The acquisition will almost double Boliden’s zinc concentrates output
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 per cent, the Swedish company said Monday in a statement.
Bloomberg reported that Boliden was closing in on a deal to buy the assets last month, as it seeks to secure long-term raw-material supplies for its copper and zinc smelters in Scandinavia. Smelting margins have come under acute strain in recent months, and Boliden said on Monday that buying the mines will deliver an immediate boost to profitability.
“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 Mikael Staffas said in the statement.
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.
sThe mines are Lundin’s oldest assets and generated about 19 per cent of the company’s revenue last year.
Lundin said it will receive an upfront cash consideration of US$1.37 billion upon closing, as well as up to US$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.
Boliden’s shares saw volatile trading as markets opened on Monday, initially opening 3.1 per cent higher before swinging to a loss of as much as 1.7 per cent. The shares were up one per cent lower at 330.7 kronor at 09:40 a.m. in Stockholm.
With assistance from Mark Burton