on the adoption of the Rights Plan, Mr. Phil Wright, the President and CEO of
Lundin Mining said, "This plan has been put in
place to ensure that we have adequate time to explore all alternatives to
bring value to Lundin shareholders. Our exploration
of alternatives starts immediately and we will be actively and aggressively
looking for the best value transaction.
"The Rights Plan ensures that we can do this in a considered and
structured way and get the best result for our shareholders" Mr. Wright
In a previous release earlier today, Lundin Mining
announced that it has mutually terminated its proposed merger with Inmet Mining Corporation ("Inmet")
and has agreed that Inmet's right to a break fee of
$120 million will be preserved in connection with the unsolicited offer of
Equinox Minerals Limited ("Equinox").
The Board continues to recommend that shareholders reject the Equinox offer,
on its own merits, for the reasons detailed in the Directors' Circular mailed
to registered shareholders on March 21, 2011 and available on SEDAR at www.sedar.com.
Commenting on the plans to pursue alternative transactions, Mr. Lukas Lundin, Chairman of Lundin
Mining said, "Our hands have been completely tied in defending against
the low ball, risky Equinox bid because of the Inmet
"Having agreed to terminate with Inmet, we can
now pursue new alternatives to significantly improve shareholder value and
get a proper premium if we do a change of control transaction.
"I am not against selling if it achieves an excellent financial return
to shareholders but I will not support selling at bargain prices" Mr. Lundin said.
Scotia Capital, as financial advisors, and Cassels
Brock & Blackwell LLP, as legal advisor, will continue to assist the
Company in responding to the unsolicited offer announced by Equinox.
The Board will make every effort to ma ximize value
for the benefit of Lundin Mining shareholders and
will update shareholders from time to time of its efforts.
Details of the Rights Plan
The Rights Plan is intended to ensure that in the context of the unsolicited
take-over proposal for Lundin Mining common shares
announced by Equinox, the Board has sufficient time to identify, develop and
negotiate alternatives to maximize shareholder value. The Rights Plan also
seeks to ensure the fair treatment of shareholders and to provide them with
adequate time to properly assess any potential take-over bid without undue
Prior to the termination of the proposed merger with Inmet,
the Company has been subject to customary "no shop" clause
obligations under the terms of the arrangement agreement with Inmet which has rendered the Company unable to seek other
value enhancing alternatives to Equinox's unsolicited offer.
The Board has authorized the issuance of one right in respect of each common
share of the Company outstanding at 5:00 p.m. (Eastern Time) on March 29,
2011 and each share issued thereafter. The rights will become exercisable if
a person, together with its affiliates, associates and joint actors, acquires
or announces an intention to acquire beneficial ownership of common shares
which, when aggregated with its current holdings, total 20% or more of the
outstanding common shares of the Company (determined in the manner set out in
the Rights Plan). Following the acquisition of 20% or more of the outstanding
common shares, each right held by a person other than the acquiring person and
its affiliates, associates and joint actors would, upon exercise, entitle the
holder to purchase common shares at a substantial discount to the market
price of the common shares at that time.
The Board has the discretion to defer the time at which the rights become
exercisable (which it has done in respect of the proposed Equinox offer) and
to waive the application of the Rig hts Plan and/or
redeem the Rights if the Board determines it is in the best interests of Lundin Mining to do so.
The Rights Plan permits the acquisition of control of Lundin
Mining through a "permitted bid", a "competing permitted
bid" or a negotiated transaction. A permitted bid is one that, among
other things, is made to all holders of common shares for all of their
shares, is open for a minimum of 90 days and is subject to an irrevocable
minimum tender condition of at least 50% of the common shares held by
independent shareholders. The Rights Plan will expire at 5:00 p.m. (Eastern
Time) on May 31, 2011.
Although the Rights Plan is effective immediately, it remains subject to
acceptance by the Toronto Stock Exchange. A copy of the Rights Plan will be
available at www.sedar.com.
The Equinox Offer
The Board recommends to Lundin Mining shareholders
that they REJECT the Unsolicited Offer and DO NOT TENDER their Lundin Mining shares for the following reasons:
� The Unsolicited Offer is inadequate from a financial point of view to Lundin Mining shareholders;
� The pro-forma debt-to-equity ratio of the combined Equinox and Lundin Mining is excessive and will present increased
financial risk and a more highly leveraged capital structure than Lundin Mining and peer group companies. In addition, the
lenders to Equinox will have considerable influence over the business
decisions of a combined Equinox and Lundin Mining;
� Substantially all of Equinox's and Lundin
Mining's existing cash balances and projected near-term cash flow will be
utilized to pay for: lenders' fees; interest charges; and the principal
repayments of the debt incurred to fund the cash portion of the consideration
payable under the Unsolicited Offer;
� The Unsolicited Offer would result in a company with increased exposure to
geopolitical risks due to the location of Equinox assets in Zambia and Saudi
� The Unsolicited Offer is highly opportunistic. Equinox's shares were
trading at or near the all-time high share price when Equinox announced the
Unsolicited Offer, which followed a news release made earlier in February 2011
on its strategy to expand the Lumwana project. The
proposed Lumwana expansion plan is not supported by
mineral reserves or mineral resources and is not based on pre-feasibility or
feasibility studies. To date the Lumwana mine has
significantly under-performed original feasibility study projections
disclosed by Equinox;
� There are no strategic benefits for Lundin Mining
shareholders under the Unsolicited Offer. The acquisition results in a
company with high Africa and Middle East concentration and few, if any
synergies with Lundin Mining's business.
� The Board has reservations about the experience of the management of
Equinox to operate a multi-mine company with projects and mines spread across
� The Unsolicited Offer is highly conditional and has a substantial risk
regarding completion without additional compensation for such risk.
Conditions are subject to Equinox's lenders discretion resulting in Equinox,
in many instances, not being the ultimate decision-maker.
� The Unsolicited Offer may be a violation of Section 5 of the U.S.
Securities Act of 1933, as amended.
� Lundin Mining's directors, officers and certain
shareholders have confirmed that they will not tender their Common Shares to
the Unsolicited Offer.
Shareholders do not need to take any action in response to Equinox's proposed
offer at this time.
About Lundin Mining
Lundin Mining Corporation is a diversified base
metals mining company with operations in Portugal, Sweden, Spain and Ireland,
producing copper, zinc, lead and nickel. In addition, Lundin
Mining holds a development project pipeline which includes an expansion
project at its Neves- Corvo
mine along with its equity stake in the world class Tenke
Fungurume copper/cobalt mine in the Democratic
Republic of Congo.
On Behalf of the Board,
President and CEO
For further information, please contact:
Sophia Shane, Investor Relations North America: +1-604-689-7842
John Miniotis, Senior Business Analyst:
Robert Eriksson, Investor Relations Sweden: +46 8 545 015 50
Forward Looking Statements
Certain of the statements made and information contained herein is
"forward-looking information" within the meaning of the Ontario
Securities Act or "forward-looking statements" within the meaning
of Section 21E of the Securities Exchange Act of 1934 of the United States.
Forward-looking statements are subject to a variety of risks and
uncertainties which could cause actual events or results to differ from those
reflected in the forward-looking statements, including, without limitation,
risks and uncertaint ies
relating to foreign currency fluctuations; risks inherent in mining including
environmental hazards, industrial accidents, unusual or unexpected geological
formations, ground control problems and flooding; risks associated with the
estimation of mineral resources and reserves and the geology, grade and
continuity of mineral deposits; the possibility that future exploration,
development or mining results will not be consistent with the Company's
expectations; the potential for and effects of labour
disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; actual ore mined
varying from estimates of grade, tonnage, dilution and metallurgical and
other characteristics; the inherent uncertainty of production and cost
estimates and the potential for unexpected costs and expenses, commodity
price fluctuations; uncertain political and economic environments; changes in
laws or policies, foreign taxation, delays or the inability to obtain
necessary governmental permits; and other risks and uncertainties, including
those described under Risk Factors Relating to the Company's Business in the
Company's Annual Information Form and in each management discussion and
analysis. Forward-looking information is in addition based on various
assumptions including, without limitation, the expectations and beliefs of
management, the assumed long term price of copper, nickel, lead and zinc;
that the Company can access financing, appropriate equipment and sufficient labour and that the political environment where the
Company operates will continue to support the development and operation of
mining projects. Should one or more of these risks and uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in forward-looking statements.
Accordingly, readers are advised not to place undue reliance on