Business

Lundin buys stake in Chilean mine for $1.8B US

Lundin Mining says it's buying an 80 per cent stake in the Candelaria and Ojos del Salado copper mine in Chile from Freeport-McMoRan Inc. for $1.8 billion US.
A mining haul truck carries waste rock at a copper mine in Utah. Lundin Mining of Canada is buying a stake in a property in Chile. (Associated Press)

Lundin Mining says it's buying an 80 per cent stake in the Candelaria and Ojos del Salado copper mine in Chile from Freeport-McMoRan Inc. for $1.8 billion US.

The remaining 20 per cent stake in the mines will continue to be owned by Sumitomo Metal Mining Co., Ltd and Sumitomo Corp.

The Toronto-based mining company says the acquisition will capitalize on long-term copper production from the northern region of Chile.

Copper futures are trading at a six-month low and many mining companies are looking at ways to consolidate or slow development from their properties as demand from China slows. However, Lundin is calculating the mine will viable.

"The acquisition of Candelaria is a unique opportunity to acquire a large-scale, high quality copper operation with strong cash flows in an excellent mining jurisdiction," said Lundin president and CEO, Paul Conibear.

"Candelaria is a well run, renowned asset with superb infrastructure and an experienced operating team. 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."

The company says it is funding the purchase with $1 billion US of new senior secured debt, approximately US$600 million in equity financing.

The remaining funds will be financed with the sale of 68 per cent of Candelaria's gold and silver production to Franco-Nevada Corporation for an upfront payment of $648 million.

The acquisition is subject to regulatory approvals, and is expected to close in the fourth quarter of 2014.

Lundin Mining has operations in Portugal, Sweden, Spain and the U.S. in producing copper, zinc, lead and nickel. It also owns stakes in copper and cobalt mines in the Democratic Republic of Congo and in Kokkola, Finland.

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