Lundin Mining to up stake in Caserones copper mine to 70%

Canada’s Lundin Mining (TSX: LUN) said on Wednesday it will increase its ownership of the Caserones copper-molybdenum mine in Chile to 70% by acquiring an additional 19% interest for $350 million. 

The miner, which now owns 51% of Caserones, is exercising an option agreed in March last year with JX Nippon Mining & Metals Corp. The deal gave Lundin the right to acquire a majority stake in the Japanese firm’s subsidiary Lumina Copper, which is Caserones’ operator.

“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,” president and CEO Jack Lundin said in the statement.

The executive noted that exercising the company’s 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,” Lundin explained.

Under the revised agreement, the Vancouver-based miner is entitled to a yearly operator fee in the form of a preferred dividend. This will increase from $21 million a year to $28 million a year, effective from the start of 2025.

Lundin said it would will initially fund the transaction from its revolving credit facility with the intention to re-finance the amount by increasing the current $800 million term loan to $1.15 billion.

Strategic asset

Caserones is expected to churn out this year 120,000 to 130,000 tonnes of copper, and 2,500 to 3,000 tonnes of molybdenum on a 100% basis.

The company recently secured a permit to expand the operation’s footprint and extend operations by another decade.

The mine is located at an altitude of 4,200m to 4,600m above sea level in Chile’s Atacama desert, just across the border from Argentina’s San Juan province.

Caserones is also close Lundin’s Candelaria (about 160km away) and only 20km from the miner’s Josemaría project in Argentina. This proximity, according to the company, introduces synergies and additional savings in terms of supply, logistics and management strategies not yet reflected in the life-of-mine plan.