Lundin Mining (TSX: LUN) is buying a majority stake in the Caserones copper-molybdenum mine in Chile for about US$950 million, adding to a flow of deals as miners seek to increase their exposure to the metal, crucial for the world's energy transition.
The miner will acquire a 51% stake in the company that operates Caserones from its owner Japan's JX Nippon Mining & Metals Corp.
Lundin said it will pay US$800 million in cash upfront, plus US$150 million over six years from the deal's completion.
The deal also gives the Toronto-based miner the right to purchase an additional interest of up to 19% in the copper-molybdenum mine for US$350 million over five years.
"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," Lundin's chief executive, Peter Rockandel, said in a statement.
JX Nippon Mining & Metals said the decision to sell part of Lumina Copper, its subsidiary and operator of Caserones, was part of an asset portfolio review.
The firm became the majority owner of the Chilean mine in November 2020, when it acquired the stakes from its partners in the operation Mitsui & Co and Mitsui Mining and Smelting.
The operation has suffered a series of ramp-up delays and cost overruns since it began producing in May 2014. Its annual production of roughly 100,000 tonnes still falls short of the 150,000 tonnes a year intended when construction of the mine began.
Completion of the deal is expected by June 2023, Lundin said.
Caserones is located at an altitude of 4,200 to 4,600 metres above sea level in Chile's Atacama desert, close to the Argentina border.
Lundin Mining grabbed headlines last year when a sinkhole opened up near one of the company's mines in Chile - Alcaparrosa.