Lundin Mining to acquire a majority interest in the Caserones copper mine in Chile

Acquisition Rationale

• Aligned with strategic goals – delivers a large-scale, long-life copper operation with favourable cash flow generation, complementing Lundin Mining’s existing operations and overall copper-dominant portfolio of high-quality base metal mines.
• Enhances copper production profile – increases exposure to a highly desired base metal and on a pro forma basis would have increased Lundin Mining’s 2022 copper production by 50%. This will further solidify Lundin Mining’s position as a meaningful copper producer globally.
• Immediate free cash flow contribution – underpinned by competitive cash costs and modest capital expenditures, and significantly accretive to operating cash flow per share metrics.
• Continued balance sheet strength – remains a high priority for Lundin Mining, and financial leverage continues to be low in relation to internal targets and to comparable mining peers. The Company retains healthy liquidity headroom on its US$1.75 billion revolving facility after accounting for the upfront cash consideration for the Acquisition.
• Upside opportunities – through expected operational improvements under Lundin Mining’s management, including initiating drill programs. The producing operation comes with a mineral property package in a highly prospective district and Lundin Mining believes significant exploration potential exists.
• Potential synergies – proximity to Lundin Mining’s Candelaria operations (~160 km from Caserones) introduces opportunities to realise additional savings and implement effective supply, logistical and management strategies.
• Chile is a well-established Tier-1 mining jurisdiction – Lundin Mining has made a significant investment in the region and the country, and can leverage its operating experience, as well as local regulatory and community relationships.
• Attractive call option – clear path for Lundin Mining to increase ownership up to 70% and strengthen its presence in a leading copper mining district.
• Strengthening partnerships – JX has extensive operational knowledge, which will help Lundin Mining to realise the full potential of the Caserones mining operation. 

Commenting on the transaction, Peter Rockandel, CEO, said, “Upon closing of the Acquisition of Caserones, we add another long-life copper mine of material size and with significant growth potential to our portfolio, in a region in which we have considerable knowledge and experience. The Caserones team has achieved meaningful operational improvements in recent years, and we will work to unlock additional upside through our strong technical resources and existing presence in the region. The initial controlling interest increases our exposure to what we believe is a growing top-tier copper mining district. We retain the option to further increase our ownership over the next few years at an attractive price. The Acquisition further solidifies Lundin Mining’s position as a growing global producer of copper as the world shifts to a lower carbon future.”

Caserones Overview

Caserones is a significant porphyry copper-molybdenum deposit in the Atacama Region (Region III) of the northern Chilean Andean Cordillera, situated between the Maricunga and El Indio belts and is part of the emerging Vicuña copper district. It is located approximately 160 km southeast of Copiapó, 9 km from the border with Argentina, and at an altitude of approximately 4 500 mabove sea level. The operation produces copper and molybdenum concentrates from a traditional open pit mine and conventional sulphide flotation plant, as well as copper cathode from a dump leach, solvent extraction and electrowinning plant. First copper cathode was produced in 2013, followed by copper and molybdenum concentrates in 2014. Climatic conditions and the physiology of the high-cordillera of the Chilean Andes support mining operations throughout the year.

Asset Highlights:

• Mine operations – traditional open-pit truck and shovel operation utilising thirty-three haul trucks loaded by a combination of two electric rope shovels, two hydraulic shovels, and two large front-end loaders.
• Processing – conventional crush, grind and flotation processing with a nominal capacity of 105 000 tpd, producing both copper in concentrates and molybdenum in concentrates, as well as a solvent extraction and electrowinning (SX-EW) plant and leaching facilities for processing oxide and low-grade sulphide ore with a production capacity of 34.5 kt of cathode per year (96 tpd). In 2022, the concentrator plant produced 109.1 kt of copper in concentrate. In addition, 15.1 kt of copper cathodes and 3.1 kt of molybdenum in concentrate was produced.
• Concentrate – clean copper concentrate with minimal impurities. Similarly, molybdenum concentrates meet the quality standards for global sales.
• Operating cash costs – C1 cash costs of US$2.22/lb and all-in sustaining cash costs (AISC) of US$2.54/lb was reported by Caserones for 2022.
• Mineral Reserves and Resources – a “historical estimate” (as defined in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”)) for copper Proven and Probable Mineral Reserves of 892.1 Mt at an average grade of 0.33% copper containing approximately 2.9 Mt of copper and historical estimates for copper Measured and Indicated Mineral Resources of 1.595 Bt at an average grade of 0.29% copper containing 4.583 Mt of copper. A qualified person has not done sufficient work to classify these historical estimates as current Mineral Resources or Mineral Reserves and Lundin Mining is not treating the historical estimate as current Mineral Resources or Mineral Reserves. See below for further detail.
• Tailings facility (TSF) – tailings are managed in two separate facilities. The flotation tailings from the concentrator plant are classified into coarse and fine fractions. The La Brea TSF, located approximately 9 km west of the concentration plant, receives the fines and the coarse fractions are sent to the El Tambo sand stacking facility immediately adjacent to the concentrator plant. Due diligence was performed on the tailings facilities and related infrastructure, led by Lundin Mining’s Technical Services Group.
• High-quality infrastructure – well-established supporting infrastructure includes a 160 km road to Copiapó, access to maritime transportation channels for exporting concentrates and cathodes, a 220 kV power line connection to the national grid, and water rights permitted for operational use.
• Communities and employees – experienced workforce and community relations team in place enabling good relationships with local stakeholders.

Read the article online at: https://www.globalminingreview.com/mining/29032023/lundin-mining-to-acquire-a-majority-interest-in-the-caserones-copper-mine-in-chile/