Zinkgruvan (Sweden)

Operator: Lundin
Location: Sweden
Term of Stream: Life of Mine
Stream Parameters: 100% of silver production
Upfront Consideration: US$78M
Cost Quartile: 2nd
Primary Metal: Zinc

Project Overview

The Zinkgruvan mine is an underground zinc-lead-silver mine, owned and operated by Lundin Mining Corporation (“Lundin Mining”), and located approximately 250 kilometres southwest of Stockholm, Sweden. This low-cost mine has been producing on a continuous basis since 1857.

Zinkgruvan employs a conventional underground crushing, grinding and flotation milling process producing zinc and lead concentrates, which are transported via ship to smelters in Europe. Nominal production capacity of zinc-rich ores is currently 1.1 million tonnes per annum (“Mtpa”). A separate 0.3 Mtpa copper treatment line in the processing plant was commissioned during 2010. This line was further modified during 2011 to allow it the flexibility to treat zinc-lead ore as well as copper ore.

The Zinkgruvan orebodies are dominated by sphalerite and galena and are generally massive, well banded, and stratiform. Remobilization of galena and silver has occurred in response to metamorphism and deformation, and is most pronounced in the lead-rich western extension of Nygruvan and in the Burkland area. Copper stockwork mineralization has been identified in the structural hanging wall of the Burkland deposit. Chalcopyrite is the main copper mineral and occurs as coarse disseminations and patches within a marble host rock. Current mineral reserves are sufficient for a mine life in excess of 10 years and excellent opportunities for ongoing reserve and resource expansion exist at Zinkgruvan. Historically, the mine has been very successful at converting inferred resources into measured and indicated resources and subsequently into mineral reserves.

Precious Metal Purchase Agreement

In December 2004, Silver Wheaton entered into a silver purchase agreement with Lundin Mining to purchase 100% of the life of mine payable silver produced at the Zinkgruvan mine for an upfront cash payment of US$50 million in cash, 6 million Common Shares and 30 million Silver Wheaton Common Share Purchase Warrants (equal to approximately US$78 million), plus a payment equal to the lesser of US$3.90 per ounce of delivered silver (subject to an annual inflationary price adjustment) and the then prevailing market price per ounce of silver.

More Information

For more information about the Zinkgruvan mine, please visit Lundin Mining’s website at www.lundinmining.com. Cost quartile information is sourced from Wood Mackenzie byproduct cost curves for gold, zinc/lead, copper, nickel, and silver mines.

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