TORONTO, ONTARIO -- (Marketwire) -- 01/21/13 -- Lundin Mining Corporation (TSX: LUN)(OMX: LUMI) ("Lundin Mining" or the "Company") is pleased to announce that it has through a newly formed joint venture entity entered into a definitive agreement with OM Group, Inc. (NYSE: OMG) to acquire a large scale cobalt chemical refinery located in Kokkola, Finland, and the related sales and marketing business (collectively "Kokkola"). The acquisition will provide direct end-market access for the cobalt hydroxide production from Tenke Fungurume copper/cobalt mine ("Tenke"). Lundin Mining will hold an effective 24 percent ownership interest in the joint venture, with Freeport-McMoran Copper & Gold Inc. ("Freeport") (NYSE: FCX) holding an effective 56 percent ownership interest and acting as operator of the joint venture, and La Generale des Carrieres et des Mines (Gecamines), the Congolese state mining company, holding a 20 percent interest. Under the terms of the agreement, initial consideration of US$325 million, on a 100% basis, (subject to customary working capital adjustments) will be paid at closing, with the potential for additional consideration of up to US$110 million payable over a period of three years, contingent upon the achievement of revenue-based performance targets. The acquisition is subject to customary closing conditions, including required regulatory approvals, and is expected to close in the second quarter of 2013.
Lundin Mining and Freeport will together fund the initial acquisition costs on a 30/70% basis, which amounts will be repaid in full prior to any distributions. Accordingly, the Company will pay US$97.5 million (subject to customary working capital adjustments) towards the initial purchase consideration and up to US$33 million over a three year period in contingent payments to satisfy its 30% share of the total purchase consideration.
Commenting on the transaction, Mr. Paul Conibear, President and CEO of Lundin Mining said, "The acquisition of Kokkola will enable immediate entry and vertical value-added integration to the refined cobalt market and will ensure that all of the cobalt product from Tenke can be processed and sold in a competitive market. We are fortunate to be acquiring a market leader in the cobalt chemical business with a fully operating and staffed refining operation in Finland and significant global sales presence. We are pleased to be extending our partnership with Freeport and Gecamines further into the cobalt market."
Kokkola, located on the Baltic Sea in Kokkola, Finland, processes unrefined cobalt and related metals and manufactures advanced inorganic products for use in a variety of applications in fast-growing end use markets. Kokkola is the world's largest supplier of cobalt chemicals and powders for use in:
-- batteries: cobalt raw materials and precursors for rechargeable batteries-- chemicals & ceramics: cobalt inorganic materials for a variety of chemical, catalyst, blue pigment and other applications-- powder metallurgy: cobalt fine powders for the hard metal and diamond tooling industries