Noranda and Falconbridge file suit against Boliden

Noranda (NOR) and affiliate Falconbridge (FL-T) have filed a lawsuit in the Ontario Superior Court of Justice against Swedish-Canadian miner Boliden (BOL-T) and affiliated companies regarding Boliden’s refusal to complete the sale of two projects in Chile.

Noranda and Falconbridge want Boliden to finalize the sale of the Lomas Bayas solvent extraction-electrowinning copper project and the adjacent Fortuna de Cobre copper deposit. In addition, or alternatively, the two companies will seek damages of $250 million.

The lawsuit seeks a declaration from the court that binding agreements exist between the affiliates and Boliden for the sale of the Chilean assets, as set out in the agreements executed and delivered by Noranda and Falconbridge to Boliden on May 18.

Noranda and Falconbridge maintain that Boliden breached its duty to act in good faith and execute definitive agreements consistent with the agreement it reached with Noranda.

The lawsuit asserts that Boliden violated this agreement by breaching its commitment to deal exclusively with Noranda and Falconbridge with respect to Lomas Bayas and Fortuna de Cobre.

Cash-strapped Boliden pulled out of the deal, which would have seen Falco acquire a 100% interest in Compania Minera Lomas Bayas and Compania Minera Boliden Westmin Chile, the owners of Lomas Bayas and Fortuna de Cobre.

Boliden says it was unable to “reach agreement with Noranda and Falconbridge with respect to the sale of the Chilean assets on terms satisfactory to its board of directors as provided for under the letter of intent signed by the parties on February 28.”

Subsequently, Boliden announced a restructuring plan that allows the company to issue shares to Swedish financial institutions and certain lenders. The restructuring is contingent upon Boliden retaining Lomas Bayas and Fortuna de Cobre.

In February, Noranda and Falconbridge agreed to buy Boliden’s Chilean divisions with the assets for US$175 million cash, less outstanding third-party debt obligations of US$112.7 million, plus a further US$15 million should the partners exercise their right to the Fortuna de Cobre copper deposit within five years. Noranda later changed its mind and said that it would shuffle off its stake to Falconbridge.

The addition of Lomas, which churns out about 125 million lbs. copper annually, would increase Falconbridge’s 2001 copper production by 16% to about 397,000 tonnes.

In afternoon trading on the Toronto Stock Exchange, Boliden shares were off 4 at 83, Falco stock was 45 lower at $18.30 and Noranda was trading at $29.10, 85 off its previous close.