Canada's Lundin Mining (TSX:LUN) has agreed to acquire a copper-gold operation in Brazil from fellow miner Yamana Gold (NYSE: AUY), (TSE: YRI) in a $1 billion-deal as it looks to beef up its base metals portfolio.
The Chapada mine, in the northwest Brazilian state of Goi??s, began production in 2007 and is expected to churn out about 54,500 tonnes of copper and 100,000 ounces of gold this year.
The Chapada copper-gold mine, in the northwest Brazilian state of Goi??s, began production in 2007.Lundin said the deal would immediately add to its earnings and operating cash flow per share, while increasing its annual copper output by more than 25%.
Yamana will receive $800 million in cash once the sale is closed, and contingent payments totalling about $225 million, the companies said.
"While Chapada has been a valued asset for Yamana, the sale transaction delivers a significant gain, delivers a high after-tax return and financially repositions the company with a significant and immediate improvement to overall financial flexibility," Yamana's chief executive Peter Marrone said in a statement.
Lundin said it would fund the acquisition from its current cash balance and a part of its $550 million revolving credit facility.