Lundin Mining to Divest Neves-Corvo and Zinkgruvan Operations for US$1.52 Billion

Lundin Mining (TSX:LUN,OTC Pink:LUNMF) has entered a definitive agreement to sell its Neves-Corvo operation in Portugal and Zinkgruvan operation in Sweden to Boliden (STO:BOL) for up to US$1.52 billion.

The sale, announced by the company on Monday (December 9), will see Boliden acquire full ownership of Somincor, the company operating Neves-Corvo, as well as Zinkgruvan Mining Aktiebolag and its associated entities.

Lundin expects to receive upfront cash consideration of US$1.37 billion at closing, based on financial conditions as of August 31, 2024. Interest will accrue at 5 percent annually until the closing date.

It will also receive up to US$150 million in contingent cash consideration once certain conditions are satisfied.

The contingent payments for the Neves-Corvo operation are linked to copper and zinc prices exceeding US$4.50 per pound and US$1.30 per pound, respectively, between 2025 and 2027.

For Zinkgruvan, the contingent payments are tied to zinc prices surpassing US$1.40 per pound during 2025 and 2026, provided that annual zinc production meets a minimum threshold of 135 million pounds.

Payments are capped at US$25 million annually, with a total maximum of US$50 million. Incremental revenue exceeding these thresholds will result in payments to Lundin capped at US$100 million over the period.

Lundin intends to use the proceeds to strengthen its balance sheet and prioritize its growth in the Vicuña District in South America. The company currently has operations and development projects in Argentina, Brazil, Chile and the US.

“It is an opportune time to optimize our portfolio through this divestiture as we drive towards becoming a top-tier copper-dominant mining company,” said CEO Jack Lundin in a press release.

Neves-Corvo and Zinkgruvan have been significant contributors to Lundin Mining’s growth as a multi-asset base metals producer. According to Lundin, the transition to Boliden will provide continuity for local stakeholders and employees.

Both companies anticipate completing the transaction by mid-2025.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.