Closing of the additional stake in Lumina Copper is expected to occur around July 2, 2024.
Lundin Mining Corporation announced that it will exercise its option to acquire an additional 19% interest in the issued and outstanding capital of SCM Minera Lumina Copper Chile, owner of the Caserones copper-molybdenum mine located in Chile, from JX Advanced Metals Corporation for consideration of US$350 million.
Closing of the additional stake in Lumina Copper is expected to occur around July 2, 2024.
Jack Lundin, President and CEO, commented that they are pleased to expand their ownership into a long-standing operation characterized by strong cash flow generation, further enhancing Lundin Mining’s presence in the region and strengthening our overall portfolio base. high quality predominant in copper.
“Exercising our option early provides significant benefits for both parties: we secure additional copper production at an attractive acquisition price, while our partners receive an upfront payment and retain a significant 30% equity position in Caserones,” he commented.
The consideration for the Exercise of the Purchase Option will be paid 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 exercise of the call option, Lundin Mining and JX have agreed to modify certain aspects of the original shareholders’ agreement, which will allow Lundin Mining to exercise the call option early and provide Lundin Mining with the rights to 70% of the distributions retroactively. starting January, 2024.
Upon closing of the purchase option, Lumina Copper will declare a cash distribution estimated at approximately $150 million, of which 70% will be distributed to Lundin Mining and 30% to JX.
As part of the shareholder agreement with JX, Lundin Mining is entitled to an annual operator fee in the form of a preferred dividend. With the exercise of the purchase option, the parties agreed that the preferred dividend will increase from $21 million annually to $28 million annually, starting in early 2025.
The $350 million purchase price will be initially funded from Lundin Mining’s revolving credit facility with the intention of refinancing this amount by increasing the current term loan from $800 million to $1.15 billion.
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.
The term loan is expected to be used to refinance the drawdown of the existing revolving credit facility. The commitments are subject to the execution and delivery of definitive documentation in form and substance satisfactory to the Company and the lenders of the Term Loans.
Caserones’ production forecast for 2024 is 120,000 to 130,000 tons of copper and 2,500 to 3,000 tons of molybdenum on a 100% basis. The planned annual production for Caserones on a 100% basis for 2025 and 2026 is 125,000 to 135,000 tons of copper. The cash cost is forecast 2 by 2024 will be $2.60/lb – $2.80/lb copper, after by-product credits, assuming an average molybdenum price of $20/lb.
Reflexes:
- Improves copper production profile: increases Lundin Mining’s attributable copper production by 2024. This will further solidify Lundin Mining’s position as a major global copper producer.
- Immediate contribution to free cash flow: attractive acquisition price that increases attributable production and financial metrics.
- Optimization opportunities: The Company is expected to achieve significant additional operational improvements over the next six to eight months thanks to optimization efforts currently underway.
- Exploration potential: Caserones comes with a highly prospective mineral property package. Lundin Mining believes there is significant exploration potential close to the mine and regionally. Since the acquisition, the Company has added additional proven and probable copper mineral reserves at Caserones, which will contribute to a longer mine life.
- Emerging District of Vicuña: Caserones is located in the Vicuña District, an emerging world-class copper belt that is also home to the Josemaría development project; Taken together, this region represents a key growth opportunity for the Company.
