Agreement has been reached for the sale of Lundin Mining’s subsidiary Pirites Alentejanas (PA) owner of the Aljustrel mine in Portugal to MTO SGPS, SA. Closure of the agreement is expected by the end of January 2009, subject to the completion of certain contractual obligations and a favorable decision from the Portuguese Securities Market Commission to withdraw PA from public status. The agreement involves the recapitalisation of PA prior to the sale of the company’s shares in PA to MTO, along with certain loans to PA by an associated company, for nominal consideration. The Portuguese Government has indicated its support for the sale.

The Aljustrel zinc mine is located approximately 40 km northwest of Lundin’s Neves-Corvo mine in Portugal. Following a detailed study of production alternatives for the Aljustrel zinc/lead mine, Lundin had placed the mine on care and maintenance. At the time this was done, zinc prices had dropped nearly 70% since the restart of Aljustrel was announced and around 50% since the official opening in May of 2008.

Aljustrel was conceived primarily as a zinc project with limited copper resources to be extracted at the end of the mine life. Recent exploration drilling and resource upgrades had increased the quantity of copper resources available for mining. This increase, coupled with the current uneconomic status of the zinc resources, had led to the examination of a mining plan that focused initially on the extraction of copper resources only. Whilst a copper operation was technically possible, Lundin’s studies indicated that this option was also economically unviable at today’s metal prices.

Aljustrel was planned to produce 80,000 t/y of contained metal in concentrates. It cost $225 million to build. Pre-production losses and shutdown costs were expected to amount to $80 million. On-going annual care and maintenance costs are estimated to be in the order of €4 million.