CHILE – Lundin Mining Corp. of Toronto has agreed to purchase Freeport-McMoRan‘s 80% share of the Candelaria-Ojos del Salado copper mining operation for US$1.8 billion. The operation includes an open pit, an underground mine, and a 75,000-t/d concentrator located in the Atacama Desert as well as port facilities at Caldera.
Contingent consideration of up to US$200 million is also payable 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/lb.
The remaining 20% stake in Candelaria will continue to be held by Sumitomo Metal Mining and Sumitomo Corp. of Japan.
Lundin will pay for the acquisition by issuing new senior secured debt in the amount of US$1.0 billion; an equity financing of approximately US$600 million; and the sale of 68% of Candelaria’s gold and silver stream to Franco-Nevada Corp. for an upfront payment of US$648 million.
Proven and probable reserves at Candelaria are 380.4 million tonnes grading 0.54% Cu, 0.13 g/t Au and 2.01 g/t Au (using a copper price of US$2.00/lb). Current reserves will support mining for the next 14 years. C1 cash operating cists are estimated at US$1.80/lb Cu in 2014 and US$1.69/lb over the life of the project.
“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,” said Paul Conibear, Lundin president and CEO. “Candelaria is a well run, renowned asset with superb infrastructure and an experienced operating team.”
More information is posted at LundinMining.com.