Boliden AB (publ) (OM:BOL) has signed a definitive agreement to acquire Sociedade Mineira de Neves-Corvo, S.A. and Zinkgruvan Mining AB from Lundin Mining Corporation (TSX:LUN) for $1.52 billion on December 9, 2024. A consideration for up to $1.52 billion in cash which is cash and debt-free basis, consisting of $1.37 billion in upfront cash consideration at closing and up to $150 million in contingent consideration, Up to $50 million in contingent payments at Zinkgruvan is tied to underlying zinc prices. Boliden will pay Lundin 50% of the incremental revenue realized in each of the two calendar years between 2025 and 2026 where the average realized zinc price on an annual calendar year exceeds $1.40/lb zinc, as per the LME reference prices, provided a minimum annual production of 135 million pounds of payable zinc is achieved. Incremental revenue is calculated using total payable sales volumes of zinc for an annual calendar year period and tax affected using Sweden's current corporate income tax rate. The Zinkgruvan Contingent Payment is subject to a maximum payout of $25 million per calendar year. Total consideration at closing may also be subject to other customary adjustments in the event of non-permitted leakage from the Lock-Box. The terms of the agreement incorporate a Lock-Box completion mechanism, with the purchase price based on a cash-free and debt-free enterprise value of $1.3 billion, and assuming a normalized level of working capital. Based on the Lock-Box financial statements as of August 31, 2024, the upfront cash consideration to be paid at closing is $1.37 billion. The upfront cash consideration will also accrue interest at a 5% annual interest rate from August 31, 2024 to closing and is payable to the Company at closing. The proceeds from the Transaction will strengthen the Company's balance sheet and support its growth plans in the Vicuña District. Post completion, Boliden will operate seven mining areas and five smelters, mainly focused on the value chains for zinc and copper. Up to $100 million in contingent payments at Neves-Corvo is tied to underlying copper and zinc prices (Neves-Corvo Contingent Payment). Boliden will pay Lundin Mining 60% of the incremental revenue realized in each of the three calendar years between 2025 and 2027 where the average realized price on a semi-annual calendar period exceeds $4.50/lb copper and/or $1.30/lb zinc as per the London Metal Exchange (LME) reference prices.

The Transaction is expected to be immediately accretive to Boliden?s earnings per share from completion of the Transaction and contribute with >10% to Cash EPS. In 2023, Neves-Corvo mine generated EBITDA approximately $91 million and Zinkgruvan mine generated EBITDA approximately $104 million.

The upfront cash consideration will be fully financed through a bridge loan provided by BNP PARIBAS, RBC Capital Markets (RBC) and Skandinaviska Enskilda Banken AB (SEB), and the remaining amount in medium and long-term debt financing. Boliden?s intention is to refinance the bridge loan by securing additional medium and long-term debt financing and issuing new equity through a share issue.

The Transaction is anticipated to close in mid-2025, subject to the completion of customary conditions and regulatory approvals, including but not limited to merger control approvals by the EU Commission and approval of the Swedish Inspectorate of Strategic Products under the Swedish FDI Act, and the change of control approval by the Portuguese Directorate-General for Energy and Geology (Direção-Geral de Energia e Geologia) under the Neves-Corvo Concession Contract. The Transaction is not subject to shareholder approval or any financing conditions.

RBC Capital Markets Inc. acted as financial advisor for Boliden AB. Evercore Group L.L.C. acted as financial advisor for Boliden AB. Ernst & Young Capital Advisors, LLC acted as financial advisor to Boliden AB.