TORONTO, ONTARIO–(Marketwire - Oct. 22, 2010) - Lundin Mining Corporation (“Lundin Mining” or the “Company”) (TSX:LUN)(OMX:LUMI) is pleased to report that the government of the Democratic Republic of Congo (DRC) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) have today announced the successful conclusion of the review of Tenke Fungurume Mining’s (TFM) contracts. The joint news release reports as follows:
“KINSHASA, DRC and PHOENIX, AZ, October (22), 2010 – The government of the Democratic Republic of Congo (DRC) and Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) announced today the successful conclusion of the review of Tenke Fungurume Mining’s (TFM) contracts. The conclusion of the review process by the DRC government confirms that the Tenke Fungurume contracts are in good standing, and acknowledges the parties’ continuing commitment to the rights and benefits granted under the existing TFM contracts.
In connection with the review, the parties will incorporate clarifying language that its rights and obligations are governed by the mining convention. TFM’s key fiscal terms, including a 30% income tax rate, 2% mining royalty rate and 1% export fee, will continue to apply and are consistent with the rates in the DRC’s current Mining Code.
His Excellency the Minister of Mines of the DRC and FCX Chief Executive Richard Adkerson issued the following joint statement: “We are pleased to announce completion of the contract revisitation process for Tenke Fungurume Mining. The parties worked cooperatively to reach a mutually satisfactory conclusion of the issues raised during the process. This important milestone provides the basis for future cooperation and enables TFM to pursue additional investments to develop this massive project to its full potential.”
Mr. Adkerson expressed his appreciation to His Excellency the President of the DRC, His Excellence the Minister of Mines and the Minister’s staff for their efforts in completing the review. Mr. Adkerson stated, “We are committed to continuing our positive partnership with the DRC government and providing significant benefits to the Congolese people for decades to come. We look forward to continued development of Tenke Fungurume into one of the world’s premier copper and cobalt operations, using world class standards for environmental management and social programs. The project will provide large and sustainable benefits associated with employment, infrastructure development, taxes, royalties and other benefits to the government and Congolese people over its long life.”
TFM agreed to several additional commitments, including an increase in Gecamines ownership interest in TFM from 17.5% to 20%; an additional royalty of $1.2 million for each 100,000 metric tonnes of proven and probable copper reserves above 2.5 million metric tonnes; additional payments totalling $30 million to be paid in six instalments upon reaching certain production milestones; conversion of $50 million in intercompany loans to equity; and a payment of $5 million for surface area fees. In addition, TFM has agreed to expand Gecamines’ participation in TFM management and reiterated its commitment to the use of local services and Congolese employment. In connection with the agreed modifications, the parties have agreed to increase the annual interest rate on advances from the current rate of LIBOR +2% to LIBOR +6%. These terms have been agreed to by TFM, its shareholders and the DRC government and will be incorporated into the related agreements.
The Tenke Fungurume mining concessions are located in the Katanga province of the DRC approximately 110 miles northwest of Lubumbashi. Copper production commenced last year on the approximately $2 billion initial development project, the largest such capital investment in the DRC in recent years. Current operations are designed to produce approximately 250 million pounds of copper and 18 million pounds of cobalt per year and the operation is currently being expanded to approximately 290 million pounds of copper per annum starting in 2011. The initial development project was designed and constructed in world-class fashion, using leading-edge technology and following international best practice standards for environmental management, occupational safety and social responsibility. TFM continues to engage in drilling activities, exploration analysis and metallurgical testing and has commenced feasibility studies to evaluate the potential of this highly prospective mining district that will enable significant future expansion and enhance the long-term partnership with Gecamines, the government of the DRC, and the Congolese people. In the aggregate, through June 30, 2010, tax and related payments to government institutions, transfer bonuses, and social spending within the DRC has totalled approximately $370 million since the project’s inception. TFM estimates more than two-thirds of the economic benefits from the project remain in the DRC in the form of taxes, royalties and duties, and the provision of local services.”
The Company notes that the shareholding change benefiting Gecamines will be shared proportionately by Lundin Mining and Freeport-McMoRan Copper & Gold Inc. As a result Lundin Mining’s equity interest in TFM will reduce from 24.75% to 24%. The Company will benefit from the increase in the annual interest rate on advances from the current rate of LIBOR +2% to LIBOR +6%.
Commenting on the news, Mr. Lukas Lundin, Chairman of Lundin Mining said, “We are very pleased to have achieved this resolution which has important benefits as we and our partners continue to pursue the significant potential of the highly prospective mineral district at Tenke Fungurume.
About Lundin Mining
Lundin Mining Corporation is a diversified Canadian base metals mining company with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel. In addition, Lundin Mining holds a development project pipeline which includes expansion projects at its Zinkgruvan and Neves‐Corvo mines along with its equity stake in the world class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo.
On Behalf of the Board,
Phil Wright, President and CEO
Forward Looking Statements
Certain of the statements made and information contained herein is “forward-looking information” within the meaning of the Ontario Securities Act. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to foreign currency fluctuations; risks inherent in mining including environmental hazards, industrial accidents, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company’s expectations; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations; uncertain political and economic environments; changes in laws or policies, foreign taxation, delays or the inability to obtain necessary governmental permits; and other risks and uncertainties, including those described under Risk Factors Relating to the Company’s Business in the Company’s Annual Information Form and in each management discussion and analysis. Forward-looking information is in addition based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of copper, nickel, lead and zinc; that the Company can access financing, appropriate equipment and sufficient labour and that the political environment where the Company operates will continue to support the development and operation of mining projects. 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 statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements.