TORONTO, ONTARIO -- (Marketwire) -- 02/23/09 -- Lundin Mining Corporation (TSX: LUN)(NYSE: LMC)(OMX: LUMI) ("Lundin Mining" or the "Company") announced today that it has entered into an agreement with HudBay Minerals Inc. ("HudBay") whereby the companies have agreed to terminate the previously announced arrangement agreement dated November 21, 2008 (the "Arrangement Agreement"), pursuant to which HudBay agreed to acquire all of the outstanding shares of Lundin Mining subject to the satisfaction of certain conditions (the "Arrangement").
HudBay and Lundin Mining have determined that it is unlikely that HudBay's shareholders will approve the Arrangement. In order to avoid the time and expense of preparing for and holding the HudBay shareholders meeting, HudBay and Lundin Mining have agreed to terminate the Arrangement Agreement. In consideration of terminating the Arrangement Agreement and in recognition of HudBay's 19.9% ownership interest in Lundin Mining, the companies have agreed to the following terms in the termination agreement:
- As long as HudBay owns 10% or more of the outstanding common shares of Lundin Mining, HudBay shall be entitled to designate one nominee acceptable to Lundin for inclusion on the management slate of nominees for election to the Lundin Mining board of directors;
- As long as HudBay owns 10% or more of the outstanding common shares of Lundin Mining, HudBay shall have the right to maintain its then current level of ownership of the common shares of Lundin Mining in connection with, and as a part, of any public offering or private placement of Lundin Mining common shares by Lundin Mining;
- For a period of six months following the date of the termination agreement, HudBay shall have a right of first offer in connection with any proposed sale or transfer of material assets of Lundin. This right in no way binds Lundin to accept any offer from HudBay;
- A mutual release in respect of any and all rights in connection with or arising from the Arrangement Agreement; and
- HudBay and Lundin Mining are bound by a reciprocal standstill covenant for a period of twelve months from the date of the termination agreement.
In addition, HudBay will continue to be bound by the terms of the subscription agreement under which HudBay acquired its holding in Lundin Mining. The terms include restrictions on voting and limiting the amount of shares that can be disposed of in any six month period.
Commenting on the agreement reached with HudBay, Mr. Phil Wright, President and Chief Executive of Lundin Mining, said, "We are pleased to have agreed this release with HudBay.
