Lundin Mining announced today that it has entered into a definitive agreement with Josemaria Resources to acquire all of its shares through a plan of arrangement for an implied equity value of approximately C$625 million (US$485 million).
Lundin said that the company will acquire 100% of the advanced stage Josemaria copper-gold project located in the San Juan Province of Argentina.
Mineral Reserves are estimated by Josemaria Resources to be 1,012 Mt at an average grade of 0.30% copper, 0.22 g/t gold and 0.94 g/t silver, containing approximately 6.7 billion lb of copper, 7.0 million oz of gold and 30.7 million oz of silver estimated using a copper price of US$3.00/lb, gold price of US$1,500/oz and silver price of US$18.00/oz silver.
Josemaria is expected to produce an average of 166,000 tonnes of copper, 331,000 oz of gold and 1.2 million oz of silver per year for the first three years. Over a 19-year mine life defined by the current Mineral Reserve estimate, average annual production is forecast to be 131,000 t of copper, 224,000 oz of gold and 1.0 million oz of silver at an average total cash cost of US$1.55/lb of copper equivalent.
“The world-class Josemaria project is a unique opportunity at an advanced stage with a clear path to production. With Josemaria, Lundin Mining positions itself as a major copper producer with a diversified portfolio of high-quality, long-life base metal assets,” the company said in a statement.
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Importantly, the company added that the project has a completed positive feasibility study and has been advancing through environmental approvals, and commercial and fiscal terms with federal and provincial authorities. Josemaria Resources anticipates the ESIA and commercial and fiscal terms to be finalized in 2022, outlining a project timeline of approximately five years to commercial production.
President and CEO Peter Rockandel commented, “Josemaria is a world-class copper-gold project that has many characteristics which makes it the ideal project, at the right time, for Lundin Mining to advance in the next phase of our growth.”
“Building on our strengthened technical expertise, leveraging our financial strength, and drawing on Josemaria Resources’ in-country knowledge, we believe this opportunity will create meaningful value for all stakeholders. The addition of Josemaria will elevate Lundin Mining’s position to a major base metals producer with high-quality, low-cost copper exposure,” he added.
Under the terms of the transaction, Josemaria Resources shareholders may elect to receive in exchange for each Josemaria Resources common share, 0.1487 of a Lundin Mining Share or C$1.60 cash or any combination thereof issuable to all Josemaria Resources shareholders.
The consideration will be subject to a total maximum cash consideration of approximately C$183 million and a total maximum share consideration of approximately 39.7 million Lundin Mining Shares, equating to 30% of the transaction consideration payable in cash and 70% of the transaction consideration payable in Lundin Mining Shares, respectively.
Lundin Mining is a diversified Canadian base metals mining company with operations in Brazil, Chile, Portugal, Sweden and the United States of America, primarily producing copper, zinc, gold and nickel.