Lundin Mining Corp. is buying a copper gold mine from Yamana Gold Inc. worth US$1-billion, the latest big deal during a hectic period for mergers and acquisitions in the mining sector.
Toronto-based Lundin is buying the Chapada mine in Brazil that produced just under 59,000 tonnes of copper last year and 121,000 ounces of gold.
Cash-rich Lundin has been vocal about wanting to do a deal and came close last year. The sale of Chapada will also help struggling Yamana improve its balance sheet and pay down some of its debt.
Yamana will receive US$800-million in cash right away and stands to earn up to an additional US$225-million if gold trades above certain levels and if Lundin builds an additional processing facility at Chapada.
Chapada went into production in 2007 and Yamana has been studying whether to expand the facility, which would entail a significant capital infusion.