VANCOUVER, BC, June 26, 2024 /PRNewswire/ -- (TSX: LUN) (Nasdaq Stockholm: LUMI) Lundin Mining Corporation ("Lundin Mining" or the "Company") is pleased to announce that the Company has provided notice to exercise its option to acquire an additional 19% interest in the issued and outstanding equity of SCM Minera Lumina Copper Chile ("Lumina Copper"), which owns the Caserones copper-molybdenum mine ("Caserones'") located in Chile, from JX Advanced Metals Corporation¹ ("JX") for consideration of $350 million (the "Call Option Exercise"). Closing of the additional interest in Lumina Copper is expected to occur on or around July 2, 2024.

Jack Lundin, President and CEO, commented "We are pleased to expand our ownership in a long-life operation characterized by robust cash flow generation, further enhancing Lundin Mining's presence in the region and strengthening our overall copper-dominant portfolio of high-quality base metal mines. Exercising our option early provides significant benefits to both parties: we secure additional copper production at an attractive acquisition price, while our partners receive an upfront payment and retain a meaningful 30% equity position in Caserones. This strategic move underscores our commitment to disciplined, scalable copper growth."

The consideration for the Call Option Exercise will be paid for in cash and will consist of a payment of $350 million for an additional 19% interest in Caserones, bringing the Company's ownership to 70%. In connection with the Call Option Exercise, Lundin Mining and JX have agreed to amend certain aspects of the original shareholders agreement, which will allow Lundin Mining to exercise the call option early and provide Lundin Mining the rights to 70% of the distributions retroactively from January 1, 2024. Upon closing of the call option, Lumina Copper will declare a distribution of cash estimated to be approximately $150 million of which 70% will be distributed to Lundin Mining and 30% to JX.

As part of the shareholders' agreement with JX, Lundin Mining is entitled to an annual operator fee in the form of a preferred dividend. With the Call Option Exercise the parties have agreed that the preferred dividend will increase from $21 million per annum to $28 million per annum, effective from the beginning of 2025.

The purchase price of $350 million will initially be funded from Lundin Mining's revolving credit facility with the intention to re-finance this amount by increasing the current $800 million Term Loan to $1.15 billion (the "Term Loan"). The Company has received commitments from new and existing lenders for a $350 million accordion under the same terms as the Term Loan announced on July 13, 2023 "Lundin Mining Announces Closing of $800 Million Term Loan with Additional $400 Million Accordion Available". The Term Loan is expected to be used to refinance the drawdown of the existing revolving credit facility. The commitments remain subject to the execution and delivery of definitive documentation in form and substance satisfactory to the Company and the Term Loan lenders.

Caserones' production guidance for 2024 is 120,000 - 130,000 tonnes of copper and 2,500 - 3,000 tonnes of molybdenum on a 100% basis. Annual production guidance for Caserones on a 100% basis for both 2025 and 2026 is 125,000 - 135,000 tonnes of copper. Cash cost² for 2024 is forecast to be $2.60/lb - $2.80/lb of copper, after by-product credits, assuming an average molybdenum price of $20/lb.


     ________________________________________



     
              (1)
             Previously named JX Metals Corporation.



     
              (2)
             This is a non-GAAP measure. For equivalent historical non-GAAP financial measure comparatives see the Historical Non-GAAP Measure Comparatives section of this press release. Please also see the Management's Discussion and Analysis for the period ended March 31, 2024.

Capital expenditures for the year are forecast to total $205 million on a 100% basis, which is inline with last year's capital requirements. This includes approximately $80 million for capitalized waste stripping, $60 million for TSF and water management systems, and $12 million for mine and mobile equipment. Other sustaining capital requirements are estimated at $35 million.

Highlights:

Enhances copper production profile: Increases Lundin Mining's 2024 attributable copper production. This will further solidify Lundin Mining's position as a meaningful copper producer globally.
Immediate free cash flow contribution: Attractive acquisition price that is accretive to attributable production and financial metrics.
Optimization opportunities: The Company is expected to realize significant additional operational improvements over the next six to eight months from optimization efforts currently underway.
Exploration potential: Caserones comes with a highly prospective mineral property package. Lundin Mining believes significant exploration potential exists near the mine and regionally. Since the acquisition, the Company has added additional copper Proven and Probable Mineral Reserves at Caserones which will contribute to a longer mine life, as per the news release dated February 8, 2024 "Lundin Mining Announces 2023 Mineral Resource and Mineral Reserve Estimates".
Emerging Vicuña District: Caserones is in the Vicuña District, an emerging world-class copper belt that also hosts the Josemaria development project, together this region represents a key growth opportunity for the Company.

About Lundin Mining

Lundin Mining is a diversified Canadian base metals mining company with operations and projects in Argentina, Brazil, Chile, Portugal, Sweden and the United States of America, primarily producing copper, zinc, gold and nickel.

The information in this release is subject to the disclosure requirements of Lundin Mining under the Swedish Financial Instruments Trading Act. The information was submitted for publication, through the agency of the contact persons set out below on June 26, 2024 at 2:00 Eastern Time.

Technical Information

The Qualified Person responsible for the scientific and technical information contained herein is Arman Barha, P.Eng., Vice President, Technical Services of the Company. Mr. Barha, who is a "qualified person" as defined under NI 43-101, has reviewed and approved the technical information in this news release.

Reconciliation of Non-GAAP Measures

The Company uses certain performance measures in its analysis. These performance measures have no standardized meaning within generally accepted accounting principles under International Financial Reporting Standards and, therefore, amounts presented may not be comparable to similar data presented by other mining companies. For additional details please refer to the Company's discussion of non-GAAP and other performance measures in its Management's Discussion and Analysis for the three months ended March 31, 2024 which is available on SEDAR+ at www.sedarplus.com.

Cash Cost per Pound and All-in Sustaining Costs per pound can be reconciled to Production Costs on the Company's Condensed Interim Consolidated Statement of Earnings as follows:

                                                                         Three months ended 
            March 31, 2024



              
                Operations             Candelaria Caserones                       Chapada               Eagle    Neves-Corvo     Zinkgruvan



              ($000s, unless otherwise noted)        (Cu)       (Cu)                           (Cu)                (Ni)         (Cu)           (Zn)              Total



              Sales volumes (Contained metal):



              Tonnes                                  33,536     35,211                          8,742                2,163           5,886          15,825



              Pounds (000s)                           73,934     77,627                         19,273                4,769          12,976          34,888



              Production costs                                                                                                                               567,134



              Less: Royalties and other                                                                                                                     (19,970)


                                                                                                                                                              547,164



              Deduct: By-product credits                                                                                      (165,308)



              Add: Treatment and refining charges                                                                                46,951





              Cash cost                              139,490    166,439                         38,735               19,249          42,057          22,837          428,807



              
                Cash cost per pound          1.89       2.14                           2.01                 4.04            3.24            0.65



              Add: Sustaining capital                 99,532     42,754                         29,199                4,078          22,413          14,341



              Royalties                                2,968      8,814                          1,617                2,678             735



              Reclamation and                          2,167      1,040                          2,679                1,968           1,335           1,186
    other closure
    accretion and depreciation



              Leases & other                           3,033     15,381                            765                1,236              64              78



              All-in sustaining cost                 247,190    234,428                         72,995               29,209          66,604          38,442



              
                AISC per pound ($/lb)        3.34       3.02                           3.79                 6.12            5.13            1.10

                                                                           Twelve months ended 
         December
                                                                                            31, 2023



     
                Operations                                  Candelaria Caserones(1)                    Chapada   Eagle            Neves-Corvo                Zinkgruvan



     ($000s, unless otherwise noted)                             (Cu)        (Cu)                          (Cu)    (Ni)              (Cu)                (Zn)             Total



     Sales volumes (Contained metal):



     Tonnes                                                      144,473        66,075                      43,761   13,339  32,054  65,344



     Pounds (000s)                                               318,508       145,670                      96,476   29,407  70,667 144,059



     Production costs                                                                                                                           2,086,108



     Less: Royalties and other                                                                                                                    (66,237)



               Inventory fair value adjustment                                                                                                   (39,945)




                                                                                                                                                 1,979,926



     Deduct: By-product credits                                                                                                                  (699,915)



     Add: Treatment and refining charges                                                                                                          183,328





     Cash cost                                                   660,160       290,553                     219,278   63,457 167,424  62,467             1,463,339



     
                Cash cost per pound                               2.07          1.99                        2.27     2.16    2.37    0.43



     Add: Sustaining capital                                     380,112        83,880                      72,291   22,201 102,621  53,358



     Royalties                                                                 15,820                       8,568   22,994   3,949       -



     Reclamation and other closure accretion and depreciation      9,258         2,560                       7,836   11,331   5,387   3,744



     Leases & other                                               13,325        47,944                       4,999    4,100     553     427



     All-in sustaining cost                                    1,062,855       440,757                     312,972  124,083 279,934 119,996



     
                AISC per pound ($/lb)                             3.34          3.03                        3.24     4.22    3.96    0.83


     (1) Caserones results are from July 13, 2023, to December 31, 2023

Cautionary Statement on Forward-Looking Information

Certain of the statements made and information contained herein is "forward-looking information" within the meaning of applicable Canadian securities laws. All statements other than statements of historical facts included in this document constitute forward-looking information, including but not limited to statements regarding the Company's plans, prospects and business strategies; the Company's guidance on the timing and amount of future production and its expectations regarding the results of operations; expected costs; permitting requirements and timelines; timing and possible outcome of pending litigation; the results of any Preliminary Economic Assessment, Feasibility Study, or Mineral Resource and Mineral Reserve estimations, life of mine estimates, and mine and mine closure plans; anticipated market prices of metals, currency exchange rates, and interest rates; the development and implementation of the Company's Responsible Mining Management System; the Company's ability to comply with contractual and permitting or other regulatory requirements; anticipated exploration and development activities at the Company's projects; the Company's integration of acquisitions and any anticipated benefits thereof; and expectations for other economic, business, and/or competitive factors. Words such as "believe", "expect", "anticipate", "contemplate", "target", "plan", "goal", "aim", "intend", "continue", "budget", "estimate", "may", "will", "can", "could", "should", "schedule" and similar expressions identify forward-looking statements.

Forward-looking information is necessarily based upon various estimates and assumptions including, without limitation, the expectations and beliefs of management, including that the Company can access financing, appropriate equipment and sufficient labour; assumed and future price of copper, nickel, zinc, gold and other metals; anticipated costs; ability to achieve goals; the prompt and effective integration of acquisitions; that the political environment in which the Company operates will continue to support the development and operation of mining projects; and assumptions related to the factors set forth below. While these factors and assumptions are considered reasonable by Lundin Mining as at the date of this document in light of management's experience and perception of current conditions and expected developments, these statements are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information. Such factors include, but are not limited to: global financial conditions, market volatility and inflation, including pricing and availability of key supplies and services; risks inherent in mining including but not limited to risks to the environment, industrial accidents, catastrophic equipment failures, unusual or unexpected geological formations or unstable ground conditions, and natural phenomena such as earthquakes, flooding or unusually severe weather; uninsurable risks; volatility and fluctuations in metal and commodity demand and prices; significant reliance on assets in Chile; reputation risks related to negative publicity with respect to the Company or the mining industry in general; delays or the inability to obtain, retain or comply with permits; risks relating to the development of the Josemaria Project; health and safety laws and regulations; risks associated with climate change; risks relating to indebtedness; economic, political and social instability and mining regime changes in the Company's operating jurisdictions, including but not limited to those related to permitting and approvals, nationalization or expropriation without fair compensation, environmental and tailings management, labour, trade relations, and transportation; inability to attract and retain highly skilled employees; risks inherent in and/or associated with operating in foreign countries and emerging markets, including with respect to foreign exchange and capital controls; project financing risks, liquidity risks and limited financial resources; health and safety risks; compliance with environmental, unavailable or inaccessible infrastructure, infrastructure failures, and risks related to ageing infrastructure; changing taxation regimes; the inability to effectively compete in the industry; risks associated with acquisitions and related integration efforts, including the ability to achieve anticipated benefits, unanticipated difficulties or expenditures relating to integration and diversion of management time on integration; risks related to mine closure activities, reclamation obligations, environmental liabilities and closed and historical sites; reliance on key personnel and reporting and oversight systems, as well as third parties and consultants in foreign jurisdictions; information technology and cybersecurity risks; risks associated with the estimation of Mineral Resources and Mineral Reserves and the geology, grade and continuity of mineral deposits including but not limited to models relating thereto; actual ore mined and/or metal recoveries varying from Mineral Resource and Mineral Reserve estimates, estimates of grade, tonnage, dilution, mine plans and metallurgical and other characteristics; ore processing efficiency; community and stakeholder opposition; regulatory investigations, enforcement, sanctions and/or related or other litigation; financial projections, including estimates of future expenditures and cash costs, and estimates of future production may not be reliable; enforcing legal rights in foreign jurisdictions; risks associated with the use of derivatives; risks relating to joint ventures and operations; environmental and regulatory risks associated with the structural stability of waste rock dumps or tailings storage facilities; exchange rate fluctuations; compliance with foreign laws; potential for the allegation of fraud and corruption involving the Company, its customers, suppliers or employees, or the allegation of improper or discriminatory employment practices, or human rights violations; risks relating to dilution; risks relating to payment of dividends; counterparty and customer concentration risks; activist shareholders and proxy solicitation matters; estimation of asset carrying values; relationships with employees and contractors, and the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; conflicts of interest; existence of significant shareholders; challenges or defects in title; internal controls; risks relating to minor elements contained in concentrate products; the threat associated with outbreaks of viruses and infectious diseases; and other risks and uncertainties, including but not limited to those described in the "Managing Risks" section of the Company's MD&A and the "Risks and Uncertainties" section of the Company's Annual Information Form for the year ended December 31, 2023, which are available on SEDAR+ at www.sedarplus.com under the Company's profile.

All of the forward-looking statements made in this document are qualified by these cautionary statements. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated, forecast or intended and readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions which may have been used. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking information. Accordingly, there can be no assurance that forward-looking information will prove to be accurate and forward-looking information is not a guarantee of future performance. Readers are advised not to place undue reliance on forward-looking information. The forward-looking information contained herein speaks only as of the date of this document. The Company disclaims any intention or obligation to update or revise forward-looking information or to explain any material difference between such and subsequent actual events, except as required by applicable law.

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