreed that the preferred dividend will increase from $21 million per annum to $28 million per annum, effective from the beginning of 2025.

 

The purchase price of $350 million will initially be funded from Lundin Mining’s revolving credit facility with the intention to re-finance this amount by increasing the current $800 million Term Loan to $1.15 billion (the “Term Loan”). The Company has received commitments from new and existing lenders for a $350 million accordion under the same terms as the Term Loan announced on July 13, 2023 “Lundin Mining Announces Closing of $800 Million Term Loan with Additional $400 Million Accordion Available“. The Term Loan is expected to be used to refinance the drawdown of the existing revolving credit facility. The commitments remain subject to the execution and delivery of definitive documentation in form and substance satisfactory to the Company and the Term Loan lenders.

 

Caserones’ production guidance for 2024 is 120,000 – 130,000 tonnes of copper and 2,500 – 3,000 tonnes of molybdenum on a 100% basis. Annual production guidance for Caserones on a 100% basis for both 2025 and 2026 is 125,000 – 135,000 tonnes of copper. Cash cost2 for 2024 is forecast to be $2.60/lb – $2.80/lb of copper, after by-product credits, assuming an average molybdenum price of $20/lb.

 

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1 Previously named JX Metals Corporation.
2 This is a non-GAAP measure. For equivalent historical non-GAAP financial measure comparatives see the Historical Non-GAAP Measure Comparatives section of this press release. Please also see the Management’s Discussion and Analysis for the period ended March 31, 2024.

 

Capital expenditures for the year are forecast to total $205 million on a 100% basis, which is inline with last year’s capital requirements. This includes approximately $80 million for capitalized waste stripping, $60 million for TSF and water management systems, and $12 million for mine and mobile equipment. Other sustaining capital requirements are estimated at $35 million.

 

Highlights:

  • Enhances copper production profile: Increases Lundin Mining’s 2024 attributable copper production. This will further solidify Lundin Mining’s position as a meaningful copper producer globally.
  • Immediate free cash flow contribution: Attractive acquisition price that is accretive to attributable production and financial metrics.
  • Optimization opportunities: The Company is expected to realize significant additional operational improvements over the next six to eight months from optimization efforts currently underway.
  • Exploration potential: Caserones comes with a highly prospective mineral property package. Lundin Mining believes significant exploration potential exists near the mine and regionally. Since the acquisition, the Company has added additional copper Proven and Probable Mineral Reserves at Caserones which will contribute to a longer mine life, as per the news release dated February 8, 2024 “Lundin Mining Announces 2023 Mineral Resource and Mineral Reserve Estimates”.
  • Emerging Vicuña District: Caserones is in the Vicuña District, an emerging world-class copper belt that also hosts the Josemaria development project, together this region represents a key growth opportunity for the Company.

 

About Lundin Mining

 

Lundin Mining is a diversified Canadian base metals mining company with operations and projects in Argentina, Brazil, Chile, Portugal, Sweden and the United States of America, primarily producing copper, zinc, gold and nickel.

 

The information in this release is subject to the disclosure requirements of Lundin Mining under the Swedish Financial Instruments Trading Act. The information was submitted for publication, through the agency of the contact persons set out below on June 26, 2024 at 2:00 Eastern Time.

 

Technical Information

 

The Qualified Person responsible for the scientific and technical information contained herein is Arman Barha, P.Eng., Vice President, Technical Services of the Company. Mr. Barha, who is a “qualified person” as defined under NI 43-101, has reviewed and approved the technical information in this news release.

 

Posted June 26, 2024

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