On April 4, Lundin and Rio Narcea announced an agreement whereby Lundin will purchase, for cash, all outstanding Rio Narcea shares and warrants for C$5 per share and $1.04 per warrant. The offer values Rio Narcea at about C$864 million. Lundin’s primary objective in the transaction is to acquire Rio Narcea’s Aguablanca nickel-copper-platinum group metals mine in Spain. Concurrent with the offer and contingent upon its success, Lundin granted an option to Red Back Mining whereby Red Back would acquire for $225 million in cash and assumption of $42.5 million in debt the Tasiast gold mine currently being developed by Rio Narcea in Mauritania.

On April 11, Lundin and Tenke Mining announced an agreement to merge the two companies by way of a plan of arrangement whereby all Tenke common shares would be exchanged for Lundin common shares on the basis of 1.73 Lundin shares for each Tenke share. Tenke’s primary asset is its 24.75% interest in the Tenke Fungurume copper-cobalt project in the Democratic Republic of the Congo (DRC) (E&MJ, Jan.-Feb. 2007, p. 16). Freeport-McMoRan Copper & Gold (formerly Phelps Dodge) holds a 57.75% interest and is the operator at Tenke Fungurume. Gécamines, the DRC state mining company, holds the remaining 17.5%. Lundin’s offer valued Tenke at about C$1.4 billion.

Tenke and Lundin Mining shareholders are scheduled to vote on the proposed transaction in mid-June 2007. Closure of the transaction is conditional upon Tenke shareholders approving the plan of arrangement by a 66.7% majority.

Lundin Mining currently owns four operating mines: Neves-Corvo in Portugal, the Zinkgruvan and Storliden mines in Sweden, and the Galmoy mine in Ireland. A fifth mine, the Aljustrel mine in Portugal, will be brought into production in the third quarter of 2007. Lundin also holds a 49% stake in the Ozernoe zinclead deposit project in Russia.

Acquisition of the Aguablanca mine fits well with the European focus of Lundin’s current mining operations; however, Lundin CEO Karl-Axel Waplan characterized the buy more ambitiously as being in line with Lundin’s goal of “establishing itself as the next major global mining house in the base metals sector.”

Lundin’s head office is in Vancouver, British Columbia, and its executive management team is in Stockholm, Sweden. Rio Narcea has its headquarters in Toronto and its operations office in Cayés-Llanera, Spain.

Aguablanca is an open-pit, nickel sulphide mine located about 100 km north of Seville. Acquisition of the mine introduces nickel into Lundin’s commodity mix. Production began at Aguablanca in 2005, and in 2006, the mine produced 14 million lb of nickel at a cash cost of $4.23/lb.

Construction of the Tasiast gold mine is well under way, with production startup scheduled for the second half of 2007 at an initial rate of 108,000 oz/y, an average grade of 3.25 g/mt gold, and estimated cash costs of $260/oz.