Lundin Mining Sells Two European Assets for $1.52 Billion
Canadian mining firm Lundin Mining has signed an agreement to sell its entire stake in Neves-Corvo operation in Portugal and Zinkgruvan operation in Sweden to Boliden, a multinational metals, mining, and smelting company headquartered in Sweden, for $1.52 billion.
The transaction is expected to close in mid-2025, subject to the completion of customary conditions and regulatory approvals, including but not limited to merger control approvals by the EU Commission and approval of the Swedish Inspectorate of Strategic Products under the Swedish FDI Act, and the change of control approval by the Portuguese Directorate-General for Energy and Geology under the Neves-Corvo Concession Contract.
As part of the deal, Lundin Mining will receive upfront cash consideration of $1.37 billion upon closing, based on a cash-free and debt-free enterprise value of $1.3 billion as of 31 August 2024 lock box date.
In addition, Lundin Mining will receive up to $150 million in contingent cash consideration upon satisfaction of certain conditions. The proceeds from the deal will strengthen the Company’s balance sheet and support its growth plans in the Vicuña District.
President and CEO of Lundin Mining Jack Lundin said that Neves-Corvo and Zinkgruvan played a significant role in catalysing the company to become a multi-asset base metals producer of global scale.
The Company would not be where it is today without these two long-life mining operations and they believe these operations will be an excellent strategic fit under Boliden’s operatorship, and the employees and local stakeholders will benefit from the new ownership and highly experienced management team, he said.
“The sale will further strengthen our balance sheet to support the company’s growing portfolio in South America and enable management to concentrate our focus in an area which will provide the greatest long-term value for our shareholders. It is an opportune time to optimise our portfolio through this divestiture as we drive towards becoming a top-tier copper-dominant mining company,” he added.
Neves-Corvo Contingent Payment
Boliden will pay Lundin Mining 60% of the incremental revenue realised in each of the three calendar years between 2025 and 2027 where the average realised price on a semi-annual calendar period exceeds $4.50/lb copper and/or $1.30/lb zinc as per the London Metal Exchange (LME) reference prices.
Zinkgruvan Contingent Payment
Boliden will pay Lundin 50% of the incremental revenue realized in each of the two calendar years between 2025 and 2026 where the average realized zinc price on an annual calendar year exceeds $1.40/lb zinc, as per the LME reference prices, provided a minimum annual production of 135 million pounds of payable zinc is achieved. Incremental revenue is calculated using total payable sales volumes of zinc for an annual calendar year period and tax affected using Sweden’s current corporate income tax rate. The Zinkgruvan Contingent Payment is subject to a maximum pay-out of $25 million per calendar year.
