Lundin Completes Acquisition of Brazilian Chapada Copper-Gold Mine from Yamana Gold Inc.

SEATTLE (Scrap Monster): Lundin Mining Corporation announced completion of acquisition of 100% ownership stake in Chapada copper-gold mine in the central state of Goias in Brazil from Yamana Gold Inc.

Lundin has paid total cash consideration of $800 million at closing, funded by cash on hand and the company’s $550 million revolving credit facility. As per deal, the consideration also includes cash payment of $100 million contingent on development of a pyrite roaster at Chapada mine and the right to receive up to $125 million over a period of five years upon meeting certain gold price thresholds. Also, Yamana retains 2% net smelter return (NSR) royalty on future gold production from the Suruca gold deposit.

The acquisition is part of Lundin’s ongoing strategy to expand its base metal portfolio. The deal is expected to immediately add to company’s earnings and operating cash flow per share. It will boost Lundin’s annual copper output by more than 25%, estimates indicate.

Commenting on the deal, Marie Inkster, President and CEO, Lundin Mining stated that the addition of Chapada will further solidify the company’s position as a leading intermediate base metals producer. By working closely with its new employees and stakeholders, the company will explore opportunities to maximize the value of the high-quality asset, he added.

Peter Marrone, chief executive, Yamana noted that the deal offers significant and immediate improvement to its overall financial flexibility. The upfront cash consideration will be partly used towards repayment of outstanding indebtedness under the revolving credit facility and prepayment of its senior notes.