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Press release from Marketwire

Lundin Mining Responds to Correction of Material Information by Equinox

Tuesday, April 12, 2011

Lundin Mining Responds to Correction of Material Information by Equinox16:35 EDT Tuesday, April 12, 2011TORONTO, ONTARIO--(Marketwire - April 12, 2011) -Lundin Mining Corporation ("Lundin Mining" or the "Company") (TSX:LUN)(OMX:LUMI) today commented on the retraction by Equinox Minerals Limited ("Equinox") of material information on its Lumwana project that Lundin Mining believes fundamentally undermines Equinox's rationale for, and risks inherent, in its unsolicited bid for Lundin Mining. On April 8, 2011 Equinox issued a news release which attempted to address deficiencies in the disclosure in its Take-over Bid Circular dated March 7, 2011. As part of this news release, Equinox retracted material information regarding previously disclosed expansion plans at the Lumwana mine that affected Equinox's share price prior to the announcement of the unsolicited bid. Lumwana is Equinox's only operating mine.In its Directors' Circular dated March 20, 2011, the Board of Lundin Mining specifically raised its concerns with the Lumwana project and the disclosure surrounding this project given the timing of the Equinox bid. In stating that the Equinox bid was highly opportunistic given the timing of the bid following the February 2, 2011 news release, the Directors' Circular stated, "The proposed Lumwana expansion plan is not supported by mineral reserves or mineral resources and is not based on pre-feasibility or feasibility studies." and "The basis for Equinox's expansion projections are not NI 43-101 compliant." Commenting on the retraction, Mr. Phil Wright, Chief Executive Officer of Lundin Mining, said, "It is clear that the Board's concerns were well founded. I do not see how you can retract information as fundamental as a life of mine statement that had a material effect on your share price without considering withdrawal of your bid."Nor do I see how Equinox can continue to justify using an unsupported and speculative projection of 500,000 tonnes of copper per annum as their growth forecast," Mr. Wright said.Background to the RetractionOn February 2, 2011 Equinox issued a news release entitled "Equinox provides update on Lumwana expansion strategy". According to Equinox's Take-over Bid Circular dated March 7, 2011, it was considering a transaction with Lundin Mining prior to making the expansion disclosure. Equinox's share price increased 10.3% on the day of the announcement and Equinox then traded at record highs prior to announcing the unsolicited bid for Lundin Mining. In that news release Equinox stated that based on assumed future mineral resource exploration success they were increasing the size (20 to 45 million tonnes per annum) of the planned Lumwana expansion, with the expected mine life extended to be in the range of 27 to 37 years and annual copper production increased significantly to 260,000 tpa copper production beginning in 2015. In other words, on the basis of the assumed mining inventory, Equinox announced it expected to approximately double Lumwana production. Under applicable Canadian securities laws, the assumed mining inventory is a conceptual exploration target which cannot form the basis for an economic analysis.This assumed mining inventory underlies Equinox's claim that a combined Equinox and Lundin Mining is expected to produce 500,000 tonnes of copper per annum by 2016. This claim is central to Equinox's assertion that the combined company will have a superior growth profile, a key purported benefit of the transaction identified by Equinox. The RetractionThe April 8, 2011 retraction states in part:"Equinox wishes to clarify and retract certain publicly disclosed technical information previously disseminated...... Equinox wishes to withdraw the life of mine statement and advises readers not to rely on it." [Emphasis added.] In addition to disregarding Equinox' statements on the life of mine, Lundin Mining does not believe that its shareholders should rely on Equinox's claim that it will double Lumwana production on an assumed mining inventory. In addition to the foregoing retraction, Equinox also provided corrective and supplemental disclosure relating to the impact of the acquisition debt on the financial position of a combined Lundin Mining/Equinox entity. This supplemental disclosure confirms many of the concerns regarding the highly leveraged capital structure of Equinox following the acquisition that the Board of Lundin Mining highlighted in its Directors' Circular of March 20, 2011. For example, the restated proforma financial statements show annual net income of Equinox following the acquisition of $68.2 million versus the net income of $324 million (nine month period) that was disclosed in the pro forma financial statements included with the first version of Equinox's Takeover Bid Circular.These revised pro forma financial statements also show total annual expenses of $665 million versus $46 million (nine month period) in the previous pro forma statements. These expenses include $328 million in annual interest costs on the acquisition debt; an amount that was not previously disclosed and which represents an effective annual interest rate of 10.25% on debt of $3.2 billion. Lundin Mining PositionThe Board recommends to Lundin Mining shareholders that they REJECT the Unsolicited Offer and DO NOT TENDER their Lundin Mining shares for the following reasons:The Unsolicited Offer is inadequate from a financial point of view to Lundin Mining shareholders; The pro-forma debt-to-equity ratio of the combined Equinox and Lundin Mining is excessive and will present increased financial risk and a more highly leveraged capital structure than Lundin Mining and peer group companies. In addition, the lenders to Equinox will have considerable influence over the business decisions of a combined Equinox and Lundin Mining; Substantially all of Equinox's and Lundin Mining's existing cash balances and projected near-term cash flow will be utilized to pay for: lenders' fees; interest charges; and the principal repayments of the debt incurred to fund the cash portion of the consideration payable under the Unsolicited Offer; The Unsolicited Offer would result in a company with increased exposure to geopolitical risks due to the location of Equinox assets in Zambia and Saudi Arabia; The Unsolicited Offer is highly opportunistic. Equinox's shares were trading at or near the all-time high share price when Equinox announced the Unsolicited Offer, which followed a news release made earlier in February, 2011 on its strategy to expand the Lumwana project. The proposed Lumwana expansion plan is not supported by mineral reserves or mineral resources and is not based on pre-feasibility or feasibility studies. To date the Lumwana mine has significantly under-performed original feasibility study projections disclosed by Equinox; There are no strategic benefits for Lundin Mining shareholders under the Unsolicited Offer. The acquisition results in a company with high Africa and Middle East concentration and few, if any synergies with Lundin Mining's business. The Board has reservations about the experience of the management of Equinox to operate a multi-mine company with projects and mines spread across seven countries. The Unsolicited Offer is highly conditional and has a substantial risk regarding completion without additional compensation for such risk. Conditions are subject to Equinox's lenders discretion resulting in Equinox, in many instances, not being the ultimate decision-maker. The Unsolicited Offer may be a violation of Section 5 of the U.S. Securities Act of 1933, as amended. Lundin Mining's directors, officers and certain shareholders have confirmed that they will not tender their Common Shares to the Unsolicited Offer. Shareholders do not need to take any action in response to Equinox's proposed offer at this time.About Lundin MiningLundin Mining Corporation is a diversified base metals mining company with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel. In addition, Lundin Mining holds a development project pipeline which includes an expansion project at its Neves‐Corvo mine along with its equity stake in the world class Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo.On Behalf of the Board,Phil Wright, President and CEOForward Looking StatementsCertain of the statements made and information contained herein is "forward-looking information" within the meaning of the Ontario Securities Act or "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934 of the United States. Forward-looking statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to foreign currency fluctuations; risks inherent in mining including environmental hazards, industrial accidents, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and reserves and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; actual ore mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations; uncertain political and economic environments; changes in laws or policies, foreign taxation, delays or the inability to obtain necessary governmental permits; and other risks and uncertainties, including those described under Risk Factors Relating to the Company's Business in the Company's Annual Information Form and in each management discussion and analysis. Forward-looking information is in addition based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of copper, nickel, lead and zinc; that the Company can access financing, appropriate equipment and sufficient labour and that the political environment where the Company operates will continue to support the development and operation of mining projects. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements.FOR FURTHER INFORMATION PLEASE CONTACT: Sophia ShaneLundin Mining CorporationInvestor Relations North America+1-604-689-7842ORJohn MiniotisLundin Mining CorporationSenior Business Analyst+1-416-342-5560+1 416 348 0303 (FAX)ORRobert ErikssonLundin Mining CorporationInvestor Relations Sweden+46 8 545 015 50www.lundinmining.com