Toronto’s Lundin Mining Corporation (TSX: LUN) (Nasdaq Stockholm: LUMI) will be acquiring a majority stake in a Chilean copper mine located in the Atacama Region and paying $800 million in cash up front for it.
The Canadian company announced its binding purchase agreement with JX Nippon Mining & Metals Corporation on Monday to acquire 51 per cent of its subsidiary responsible for operating the Caserones copper mine — SCM Minera Lumina Copper Chile.
SCM said on Wednesday that it expects the deal to close during the second half of 2023 pending regulatory approvals.
“We add another long-life copper mine of material size and with significant growth potential to our portfolio, in a region in which we have considerable knowledge and experience.” – Peter Rockandel, CEO. https://t.co/z6ePQEAaM0 pic.twitter.com/87vbrzQX53
— Lundin Group (@LundinGroup) March 28, 2023
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Lundin will also have the option to acquire an additional 19 per cent interest in the mine for $350 million over the course of five years following the transaction’s closing date.
The company has listed several reasons for choosing to purchase a major stake in the copper mine including the utilization of JX’s operational knowledge to help maximize efficiency and profits at Caserones, the ability to increase ownership in the mine to about 70 per cent in the coming years and a reasonable proximity to Lundin’s Candelaria operations 160 kilometres away.
“As an organization, we are convinced that this change in the corporate structure is a great opportunity for Caserones, given the extensive knowledge of Lundin Mining in the operation of different deposits, which added to our experience in operating at high geographical altitudes will generate opportunities that will benefit us mutually,” said SCM via LinkedIn on Wednesday.
Lundin’s CEO Peter Rockandel said the acquisition positions the company as a growing international copper producer as the world is continually focused on decarbonization and critical minerals.
In 2021, Chile produced more than twice as much copper as anywhere in the world at 5.6 million tonnes. Peru came in second that year with 2.2 million tonnes and China came in third with 1.8 million, according to Natural Resources Canada.
The mine also produces the chemical element molybdenum, which the Royal Society of Chemistry says is used to help make steel alloys that can be utilized for building engines.
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Lundin Mining has operations throughout South America in Argentina, Chile, and Brazil. The company is also involved with projects in Sweden, Portugal and the United States and primarily produces copper, nickel, zinc and gold.
Lundin’s stock rose by 4.55 per cent Wednesday to $8.73 on the Toronto Stock Exchange.
rowan@mugglehead.com
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