The acquired company owns the Brazil-based Chapada copper-gold mine, which began production in 2007 and has additional gold production developed by Yamana.
The mine is expected to produce 54.5kt of copper and 100koz of gold this year. Last year, it produced about 58.6kt of copper and 121koz of gold.
Under the agreement, Yamana will receive $800m in cash at closing from Lundin.
The company will also receive a contingent consideration of up to $125m over a five-year period and another $100m on the potential construction of a pyrite roaster to optimise the operation.
Lundin Mining president and CEO Marie Inkster said: “The acquisition of Chapada complements Lundin Mining’s existing portfolio of high-quality mines and highlights our focus on disciplined capital allocation to create long-term shareholder value.
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“The addition of Chapada further solidifies Lundin Mining’s position as a leading intermediate base metals producer with high-quality low-cost copper exposure.”
With the sale of the Chapada mine, Yamana will have a production platform of five mines in the Americas, comprising two sites in Chile, and one in Canada, Brazil and Argentina.
Lundin plans to use its current cash balance and a part of its $550m revolving credit facility to fund the acquisition.
According to Yamana’s fourth quarter and full-year 2018 results, several initiatives are underway to further improve the performance of the Chapada processing plant following optimisation projects completed in 2016 and 2017.
The next phase of the optimisation involves expansion of the scavenger flotation circuit and is expected to increase copper and gold recoveries by a further 1.5% to 2%.
Commissioning of the plant is expected in the second quarter of this year.
Subject to standard regulatory and third-party approvals, as well as other customary closing conditions, the transaction is expected to close in the third quarter of this year.