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Lundin Mining acquires majority stake in Chilean copper-molybdenum firm, secures $800M loan

Toronto-based Lundin Mining Corporation has announced the successful acquisition of a 51 per cent stake in SCM Minera Lumina Copper Chile, which owns the Caserones copper-molybdenum mine in Chile.

In addition to the acquisition, Lundin Mining has also secured commitments for a three-year term loan of $800 million, with an additional $400 million accordion available upon receipt of additional binding commitments and closing of up to an additional 19 per cent interest in Lumina Copper.

Supported by

Teitur Poulsen, Senior Vice President and Chief Financial Officer, said that the cash-generation potential of Lundin Mining has increased with the addition of Caserones.

The remaining deferred cash consideration of $150 million will be payable in installments over the six‑year period following the closing date.

Under the agreement, Lundin Mining also has the right to acquire up to an additional 19 per cent interest in Lumina Copper for $350 million over a five-year period starting on the first anniversary of the date of closing.

Caserones mine reports production and provides guidance

The Caserones mine, owned by SCM Minera Lumina Copper Chile, reported production of 69,704 tonnes of copper and 2,393 tonnes of molybdenum in the first half of 2023. The copper production included 61,333 tonnes of copper in concentrate and 8,371 tonnes of copper cathodes.

The mine has projected a production of 60,000‑65,000 tonnes of copper and 1,500-2,000 tonnes of molybdenum for the second half of 2023. The production for 2023 is expected to be higher in the first half of the year due to the typical seasonal winter weather operating considerations experienced during the third quarter.

The full-year 2023 production guidance may vary from estimates provided in the technical report due to the results achieved year-to-date and the refinement of near-term plans. The annual production guidance for both 2024 and 2025 is 110,000-120,000 tonnes of copper and 1,500-2,500 tonnes of molybdenum.

The forecasted cash cost for the second half of 2023 is $2.30/lb – $2.45/lb of copper, after by-product credits, assuming an average price of $20/lb molybdenum.

Capital expenditures for the second half of 2023 are expected to total $110 million. This includes approximately $45 million for capitalized waste stripping and mine development, $30 million for mine and mill capital expenditures and an estimated $25 million for capitalized tailings storage facilities costs.

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.

Company stock went down by 2.3 per cent on Friday to $11.22 on the Toronto Stock Exchange.

“With the addition of Caserones, Lundin Mining adds another long-life copper mine of meaningful size with significant growth potential to our portfolio of high-quality assets,” Lundin CEO Peter Rockandel said.

“The Caserones team has achieved material operational improvements in recent years, and I am confident that we will unlock additional upside through our considerable knowledge, experience and existing presence in the region,”

Copper attracting mining investors in the last year

Copper plays a pivotal role in powering new technologies due to its superior electrical conductivity, thermal conductivity, durability, malleability and recyclability. Its excellent electrical conductivity makes it indispensable in electric vehicles, renewable energy systems and energy-efficient appliances.

Its thermal conductivity is crucial for cooling systems in electronics and electric vehicle charging systems. Copper’s durability and malleability are vital in the miniaturization of tech components.

Copper’s importance also extends to the rollout of 5G technology and the infrastructure of renewable energy systems like solar panels and wind turbines.

Chile’s state owned company Codelco is another one of the main players in the country’s copper mining industry and the top domestic producer of the metal.

Freeport McMoRan Copper & Gold Inc. (NYSE: FCX) a prominent U.S. mining extraction company with operations in Chile. Another U.S. company, the North Carolina-based Albemarle Corporation, also plays a significant role in Chile’s copper mining industry.

Chilean-based company Antofagasta PLC is also a major player, operating four copper mines in the country: Los Pelambres, Centinela, Antucoya and Zaldívar. Canadian company Teck Resources Limited (TSX: TECK.A and TECK.B) (NYSE: TECK) operates the Quebrada Blanca and Carmen de Andacollo mines.

Lastly, the Anglo-Swiss company, Glencore plc (LON: GLEN) also has operations in Chile. This year, a new mining bill that increases taxes and royalties for large producers reached Chilean President Gabriel Boric’s desk for signature.

Under the law, companies that mine over 80,000 metric tons of refined copper annually will face a maximum tax rate of nearly 47 per cent, which the industry considers quite high.

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