Boliden will pay up to $1.52 billion in cash for two mines of Canada-based Lundin Mining, ultimately boosting its production of zinc and copper concentrate by 95% and 43%, respectively. The Neves-Corvo in Portugal and the Zinkgruvan in Sweden are underground zinc-copper-lead-silver mines, detailed in separate Monday releases.
The Swedish metals, mining and smelting company will make an upfront cash payment of $1.37 billion, based on a cash-free and debt-free enterprise value of $1.3 billion, along with contingent cash payments of up to $150 million to acquire the assets. Once the transaction closes in mid-2025, Boliden's concentrate output will increase from 35% to 70% of zinc smelting capacity and 30% to 40% of copper smelting capacity.
The company will operate seven mining areas and five smelters across Sweden, Finland, Ireland, and Portugal. Over the next five years, the annual EBITDA contribution from the Neves-Corvo and Zinkgruvan mines is expected to fall between $300 million and $350 million, presuming consensus prices and terms. To fulfill the upfront consideration, Boliden plans to utilize debt financing and a share sale in the first half of 2025.
The definitive agreement is awaiting customary closing conditions, which include regulatory approvals. "The addition of two cash flow generative zinc and copper mines in Portugal and Sweden has a strong industrial logic as well as a strategic fit. Optimizing these well-invested units and developing the feed mix for our existing smelters will create short- and long-term value for both our Business Areas.
Furthermore, we will have better development opportunities for near mine exploration in these desirable mining regions," commented Mikael Staffas, President and CEO of Boliden. On the other hand, the Canadian base metals mining company has earmarked proceeds from the sale to bolster its balance sheet and fund its growth initiatives in the Vicuña district of Argentina and Chile. "The sale will further strengthen our balance sheet to support the Company's growing portfolio in South America and enable management to concentrate our focus in an area that will provide the greatest long-term value for our shareholders," stated Lundin Mining President and CEO Jack Lundin. Boliden shares witnessed a rise of over 2%, while Lundin Mining shares increased by nearly 2% during Monday midmorning trading..