LUNMF Lundin Mining Corp (PK)

Lundin Mining Corp. said Tuesday it had agreed to sell its minority stake in African copper mine Tenke Fungurume Mining S.A. to a Chinese private-equity firm for $1.14 billion in cash.

The sale is a result of Toronto-based Lundin's review of strategic options for its interest in TF Holdings Ltd., the Bermuda holding company that indirectly owns an 80% interest in the Tenke mine in the Democratic Republic of the Congo.

Lundin holds a 30% interest in TF Holdings, and an effective 24% stake in the mining operation. Freeport-McMoRan Inc. currently owns the remaining 70% stake in TF Holdings, but is in the process of selling that to China Molybdenum Co.

"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," Lundin Chief Executive Paul Conibear said in a release.

Lundin's sale, to an affiliate of China's BHR Partners, could also include up to another $51.4 million, depending on future average copper and cobalt prices.

As a result of the agreement, Lundin said it has waived its right to acquire Freeport-McMoRan's 70% stake in the holding company, and effective 56% stake in Tenke. In May, U.S. mining company Freeport agreed to sell its stake in the holding company to China Molybdenum for $2.65 billion. Lundin had the right to acquire Freeport's stake at the same price and conditions offered by the Chinese mining-and-processing firm.

Lundin's deal includes a termination fee of $100 million, payable by the private-equity firm under certain circumstances. It said it expects the sale to close in the first half of next year.

The Tenke mine, whose remaining 20% is owned by state miner La Gé né rale des Carrié res et des Mines, is about 110 miles northwest of Lubumbashi in the Katanga province.

Write to Judy McKinnon at judy.mckinnon@wsj.com

(END) Dow Jones Newswires

November 15, 2016 09:25 ET (14:25 GMT)

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