Lundin Mining Boosts Stake in Caserones to 70% and Secures $350 Million Loan Extension

Lundin Mining Corporation ("Lundin Mining") has purchased an additional 19% stake in the issued and outstanding equity of SCM Minera Lumina Copper Chile ("Lumina Copper"), the owner of the Caserones copper-molybdenum mine in Chile, from JX Advanced Metals Corporation ("JX") for $350 million (the "Call Option Exercise"). The transaction is anticipated to close on or about July 2, 2024.

Jack Lundin, President and CEO, expressed satisfaction with Lundin Mining's decision to increase their ownership in a durable operation known for its strong cash flow. This expansion bolsters Lundin Mining's footprint in the region and enriches its portfolio of high-quality base metal mines dominated by copper. By exercising their option ahead of schedule, both Lundin Mining and their partners benefit: Lundin secures additional copper production at an advantageous price, while their partners receive an immediate payment and maintain a substantial 30% equity stake in Caserones. This strategic maneuver highlights Lundin Mining's dedication to prudent and scalable growth in the copper sector, reinforcing their position as a leading player in the industry.

The execution of the Call Option Exercise involves a cash payment of $350 million, enabling Lundin Mining to acquire an additional 19% stake in Caserones, thereby elevating its ownership to 70%. This transaction prompts amendments to the existing shareholders' agreement between Lundin Mining and JX, facilitating early exercise of the call option and retroactive entitlement for Lundin Mining to 70% of distributions from January 1, 2024. Following the option's closure, Lumina Copper will initiate a cash distribution, anticipated at around $150 million, with 70% allocated to Lundin Mining and 30% to JX.

In accordance with the revised agreement, Lundin Mining will receive an enhanced annual operator fee, transitioning from $21 million to $28 million starting from January 1, 2025. These adjustments reflect strategic enhancements aimed at optimizing operational control and financial returns within the partnership framework.

The acquisition cost of $350 million will initially be financed through Lundin Mining's revolving credit facility, with plans to subsequently refinance by increasing the existing $800 million Term Loan to $1.15 billion. Lundin Mining has secured commitments from both current and new lenders for a $350 million extension under terms matching those of 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 intended to retire the outstanding balance of the revolving credit facility. Finalizing these commitments hinges on executing satisfactory definitive documentation with both the Company and Term Loan lenders.

Caserones projects copper production between 120,000 and 130,000 tonnes, along with 2,500 to 3,000 tonnes of molybdenum in 2024 on a 100% basis. Production for 2025 and 2026 is estimated at 125,000 to 135,000 tonnes of copper annually. Cash costs for 2024 are anticipated to range from $2.60 to $2.80 per pound of copper, net of by-product credits, based on an average molybdenum price of $20 per pound.