(Bloomberg) — Boliden AB agreed to acquire zinc and copper mines in Portugal and Sweden from Lundin Mining Corp. for as much as $1.52 billion, in a deal that bolsters ore supplies for its smelters.
The acquisition of Neves-Corvo in Portugal and Zinkgruvan in Sweden will almost double Boliden’s zinc concentrates output, while increasing production of copper concentrates by 43%, the Swedish company said Monday in a statement. The purchase will boost margins and bolster raw-material supplies for the firm’s smelters at a time of intensifying competition for mined ores.
“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,” Boliden Chief Executive Officer Mikael Staffas said in the statement.
The deal will cement Boliden’s position as one of Europe’s biggest producers of zinc, a metal mainly used in galvanizing steel, guaranteeing long-term mine supply for the company’s smelting operations in Scandinavia.
Boliden said the upfront cash payment would be financed through a bridge loan. About half of that will be refinanced through a share issue, with the remaining amount taken out via medium and long-term debt financing. The miner expects to complete the transaction by the middle of next year, adding the deal is expected to be immediately earnings accretive.
Lundin put its Zinkgruvan and Neves-Corvo mines on sale earlier this year as the Vancouver-based company turns its focus to Latin America. The mines are Lundin’s oldest assets and generated about 19% of the company’s revenue last year.
Lundin said it will receive an upfront cash consideration of $1.37 billion upon closing, as well as up to $150 million if certain conditions of the deal are satisfied. The company will use the proceeds from the deal to strengthen its balance sheet and support growth plans in the Vicuna District, an emerging copper and gold area in Argentina and Chile.
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