Lundin Mining Corp. has entered into an agreement to sell its interest in TF Holdings Ltd. to an affiliate of BHR Partners, a Chinese private equity firm, for $1.136 billion in cash and contingent consideration of up to $51.4 million. It is equal to the implied value of the company’s stake in TF Holdings based on the transaction between Freeport-McMoRan and China Molybdenum Co. Ltd. announced on May 9.
TF Holdings owns an 80% interest in Tenke Fungurume Mining S.A. Lundin Mining holds a 30% stake in TF Holdings, so an effective 24% interest in Tenke.
“The decision to sell our minority interest in Tenke has been arrived at following a careful and lengthy consideration of all options open to us,” said Paul Conibear, president and CEO, Lundin Mining. “It was a difficult decision, respecting the 20 years of Lundin involvement in Tenke, and the special nature of this world-class asset. The sale will enable Lundin Mining to advance its strategy to incrementally grow the company with projects and operations we control, while maintaining a strong balance sheet.
“We want to thank our long standing partners, Freeport and Gécamines, who have been instrumental in the development of Tenke into a world-class operation,” Conibear said. “We are confident that the new Tenke partners will continue to build on Tenke’s highly successful record and realize the future development potential of the properties.”
The contingency consideration consists of $25.7 million if the average copper price exceeds $3.50/lb and $25.7 million if the average cobalt price exceeds $20/lb, both during a 24-month period beginning on January 1, 2018.
Lundin Mining has waived its right of first offer to acquire Freeport’s indirect interest in TF Holdings. The transaction is subject to the receipt of certain regulatory approvals, the completion of Freeport’s sale of its interest in TF Holdings to CMOC and other customary closing conditions. A termination fee of $100 million, which has been secured by a letter of credit that has been received by the company, is payable to Lundin Mining in certain circumstances, including upon termination of the transaction due to the failure to obtain necessary regulatory approvals. The transaction is expected close in the first half of 2017.