Monday 15th July 2019 Font size:

Lundin Mining to Acquire Chapada Copper Mine in Brazil

Monday, April 15th, 2019

Lundin Mining Corporation (“Lundin Mining” or the “Company”) is pleased to announce it has entered into a definitive purchase agreement with Yamana Gold Inc. (“Yamana”) to purchase its 100% ownership stake in Mineração Maracá Indústria e Comércio S/A, which owns the Chapada copper-gold mine located in Brazil (“Chapada”), for cash consideration of US$800 million, subject to customary adjustments (the “Acquisition”). In addition, Yamana will retain a 2.0% net smelter return (NSR) royalty on future gold production from the Suruca gold deposit and receive contingent consideration of up to US$125 million over five years if certain gold price thresholds are met and contingent consideration of US$100 million on potential construction of a pyrite roaster.

Lundin Mining will host a conference call and webcast at 08:30 am ET, 14:30 CET on Monday, April 15, 2019 to discuss the Acquisition. Call details are outlined at the end of this news release.

Acquisition Highlights:

  • Furthers Lundin Mining’s strategic goals – acquisition of Chapada delivers high-quality, long-life, expandable copper production at attractive cash costs, complementing our existing portfolio of base metal mines and aligned with our stated strategy.
  • Immediately accretive on key operating and financial metrics – including earnings, EBITDA and operating cash flow per share. Utilizes balance sheet strength while maintaining low financial leverage and retaining flexibility to act on future opportunities.
  • Materially increases copper and gold cash flows – increases annual copper production by over 25% and adds approximately 100 koz of gold production at attractive cash costs expected to generate cash flow throughout metal price cycles.
  • Significant upside opportunities – to increase value leveraging Lundin Mining’s expertise in mine expansions and copper-focused exploration. The producing operation comes with a mineral property package in a highly prospective district and Lundin Mining believes significant exploration potential exists.
  • Asset diversification – adds stable and expandable production in a well-established mining jurisdiction, maintaining a favourable base metal commodity mix.

Marie Inkster, President and CEO commented:  “The acquisition of Chapada complements Lundin Mining’s existing portfolio of high-quality mines and highlights our focus on disciplined capital allocation to create long-term shareholder value. Chapada is a well-run, established operation with an experienced local workforce. Leveraging our technical expertise, base metals focus and financial strength, we believe further opportunities exist to create meaningful stakeholder value. The addition of Chapada further solidifies Lundin Mining’s position as a leading intermediate base metals producer with high-quality low-cost copper exposure.”
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