Rio takeover by Lundin

Lundin Mining and Rio Narcea Gold Mines have entered into a definitive support agreement pursuant to which Lundin will offer to acquire all of the outstanding common shares of Rio Narcea on a fully diluted basis and all of the outstanding warrants of Rio Narcea by way of a take-over bid for C$5.00 cash per share and C$1.04 cash per warrant.

The Board of Directors of Rio Narcea unanimously agreed that the offer is fair and will recommend that shareholders tender to the offer. Rio’s financial advisor has provided an opinion to the Board of Directors of Rio Narcea that the consideration to be received by the shareholders under the offer is fair from a financial point of view to such shareholders. Each senior officer and each member of the Board of Directors of Rio Narcea has agreed to support the offer and to tender their shares to the offer, which together with shares owned by certain trusts associated with directors and management, represents some 5% of the shares.

Karl-Axel Waplan, President and CEO of Lundin Mining, commented, “This transaction is in line with our corporate goals to grow the company, increase value for our shareholders and establish ourselves as the next major global mining house in the base metals sector. The acquisition will add production, cash flow, resources, and synergistic assets to the Lundin Mining portfolio while introducing nickel to the Lundin Mining commodity mix.”

Chris von Christierson, Chairman and CEO of Rio Narcea, said, “The directors and management of Rio Narcea believe this is in the best interest of Rio Narcea and is a fair offer to all of our Shareholders. We are supportive of it.”

Haywood Securities acted as financial advisor to Lundin Mining and McCullough O’Connor Irwin is its legal advisor. The financial advisor to Rio Narcea is BMO Capital Markets and legal advisor is Fraser Milner Casgrain.

Rio Narcea has entered into a support agreement with Lundin Mining that provides for, among other things, a non-solicitation covenant on the part of Rio Narcea, a right in favour of Lundin Mining to match any competing offers, and a non-completion fee payment of C$25 million to be paid by Rio Narcea.

In conjunction with the Offer, Lundin Mining has arranged an $800 million senior credit facility with the Bank of Nova Scotia, which is for general corporate purposes.

Concurrent with the offer and contingent upon the success of the takeover bid, Red Back Mining has signed an option agreement with Lundin Mining to acquire the Tasiast gold mine from Lundin Mining in consideration for $225 million in cash and assumption of $42.5 million in debt related to the Tasiast gold mine.