Lundin ups stake in Chile copper mine
Canadian base metals mining company Lundin Mining has accelerated an option to increase its interest in SCM Minera Lumina Copper, which owns the Caserones copper and molybdenum mine, in Chile.
The company, which trades on the TSX and Nasdaq Stockholm exchanges, will acquire a further 19% interest in Caserones from JX Advanced Metals for $350-million.
“Exercising our option early provides significant benefits to both parties: we secure additional copper production at an attractive acquisition price, while our partners receive an upfront payment and retain a meaningful 30% equity position in Caserones,” said Lundin president and CEO Jack Lundin.
Lundin and JX have agreed to amend certain aspects of the original shareholders agreement, which will allow Lundin to exercise the call option early and provide Lundin the rights to 70% of the distributions retroactively from January 1, 2024. Upon closing of the call option, Lumina Copper will declare a distribution of cash estimated to be about $150-million of which 70% will be distributed to Lundin and 30% to JX.
As part of the shareholders' agreement with JX, Lundin is entitled to a yearly operator fee in the form of a preferred dividend. With the call option exercise the parties have agreed that the preferred dividend will increase from $21-million a year to $28-million a year, effective from the beginning of 2025.
Lundin will initially fund the purchase price from its revolving credit facility with the intention to re-finance this amount by increasing the current $800-million term loan to $1.15-billion.
Caserones' production guidance for 2024 is 120 000 t to 130 000 t of copper and 2 500 t to 3 000 t of molybdenum on a 100% basis.
The yearly production guidance for Caserones on a 100% basis for both 2025 and 2026 is 125 000 t to 135 000 t of copper. Cash cost for 2024 is forecast to be $2.60/lb to $2.80/lb of copper, after by-product credits, assuming an average molybdenum price of $20/lb.
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