Lundin Mining Announces Agreement to Purchase Freeport's 80% Interest in the Candelaria Mining Complex

October 6, 2014

TORONTO, ONTARIO–(Marketwired - Oct. 6, 2014) -


Lundin Mining Corporation (TSX:LUN)(OMX:LUMI) (“Lundin Mining” or the “Company”) is pleased to announce that it has entered into a definitive agreement with Freeport-McMoRan Inc. (“Freeport”) to purchase its 80% ownership stake in the Candelaria/Ojos del Salado copper mining operations and supporting infrastructure (together, “Candelaria”) for cash consideration of US$1.8 billion (the “Acquisition”) plus customary adjustments. In addition, contingent consideration of up to US$200 million in aggregate is also payable calculated as 5% of net copper revenues in any annual period over the next five years if the realized average copper price exceeds US$4.00 per pound. The remaining 20% ownership stake will continue to be held by Sumitomo Metal Mining Co., Ltd and Sumitomo Corporation (collectively, “Sumitomo”).

Strategic Acquisition and Unique Opportunity

  • Candelaria delivers high quality long-term copper production at attractive cash costs, enhanced open-pit expertise and capability, and geographic diversification into Chile 
  • Immediately accretive on key operating and financial metrics, including earnings, operating cash flow and free cash flow per share 
  • Substantially increases copper production while maintaining strong commodity diversification mix 
  • Low technical and execution risk in Chile, a leading copper producing region that hosts some of the world’s largest copper operations 
  • Balanced financing plan enables Lundin Mining to maintain a strong balance sheet post acquisition 
  • Solidifies long-term position as a leading intermediate diversified base metals producer with significant scale and competitive cost profile 
  • Acquisition of an established operation with a proven track record, high quality operating team and experienced workforce

Paul Conibear, President and CEO stated “The acquisition of Candelaria is a unique opportunity to acquire a large scale, high quality copper operation with strong cash flows in an excellent mining jurisdiction. Candelaria is a well run, renowned asset with superb infrastructure and an experienced operating team. This transaction further enhances our Company by providing increased operational and geographic diversification, using a balanced financing structure which allows us to maintain a strong balance sheet going forward.”

The acquisition is expected be funded with US$1.0 billion in new senior secured debt, approximately US$600 million in equity financing and the sale of a stream on 68% of Candelaria’s gold and silver production to Franco-Nevada Corporation (“Franco-Nevada”) for an upfront payment of US$648 million. The attractiveness of the gold and silver by-product credits has enabled the Company to receive approximately 36% of the initial purchase price in exchange for less than 10% of revenues.

Candelaria and Ojos del Salado Mines Overview

Located in Chile’s Atacama province, Region III, Candelaria is expected to produce 156kt of copper with attractive gold (97kozs) and silver (1.9mozs) by-products in 2014 on a 100% basis. Annual average life of mine production based on current reserves is expected to be approximately 126kt of copper, 77kozs of gold and 1.4mozs of silver on a 100% basis. Since Candelaria open-pit production commenced in the mid 1990’s, the operations have produced approximately 3.6 million tonnes of copper. The mine is located at a low elevation of 650m and near the coastal port of Caldera. Candelaria is widely seen as a global model for high grade open-pit iron oxide copper gold (IOCG) copper production.

Asset Highlights:

  • Mine Operations: One large open-pit mine and three underground mines with related fully-owned infrastructure 
  • Processing: Candelaria concentrator with a capacity of 75,000 tonnes per day and Pedro Aguirre Cerda concentrator with a capacity of 3,800 tonnes per day 
  • Other infrastructure: 100%-owned large deep water port with excess capacity, recently commissioned 500 litres per second desalination plant, and grid supplied power contract in place to 2022 
  • Copper Concentrate: High grade and clean copper concentrates with good precious metal credits 
  • C1 Cash Operating Costs: Anticipated at US$1.80/lb in 2014 and average US$1.69/lb over life of mine excluding the gold and silver stream adjustment, or US$2.06/lb in 2014 and US$1.93/lb over life of mine including the stream adjustment 
  • Mineral Reserves: Combined Proven and Probable Mineral Reserves of 380.4 million tonnes (100% basis) at an average grade of 0.54% copper, 0.13g/t gold and 2.01g/t silver (containing approximately 2Mt of copper) estimated using a copper price of US$2.00/lb 
  • Life of Mine: Current Mineral Reserves support a mine life of 14 years with additional exploration potential. The producing assets come with an extensive local mineral property position in a highly prospective district 
  • Tailings Facility: Permitted capacity to 2017; permitting underway for construction of a new life of mine facility 
  • Community and employees: Long history of stable labour relations and strong record of community engagement and support for community development 

The consolidated audited Mineral Resource statement for the Candelaria and Ojos del Salado mines is presented in the table below:

Consolidated Audited Mineral Resource Statement*, effective December 31, 2013 - 100% Basis
Classification     Contained Metal
Quantity Grade Copper Gold Silver
Tonnes Copper Gold Silver Tonnes Ounces Ounces
(000s) (%) (g/t) (g/t) (000s) (000s) (000s)
Open Pit
Measured 359,400 0.53 0.12 1.92 1,914 1,436 22,151
Indicated 15,800 0.48 0.13 1.80 77 64 914
Total Measured and Indicated 375,200 0.53 0.12 1.91 1,990 1,500 23,065
Inferred 7,643 0.33 0.09 1.13 25 23 278
Measured 19,837 1.11 0.27 5.11 221 172 3,261
Indicated 13,922 1.08 0.27 5.61 151 120 2,511
Measured and Indicated 33,759 1.10 0.27 5.32 371 292 5,772
Inferred 3,690 1.14 0.28 6.24 42 34 741
Measured 92,025 0.36 0.09 1.46 336 264 4,326
Measured and Indicated 92,025 0.36 0.09 1.46 336 264 4,326
Measured 471,262 0.52 0.12 1.96 2,470 1,872 29,738
Indicated 29,722 0.76 0.19 3.58 227 184 3,425
Measured and Indicated 500,984 0.54 0.13 2.06 2,697 2,055 33,163
Inferred 11,334 0.59 0.16 2.79 67 57 1,018
* Reported within the boundaries of the Candelaria and Ojos Projects. Mineral resources are not mineral reserves and have not demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimates. Mineral resources include mineral reserves. Open pit mineral resources are reported at a cut-off grade of 0.2% copper. Underground mineral resources are reported at a cut-off grade of 0.6% copper.
** Work in Progress (WIP) Mineral resource and mineral reserve estimates also include a contribution from various operational WIP stockpiles

The consolidated audited Mineral Reserve statement for Candelaria is presented in the table below.

Consolidated Audited Mineral Reserve Statement*, effective December 31, 2013 - 100% Basis
Classification   Grade Contained Metal
Quantity Copper Gold Silver Copper Gold Silver
(000’t) (%) (g/t) (g/t) (000’t) (000’oz) (000’oz)
Open Pit              
Proven 266,725 0.57 0.13 2.09 1,533 1,140 17,884
Probable 9,182 0.54 0.14 1.98 50 42 586
Total 275,907 0.57 0.13 2.08 1,583 1,182 18,469
Proven 92,025 0.36 0.09 1.46 336 264 4,326
Probable 0 0.00 0.00 0.00 0 0 0
Total 92,025 0.36 0.09 1.46 336 264 4,326
Proven 7,897 1.08 0.25 4.56 85 63 1,158
Probable 4,591 1.01 0.23 4.40 46 34 650
Total 12,487 1.05 0.24 4.50 132 96 1,808
Proven 366,647 0.53 0.12 1.98 1,954 1,466 23,368
Probable 13,772 0.70 0.17 2.79 96 76 1,235
Total 380,419 0.54 0.13 2.01 2,050 1,542 24,603
* Mineral reserves included in mineral resources. Mineral reserves have been prepared using US$2.00 per pound of copper, US$1,000 per ounce of gold and US$15.00 per ounce of silver. All figures have been rounded to reflect the relative accuracy of the estimates. Underground mineral reserves are reported at various cut-off grades and mining costs. Mineral Reserves for open pit, underground and stockpiles/work-in-progress for the Candelaria property are reported at cut-off grades of 0.25%, 0.81% and 0.24% copper, respectively. Underground Mineral Reserves for the Ojos del Salado property (Santos and Alcaparrosa) are reported at cut-off grades of 0.84% and 0.75% copper, respectively.

Further details with respect to the technical information contained in this news release are available in a National Instrument 43‐101 Technical Report entitled “Technical Report for the Compañía Minera Candelaria and Compañía Minera Ojos del Salado Copper Projects, Atacama Province, Region III, Chile” prepared by SRK Consulting (Canada) Inc. and authored by Jean-Francois Couture, P.Geo., Glen Cole, P.Geo., Gary Poxleitner, P.Eng., Adrian Dance, P.Eng., and Cam Scott, P.Eng. of SRK and independent consultant John Nilsson, P. Eng., which will be filed on the Company’s SEDAR profile at in conjunction with this news release.

Attractive Financing Package Obtained

Net of the US$648 million stream with Franco-Nevada, the remaining US$1.152 billion purchase price is expected to be funded with US$1.0 billion of senior secured debt and an approximate US$600 million bought deal (approximately C$674 million) equity financing. The Company also intends to repay and retire its existing US$250 million term loan with the proceeds received from the financings for this transaction. The Company has obtained a US$1,000 million senior secured bridge loan commitment. The Lundin Family Trust and Franco-Nevada will participate in the equity financing for C$100 million and up to C$50 million, respectively.

Transaction Overview

Under the existing Candelaria shareholders agreements, Sumitomo has elected to maintain their aggregate 20% interest in Candelaria.

The purchase price will be paid in cash on closing and will consist of US$1.8 billion plus customary adjustments. Freeport will also receive contingent consideration of up to US$200 million in aggregate, calculated as 5% of net copper revenues in any annual period over the next five years if the average annual realized copper price exceeds US$4.00 per pound.

The transaction effective date is June 30, 2014. The Acquisition is subject to requisite regulatory approvals (including in respect of antitrust matters), third party consents and other conditions. Closing of the acquisition is expected in the fourth quarter of 2014.

Franco-Nevada Gold and Silver Stream Overview

The Company has entered into a definitive agreement with Franco-Nevada (Barbados) Corporation, a subsidiary of Franco-Nevada to sell to Franco-Nevada a gold and silver stream from Candelaria in exchange for an upfront deposit of US$648 million payable at closing of the Acquisition, subject to expected minor post-closing adjustments upon confirmation of certain additional reserves.

Franco-Nevada will acquire 68% of gold and silver production from Candelaria until 720kozs of gold and 12mozs of silver have been delivered. Thereafter, Franco-Nevada will be entitled to receive 40% of gold and silver production from Candelaria. In addition to the upfront deposit, for each ounce of gold and silver delivered, Franco-Nevada will make ongoing payments equal to the lesser of (1) the prevailing market prices and (2) US$400/oz gold and US$4.00/oz silver. The ongoing payments for gold and silver will be subject to a 1% inflationary adjustment, beginning 3 years after closing of the Acquisition.

Debt Financing

The Company has obtained a senior secured bridge loan commitment of up to US$1.0 billion from Bank of America Merrill Lynch and The Bank of Nova Scotia. This bridge loan commitment would be utilized only in the event that the Company cannot complete a private offering of fixed rate permanent debt securities on or prior to closing of the Acquisition.

Bought Deal Financing

In connection with the Acquisition, Lundin Mining has entered into an agreement with GMP Securities L.P. and BMO Capital Markets acting as joint bookrunners on behalf of a syndicate of underwriters including Scotia Capital Inc., and others to be named (collectively, the “Canadian Underwriters”), and Pareto Securities AS (together with the Canadian Underwriters, the “Underwriters”), pursuant to which the Underwriters have agreed to purchase for resale, on a bought-deal basis, 132,157,000 subscription receipts (the “Subscription Receipts”) of Lundin Mining at a price of C$5.10 per Subscription Receipt for gross proceeds to the Company of approximately C$674 million (the “Offering”). The net proceeds of the Offering will be used to fund the Acquisition and for general working capital purposes. The Lundin Family Trust and Franco-Nevada will participate in the equity financing for C$100 million and up to C$50 million, respectively.

The gross proceeds from the Offering will be deposited and held in escrow and shall be released immediately prior to the completion of the Acquisition upon the satisfaction of certain conditions (the “Release Conditions”) on or before December 26, 2014.

Each Subscription Receipt entitles the holders thereof to receive one underlying common share for no additional consideration or further action on the part of the holders thereof upon satisfaction of (i) the Release Conditions and (ii) the approval and registration with the Swedish Financial Supervisory Authority of a prospectus (and the subsequent publication of the prospectus), if applicable, regarding the listing of the corresponding Swedish Depository Receipts relating to the Underlying Common Shares.

If the Release Conditions are not satisfied on or before December 26, 2014, or prior to such date, or Lundin Mining advises the Underwriters or announces to the public that it does not intend to satisfy the Release Conditions, the escrow agent will return to holders of the Subscription Receipts, an amount equal to the aggregate purchase price for the Subscription Receipts held by them, together with a pro rata portion of interest earned on the escrowed proceeds and the Subscription Receipts will be cancelled and of no further force or effect.

The Subscription Receipts will be distributed by way of a short-form prospectus in all provinces and territories of Canada and sold in jurisdictions outside of Canada in accordance with all applicable laws provided that no prospectus, registration statement or similar document is required to be filed in such jurisdiction and the Company does not thereafter become subject to continuous disclosure obligations in such jurisdictions.

Closing of the Offering is expected to occur on October 23, 2014 and is subject to certain conditions including the receipt of all necessary regulatory and stock exchange approvals, including approval of the TSX.


Bank of America Merrill Lynch is acting as financial advisor to Lundin Mining for purposes of this transaction and delivered an opinion to Lundin Mining’s Board of Directors as to the fairness, from a financial point of view, of the consideration to be paid by Lundin Mining in the transaction. Lundin Mining retained Cassels Brock & Blackwell LLP as Canadian legal advisors, Bofill Mir & Alvarez Jana as Chilean legal advisors and Paul, Weiss, Rifkind, Wharton & Garrison LLP as United States legal advisors in connection with the transaction.

Qualified Persons

Stephen Gatley, Vice President - Technical Services of Lundin Mining, who is a “qualified person” as defined under National Instrument 43-101, has reviewed and approved the technical information in this news release.

Conference Call Details

Lundin Mining will hold a conference call on Monday October 6, 2014 at 4:30 p.m. eastern time. Details of the call are provided below:

Call-in number for the conference call (North America): +1 416-340-2216

Call-in number for the conference call (North America Toll Free): +1 866-223-7781

Call-in number for the conference call (Europe Toll Free): +001 800-6578-9898

To take part in the interactive presentation, please log on using this direct link:

The investor presentation slideshow may be obtained by contacting GMP Securities L.P. by telephone at 416-943-6105 or by email at or BMO Capital Markets c/o The Data Group of Companies, by telephone at 905-696-8884 x4338 or by email at kennedywarehouse@datagroup.caat and will also be available in PDF format for download from the Lundin Mining website and will be filed on SEDAR at

A copy of the preliminary prospectus once available may be obtained by contacting GMP Securities L.P. by telephone at 416-943-6105 or by email at or BMO Capital Markets c/o The Data Group of Companies, by telephone at 905-696-8884 x4338 or by email at

Lundin Mining discloses the information provided herein pursuant to the Swedish Securities Market Act. The information was submitted for publication on October 6, 2014.

This press release is not an offer of securities for sale in the United States or in any other jurisdiction. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933 as amended. The securities referred to in this press release have not been and will not be registered under the U.S. Securities Act of 1933 as amended and may not be offered or sold absent an exemption from registration under the U.S. Securities Act of 1933 as amended.

About Lundin Mining

Lundin Mining is a diversified base metals mining company with operations and projects in Portugal, Sweden, Spain and the U.S.A. producing copper, zinc, lead and nickel. In addition, Lundin Mining holds a 24% equity stake in the world-class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo and in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.

On Behalf of the Board,

Paul Conibear, President and CEO

Forward Looking Information

This news release includes “forward-looking information,” within the meaning of applicable Canadian securities laws (collectively referred to herein as “forward-looking statements” or “forward-looking information”). All statements other than statements of historical facts included in this news release, including, without limitation, the Company’s plans and business strategy, statements related to the Acquisition and statements related to the financings and the gold and silver stream to Franco-Nevada may constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industries in which the Company operates as well as beliefs and assumptions made by the Company’s management. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, these statements, by their nature, involve risks and uncertainties and are not guarantees of future performance. Such statements are also subject to assumptions concerning, among other things, the Company’s anticipated business strategies and anticipated trends in the Company’s business. 
The Company can give no assurance that these estimates and expectations will prove to have been correct. Actual outcomes and results may, and often do, differ from what is expressed, implied or projected in such forward-looking statements, and such differences may be material. Some important factors that could cause actual results to differ materially from those expressed in these forward-looking statements include, but are not limited to: risks and uncertainties relating to the Acquisition, such as the Company’s ability to integrate Candelaria and realize the anticipated benefits of the Acquisition; risks and uncertainties relating to the financings, streaming arrangements and other related transactions to the Acquisition; risks and uncertainties relating to the estimated cash costs, timing and amount of production, cost estimates, 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; 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 litigation risks. Forward-looking information may also be based on other various assumptions including, without limitation: the expectations and beliefs of management, the assumed long term price of copper, gold or silver; and 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. Accordingly readers are cautioned that the above list of cautionary statements is not exhaustive. 
These and other factors could cause actual results to differ materially from the Company’s expectations expressed in the forward-looking statements included in this news release, and further details and descriptions of these and other factors are disclosed in the Company’s annual information form and other public filings which are available on SEDAR at The Company will not update these statements unless applicable securities laws require the Company to do so.


Lundin Mining Corporation
Sophia Shane
Investor Relations North America

Lundin Mining Corporation
John Miniotis
Senior Manager Corporate Development and Investor Relations

Lundin Mining Corporation
Robert Eriksson
Investor Relations Sweden
+46 8 545 015 50