In particular, the Merger Offer is not being made, directly or indirectly in, into or from Australia, Japan, South Africa, the United States or any other jurisdiction where it would be unlawful to do so, or by the use of the mails, or by any means or instrumentality (including, without limitation, telephonically or electronically) of interstate or foreign commerce, or by any facility of a national securities exchange of Australia, Japan, South Africa, the United States or any other jurisdiction where it would be unlawful to do so, and the Merger Offer will not be capable of acceptance by any such means, instrumentality or facility from within Australia, Japan, South Africa, the United States or any jurisdiction where it would be unlawful to do so. Notwithstanding the foregoing restrictions, Lundin Mining reserves the right to permit the Merger Offer to be accepted, if in its sole discretion, it is satisfied that the transaction in question is exempt from or not subject to the legislation or regulation giving rise to the restrictions in question.

Neither the existing Lundin Mining Shares, existing Lundin Mining SDRs nor the Lundin Mining SDRs to be created in connection with the Merger Offer have been, or will be, registered under the US Securities Act or under the securities laws of any state of the United States, or any state, province or territory of Australia, Japan or South Africa and they may not, subject to certain limited exceptions, be offered or sold directly or indirectly within Australia, Japan or South Africa or to any US Persons. This document does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for Lundin Mining Shares or Lundin Mining SDRs in any jurisdiction in which such offer or solicitation would be unlawful.

This paragraph should be read together with the notes on the accompanying Form of Acceptance and Parts A, B and C of Appendix I to this document. The instructions on the accompanying Form of Acceptance are deemed to form part of the terms of the Offer.

To accept the Merger Offer you must complete and return the Form of Acceptance in accordance with these instructions and the instructions printed on the Form of Acceptance.

You should note that if you hold ARCON Shares in both certificated and uncertificated form (that is to say, in CREST), you should complete a separate Form of Acceptance for each form of holding. In addition, you should complete separate Forms of Acceptance for ARCON Shares held in uncertificated form but under different Member Account IDs and for ARCON Shares held in certificated form but under different account designations. Additional Forms of Acceptance are available from Capita Corporate Registrars Plc, PO Box 7117, Dublin 2, Ireland or by telephoning (01) 810 2453, or if you are calling from outside Ireland +353 1 810 2453, or by facsimile request to +353 1 810 2422.

To accept the Offer you must complete Box 1 and 4 and if your ARCON shares are held in CREST, Box 3 on the Form of Acceptance. In all cases, you must sign Box 4 of the accompanying Form of Acceptance in the presence of an independent witness, who should also sign in accordance with the instructions printed thereon.

If you wish to elect for the Cash Alternative you must complete the Form of Acceptance as explained above and in addition you must complete Box 2 in accordance with the instructions printed therein.

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Any Form of Acceptance received in an envelope post-marked Australia, Japan, South Africa or the United States may be rejected as an invalid acceptance of the Merger Offer. For further information on overseas shareholders, see paragraph 21 of this letter and paragraph 8 of Part B of Appendix I to this document.

If your ARCON Shares are in uncertificated form, you should insert in Box 3 of the Form of Acceptance, the Participant ID and the Member Account ID under which such ARCON Shares are held by you in CREST and otherwise complete and return the Form of Acceptance in the manner set out in paragraphs 21 (a) and 21 (b) above.

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In addition, you should take (or procure to be taken) the action set out below to transfer the ARCON Shares, in respect of which you wish to accept the Merger Offer, to an escrow balance (that is, send a TTE Instruction) specifying Capita Corporate Registrars Plc (in its capacity as a CREST participant under its Participant ID referred to below) as the Escrow Agent, as soon as possible and in any event so that the transfer to escrow (TTE Instruction) settles no later than 3.00 p.m. (Dublin time) on 11 April 2005.

If you are a CREST sponsored member, you should refer to your CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your participant ID and the member account ID under which your ARCON Shares are held. In addition, only your CREST sponsor will be able to send the required TTE instruction to CRESTCo in relation to your ARCON Shares.

You should send (or, if you are a CREST sponsored member, procure that your CREST sponsor sends) a TTE Instruction to CRESTCo which must be properly authenticated in accordance with CRESTCo's specifications and which must contain, in addition to the other information that is required for a TTE instruction to settle in CREST, the following details:

(i)    the number of ARCON Shares to be transferred to an escrow balance;

(ii)    your Member Account ID. This must be the same Member Account ID as that inserted in Box 3 of the Form of Acceptance;

(iii)    your Participant ID. This must be the same Participant ID as that inserted in Box 3 of the Form of Acceptance;

(iv)    the Member Account ID of the Escrow Agent, Capita Corporate Registrars Plc. This is ARCON;

(v)    the Participant ID of the Escrow Agent, Capita Corporate Registrars Plc, in its capacity as CREST receiving agent. This is 7RA08;

(vi)   the Form of Acceptance reference number. This is the reference number that appears next to Box 3 on page 3 of the Form of Acceptance. This reference number should be inserted as the first eight characters of the shared note field on the TTE instruction. Such insertion will enable Capita Corporate Registrars Plc to match the TTE Instruction to your Form of Acceptance. You should keep a separate record of this reference number for future reference;

(vii)    the intended settlement date. This should be as soon as possible and in any event no later than 3:00 p.m. (Dublin time) on 11 April 2005;

(viii)  the standard CREST delivery instruction priority of 80;

(ix)    the corporate action number of the Merger Offer. This is allocated by CRESTCo and can be found by viewing the relevant corporate actions details in CREST; and

(x)    the corporate ISIN number. This is IE00B01H3229.

After settlement of the TTE Instruction, you will not be able to access the ARCON Shares concerned in CREST for any transaction or charging purpose (subject to the provisions of paragraph 1(f) of Part C of Appendix I to this document) unless the Merger Offer lapses. If the Merger Offer becomes, or is declared, unconditional in all respects, the Escrow Agent will transfer your ARCON Shares concerned to itself.

You are recommended to refer to the CREST Manual published by CRESTCo for further information on the CREST procedures outlined above. For ease of processing, you are requested, wherever possible, to ensure that a Form of Acceptance relates to only one transfer to escrow.

If no Form of Acceptance reference number or an incorrect reference number is included in the TTE Instruction, Lundin Mining may treat any ARCON Shares transferred to an escrow balance in favour of the Escrow Agent specified above from the Participant ID and Member Account ID identified in the TTE Instruction as relating to any Form of Acceptance which relate(s) to the same Member Account ID and Participant ID (up to the number of ARCON Shares inserted or deemed to be inserted on the Form of Acceptance concerned).

Normal CREST procedures (including timings) apply in relation to any ARCON Shares that are, or are to be, converted from uncertificated to certificated form, or from certificated to uncertificated form, during the course of the Merger Offer (whether any such conversion arises as a result of a transfer of ARCON Shares or otherwise). ARCON Shareholders who are proposing to so convert any ARCON Shares are recommended to ensure that conversion procedures are implemented in sufficient time to enable the person holding or acquiring the ARCON

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Without prejudice to the provisions of this letter and Parts B and C of Appendix I to this document, Lundin Mining reserve the right (subject to the provisions of the Irish Takeover Rules to the extent applicable and the terms of the Merger Offer) to treat as valid in whole or in part any acceptance of the Merger Offer which is not entirely in order or which is not accompanied by the relevant TTE Instruction or (as applicable) the relevant share certificate(s) and/or other document(s) of title. In that event, the consideration under the Merger Offer will not be paid until after the relevant acceptance has been perfected or the relevant TTE Instruction has settled or (as applicable) the relevant share certificate(s) and/or other document(s) of title or indemnities satisfactory to Lundin Mining have been received.

Lundin Mining SDRs are listed on the O-list of the Stockholm Stock Exchange and the underlying Lundin Mining Shares are listed on the Toronto Stock Exchange. Applications have been made to the Stockholm Stock Exchange for the Lundin Mining SDRs (and to the Toronto Stock Exchange in the case of the underlying Lundin Mining Shares) to be created in connection with the Merger Offer to be listed and admitted to trading on their markets for listed securities. Subject to the consent of the Panel, it is expected that Admission of the Lundin Mining SDRs and the underlying Lundin Mining Shares will become effective, and dealings for normal settlement will commence on the O-list of the Stockholm Stock Exchange and the Toronto Stock Exchange on the appropriate Business Day following the date on which the Merger Offer becomes or is declared unconditional in all respects. The Lundin Mining SDRs will not be available to the public in conjunction with these applications, except by way of valid acceptances under the Merger Offer.

The Lundin Mining SDRs to be issued in connection with the Merger Offer will rank pari passu in all respects with the existing Lundin Mining SDRs, together with the right to receive all dividends and other distributions declared, made or paid after the date of issue of the Lundin Mining SDRs.

Fractions of Lundin Mining SDRs will not be allotted. Entitlements to Lundin Mining SDRs will be rounded down to the nearest whole number of Lundin Mining SDRs and the fractional entitlement aggregated and sold as described in paragraph 23(e) below.

Full acceptance under the Merger Offer (assuming no exercise of options under the ARCON Share Option Schemes after 16 March 2005 (the last practicable date prior to the publication of this document) and before the date on which the Merger Offer closes and ignoring the effect of elections, if any, pursuant to the Cash Alternative) would result in the issue of 5,600,117 Lundin Mining SDRs. On this basis, following the Merger Offer, the share capital of Lundin Mining as enlarged by the Lundin Mining SDRs issued pursuant to the Merger Offer, would comprise 40,332,784 Lundin Mining Shares, of which ARCON Shareholders would hold approximately 14%. Following the compulsory acquisition of the remaining shares in NAN not owned by Lundin Mining, Lundin Mining will have issued approximately 1,313,396 Lundin Mining Shares to shareholders in NAN and, allowing for this dilution but ignoring the effect of the issue, if any, of ARCON Shares pursuant to the ARCON Share Option Schemes and ignoring the effect of elections, if any, pursuant to the Cash Alternative, ARCON Shareholders will own approximately 14% of the enlarged issued share capital of Lundin Mining immediately following completion of the Merger Offer. This excludes any ARCON Shares issued after 16 March 2005 (the last practicable date prior to the publication of this document) and before the date on which the Merger Offer closes.

Subject to the Merger Offer becoming or being declared unconditional in all respects, settlement of the consideration to which any ARCON Shareholder is entitled under the Merger Offer (except with the consent of

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the Panel and except as provided in paragraph 8 of Part B of Appendix I to this document in the case of certain overseas shareholders) will be effected in the following manner:

(i)    in the case of acceptances of the Merger Offer received, valid and complete in all respects, by the date on which the Merger Offer becomes or is declared unconditional in all respects, within 14 days of such date; or

(ii)    in the case of acceptances of the Merger Offer received, valid and complete in all respects, after the date on which the Merger Offer becomes or is declared unconditional in all respects but while it remains open for acceptance, within 14 days of such receipt.

Different settlement procedures shall apply to the ARCON Shares in uncertificated form (that is to say, in CREST) and to the ARCON Shares in certificated form.

Where an acceptance relates to ARCON Shares in uncertificated form (that is to say, in CREST), Lundin Mining SDRs to which the accepting ARCON Shareholder is entitled will be issued in uncertificated form. In such event, Lundin Mining will procure that any cash consideration to which the accepting ARCON Shareholder is entitled, subject to paragraph (c) below, will be paid in US dollars by means of CREST by Lundin Mining procuring the creation of an assured payment obligation in favour of the accepting ARCON shareholder's payment bank in respect of the cash consideration due, in accordance with the CREST assured payment arrangements. The Lundin Mining SDRs to which accepting ARCON Shareholders are entitled will be settled as described in (d) below.

Lundin Mining reserves the right to settle all or any part of the consideration referred to in this paragraph (a), for all or any accepting ARCON Shareholder(s) in the manner referred to in paragraph (b) below, if, for any reason, it wishes to do so.

All euro payments will be made by cheque drawn on a branch of an Irish clearing bank.

All Sterling payments will be made by cheque drawn on a branch of a UK clearing bank. All US dollar payments will be made by cheque drawn on the international department of an Irish bank. All cheques will be sent at the accepting ARCON Shareholder's own risk.

Lundin Mining SDRs to which accepting ARCON Shareholders are entitled will be settled as follows:

(i)    The newly issued shares in Lundin Mining represented by Lundin Mining SDRs to which accepting ARCON Shareholders are entitled will be delivered to VP Accounts in respect of those accepting ARCON Shareholders who have opened a VP Account and have furnished details of same to Capita Corporate Registrars Plc. VPC will send out a VP notice to such ARCON Shareholders confirming the number of Lundin Mining Shares deposited in the VP Account; or

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(iii)  Those accepting ARCON Shareholders who have opened a deposit account with an authorised non-Swedish account operating institute (generally, a bank based outside Sweden which in turn has a deposit account with an authorised account operating institute in Sweden) and have furnished details of same to Capita Corporate Registrars Plc, will have their Lundin Mining SDRs registered in the VPC Register in the name of their authorised non-Swedish account operating institute; or

(iv)  Those accepting ARCON Shareholders who do not furnish Capita Corporate Registrars Plc with details in respect of any one of (i) to (iii) above will have their Lundin Mining SDRs credited to an account opened by Lundin Mining Nominee with an authorised accounts operating institute in Sweden. Lundin Mining Nominee will therefore be registered in the VPC Register as the holder of these Lundin Mining SDRs but will be holding them as trustee for the relevant accepting ARCON Shareholders. The terms of such trust arrangement are set out in Appendix VIII to this Offer Document. Confirmation of these trust arrangements will be furnished in writing to the relevant accepting ARCON Shareholders at the same time as their cash entitlements are distributed to them.

Capita Corporate Registrars Plc will send written notifications to accepting ARCON Shareholders for the purpose of explaining the alternative methods whereby they may be registered as holders of their Lundin Mining SDRs. It is intended to include in such notification will be details of custodial arrangements operated by Capita IRG Trustees Limited under which such accepting ARCON Shareholders may hold their Lundin Mining SDRs.

Settlement in connection with the distribution of proceeds from sale of fractional shares will be made as described below.

If the Merger Offer does not become or is not declared unconditional in all respects and lapses or it is withdrawn:

(i)    in the case of ARCON Shares held in certificated form, the Form of Acceptance, share certificates and/or other documents of title will be returned by post (or such other method as may be approved by the Panel) within 14 days of the Merger Offer lapsing, to the person or agent whose name or address (outside Australia, Japan, South Africa or the United States) is set out at the top of page 3 or in Box 4 of the Form of Acceptance or, if none is set out, to the first-named holder at his or her registered address (outside Australia, Japan, South Africa or the United States); and

(ii)    in the case of ARCON Shares held in uncertificated form, the Escrow Agent will, immediately after lapsing of the Merger Offer (or within such longer period not exceeding 14 days after the Merger Offer lapses, as the Panel may approve), give TFE instructions to CREST to transfer all relevant ARCON Shares held in escrow balances and in relation to the Escrow Agent for the purposes of the Merger Offer, to the original available balances of the ARCON Shareholders concerned and the Form of Acceptance will be returned by post (or such other method as may be

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approved by the Panel) within 14 days of the Merger Offer lapsing, to the person or agent whose name or address (outside Australia, Japan, South Africa or the United States) is set out at the top of page 3 or in Box 4 of the Form of Acceptance or, if none is set out, to the first-named holder at his or her registered address (outside Australia, Japan, South Africa or the United States).

Your attention is drawn to the further information relating to the Merger Offer contained in the appendices and the accompanying Form of Acceptance which forms part of this document.

To accept the Merger Offer, you must complete and sign the Form of Acceptance in accordance with the instructions printed thereon and return it, by post to Capita Corporate Registrars Plc, PO Box 7117, Dublin 2, Ireland or, if by hand (during normal business hours only), to Capita Corporate Registrars Plc, Unit 5, Manor Street Business Park, Manor Street, Dublin 7, Ireland as soon as possible, but in any event so as to arrive no later than 3.00 p.m. (Dublin time) on 11 April 2005.

If you are in any doubt as to the procedure for acceptance of the Merger Offer or require assistance with completion of the Form of Acceptance, please telephone Capita Corporate Registrars Plc on (01) 810 2453 or, if you are calling from outside Ireland, +353 1 810 2453.

Yours faithfully

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PART 3:

The exploration and mining industry is highly speculative in nature and incurs greater risks than many other businesses. The Enlarged Group's business may be affected by the general risks associated with all companies in the mineral industry. The availability of a ready market for minerals to be sold by the Enlarged Group depends upon numerous factors beyond its control, the exact effects of which cannot be accurately predicted. These factors include: general economic activity, the world mineral prices, the marketability of the minerals produced, action taken by other producing nations, the availability of transportation capacity, the availability and pricing and the extent of governmental regulation and taxation. There can be no assurance that any mineralisation discovered will result in an increase in the proven and probable reserves of the Enlarged Group. If reserves are developed, it can take a number of years from the initial phases of drilling and identification of mineralisation until production is possible, during which time the economic feasibility of production may change. Substantial expenditures are required to establish ore reserves through drilling, to determine metallurgical processes to extract metals from ore and, in the cases of new properties, to construct mining and processing facilities. As a result of these uncertainties, no assurance can be given that the exploration programmes undertaken by the Enlarged Group will result in any new commercial mining operations being brought into operation.

The Enlarged Group's business operations are subject to risks and hazards inherent in the mining industry, including but not limited to unanticipated variations in grade and other geological problems, water conditions, surface or underground conditions, metallurgical and other processing problems, mechanical equipment performance problems, the unavailability of materials and equipment, accidents, labour force disruptions, force majeure factors, unanticipated transportation costs, and weather conditions, any of which can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures and production commencement dates.

The Enlarged Group's processing facilities are dependent on continuous mine feed to remain in operation. Insofar as the Enlarged Group's mines may not maintain material stockpiles of ore or material in process, any significant disruption in either mine feed or processing throughput, whether due to equipment failures, adverse weather conditions, supply interruptions, labour force disruptions or other causes, may have an immediate adverse effect on results of operations of the Enlarged Group.

The Enlarged Group will periodically review mining schedules, production levels and asset lives in its life-of-mine planning for all of its operating and development properties. Significant changes in the life-of-mine plans can occur as a result of mining experience, new ore discoveries, changes in mining methods and rates, process changes, investments in new equipment and technology, precious metals price assumptions, and other factors. Based on this analysis, the Enlarged Group reviews its accounting estimates and in the event of impairment, may be required to write-down the carrying value of a mine or mines. This complex process continues for the life of every mine.

As a result of the foregoing risks, among other things, expenditures on any and all projects, actual production quantities and rates, and cash costs may be materially and adversely affected and may differ materially from anticipated expenditures, production quantities and rates, and costs, just as estimated production dates may be delayed materially, in each case especially to the extent development projects are involved. Any such events can materially and adversely affect the Enlarged Group's business, financial condition, results of operations and cash flows.

The Enlarged Group's ability to maintain, or increase, its annual production of zinc, lead, copper, silver, gold and other precious and base metals will be dependent in significant part on its ability to expand existing mines and to

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bring new mines into production. Although Lundin Mining Group utilises the operating history of its existing mines to derive estimates of future operating costs and capital requirements, such estimates may differ materially from actual operating results at new mines or at expansions of existing mines.

The economic feasibility analysis with respect to any individual project is based upon, among other things, the interpretation of geological data obtained from drill holes and other sampling techniques, feasibility studies (which derive estimates of cash operating costs based upon anticipated tonnage and grades of ore to be mined and processed), precious and base metals price assumptions, the configuration of the ore body, expected recovery rates of metals from the ore, comparable facility and equipment costs, anticipated climatic conditions, estimates of labour, productivity, royalty or other ownership burdens and other factors.

The Lundin Mining Group's development projects are also subject to the successful completion of final feasibility studies, issuance of necessary permits and other governmental approvals and receipt of adequate financing. Although the Lundin Mining Group's feasibility studies are completed with the Lundin Mining Group's knowledge of the operating history of similar ore bodies in the region, the actual operating results of its development projects may differ materially from those anticipated, and uncertainties related to operations are even greater in the case of development projects. Some permits are limited in time and no assurance can be made as regards the likelihood of obtaining new permits.

The development and operation of a mine or mineral property involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. These risks include, among other things, ground fall, flooding, environmental hazards and the discharge of toxic materials, explosions and other accidents. Such occurrences may result in work stoppages, delays in production, increased production costs, damage to or destruction of mines and other producing facilities, injury or loss of life, damage to property, environmental damage and possible legal liability for such damages.

As well, although the Lundin Mining Group maintains liability coverage in an amount that it considers adequate for its operations, such occurrences, against which the Lundin Mining Group may not be able, or may elect not, to insure may result in a material adverse change in the Lundin Mining Group's and/or the Enlarged Group's financial position. The nature of these risks is such that liabilities may exceed policy limits, in which event the Enlarged Group would incur substantial uninsured losses.

The Lundin Mining Group's and the ARCON Group's reported mineral reserves and resources are only estimates. No assurance can be given that the estimated mineral reserves and resources will be recovered or that they will be recovered at the rates estimated.

Mineral reserve and resource estimates are based on limited sampling, and, consequently, are uncertain because the samples may not be representative. Mineral reserve and resource estimates may require revision (either up or down) based on actual production experience.

Market fluctuations in the price of metals, as well as increased production costs or reduced recovery rates, may render certain mineral reserves and resources uneconomic and may ultimately result in a restatement of reserves and/or resources. Moreover, short-term operating factors relating to the mineral reserves and resources, such as the need for sequential development of ore bodies and the processing of new or different ore grades, may adversely affect the Enlarged Group's profitability in any particular accounting period.

The Lundin Mining Group annually undertakes a detailed review of the life-of-mine plans for its operating properties and an evaluation of the Lundin Mining Group's portfolio of development projects, exploration projects and other assets. The recoverability of the Enlarged Group's carrying values of its operating and development properties are assessed by comparing carrying values to estimated future net cash flows from each property. Factors which may affect carrying values include, but are not limited to zinc, lead, copper, silver, gold and other precious and base metals prices, capital cost estimates, mining, processing and other operating costs, grade and metallurgical characteristics of ore, mine design and timing of production. In the event of a prolonged period of depressed prices, the Lundin Mining Group may be required to take additional material write-downs of its operating and development properties.

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All phases of mining and exploration operations are subject to governmental and supranational regulation including environmental regulation. Environmental legislation is becoming stricter, with increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and heightened responsibility for companies and their officers, directors and employees. There can be no assurance that possible future changes in environmental regulation will not adversely affect the Enlarged Group's operations.

As well, environmental hazards may exist on a property in which the Lundin Mining Group holds or the Enlarged Group will hold an interest which was caused by previous or existing owners or operators of the properties and of which the Enlarged Group is not aware at present or on a property in which the Enlarged Group formerly held an interest, but for which the Enlarged Group may still be liable. Operations at all mines are subject to strict environmental and other regulatory requirements, including requirements relating to the production, handling and disposal of hazardous materials, pollution controls, health and safety and the protection of wildlife. The Enlarged Group may be required to incur substantial capital expenditures in order to comply with these requirements. Any failure to comply with the requirements could result in substantial fines, delays in production or the withdrawal of some or all of the Enlarged Group's mining licenses.

Government approvals and permits are required to be maintained in connection with the Enlarged Group's mining and exploration activities. Although the Lundin Mining Group currently has all required permits for its operations as currently conducted, apart from certain outstanding permit applications for the Norrbotten property, there is no assurance that delays will not occur in connection with obtaining all necessary renewals of such permits for the existing operations or additional permits for any possible future changes to the Lundin Mining Group or the Enlarged Group's operations. There can be no assurance that the outstanding applications in relation to the Norrbotten property will be granted. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.

Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may be liable for civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permitting requirements, or more stringent application of existing laws, may have a material adverse impact on the Enlarged Group resulting in increased capital expenditures or production costs, reduced levels of production at producing properties or abandonment or delays in development of properties.

Mining activities result in remediation and closure costs, for which government and regulatory authorities may require security. No assurances can be given that current and future provisions and reserves accrued by the Enlarged Group in relation to such costs will be adequate.

The Norrbotten gold/copper project and the NP project are in the exploration stages only and are without known bodies of commercial ore. Development of these properties will follow only upon obtaining satisfactory exploration results. The long-term profitability of the Enlarged Group's operations will be in part directly related to the cost and success of its exploration and development programs. Mineral exploration and development are highly speculative businesses, involving a high degree of risk. Few properties, which are explored, are ultimately developed into producing mines. There is no assurance that the Enlarged Group's mineral exploration and development activities will result in any discoveries of commercial quantities of ore.

There is also no assurance that, even if commercial quantities of ore are discovered, a mineral property will be brought into commercial production. Discovery of mineral deposits is dependent upon a number of factors, not the least of which is the technical skill of the exploration personnel involved. The commercial viability of a mineral deposit once discovered is also dependent upon a number of factors, many of which are beyond the Enlarged Group's control, such as the particular attributes of the deposit (such as size, grade and proximity to infrastructure), metal prices and government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection.

In the course of exploration, development, and mining of mineral properties, certain unanticipated conditions may arise or unexpected or unusual events may occur, including but not limited to rock bursts, cave-ins, fires, floods, or earthquakes. It is not always possible to fully insure against such risks and the Enlarged Group may decide not

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Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure. Reliable roads, bridges and power and water supplies are important determinants, which affect capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect the activities and profitability of the Enlarged Group.

The Enlarged Group's exploration efforts may depend upon the Enlarged Group's ability to obtain financing through internally generated funds, joint ventures, debt financing, equity financing or other means. There can be no assurance that the Enlarged Group will be able to raise the financing required or that such financing can be obtained without substantial dilution to shareholders. Failure to obtain additional financing on a timely basis could cause the Enlarged Group to delay, reduce or terminate its operations. In addition, a lack of funds could cause the Enlarged Group to default on option payments or cash calls, which in turn could cause the dilution or termination of the property interests held by the Enlarged Group.

There are a number of outstanding securities and agreements pursuant to which Common Shares of the Enlarged Group may be issued in the future which will result in further dilution to the Enlarged Group's shareholders. Please refer to paragraph 5 of Appendix VI and paragraph 11 of Part 2 of Appendix V for further details.

The profitability of the Storliden, Zinkgruvan and Galmoy mines and other mining projects is dependent upon the market price of copper, zinc, lead, and silver and changes in currency exchange rates, in particular relating to SEK, euro and US$. The prices of precious and base metals and currency exchange rates have fluctuated significantly and are affected by numerous factors beyond the Enlarged Group's control, including but not limited to, international economic and political conditions, global and regional consumption patterns, speculative trading activities, levels of supply and demand, availability and costs of metal substitutes, metal stock levels maintained by producers and others, inventory carrying costs and inflation and interest rates.

As well, the mining projects of the Enlarged Group and its competitors may increase production due to new mining developments and improved mining and production methods. These factors affect the price of precious and base metals, and therefore the economic viability of the Enlarged Group's mining interests, and they cannot accurately be predicted.

The Lundin Mining Group is and the Enlarged Group will be exposed to various counterparty risks. When the Enlarged Group sells concentrates to third parties there is a risk for non-payment by the purchasers of the Enlarged Group's products. Furthermore, there is a risk for non-payment by joint venture partners of their share of joint venture expenditures. Consequently, non-payment by either purchasers or joint venture partners may adversely affect the Enlarged Group's financial position and financial results.

The Lundin Mining Group's financial statements have been prepared on a going concern basis under which an entity is considered to be able to realise its assets and satisfy its liabilities in the ordinary course of business. The Lundin Mining Group's operations to date have been primarily financed by equity financing and in respect of Storliden, by a credit granted by Boliden which is now fully repaid. The Enlarged Group's future operations are dependent upon the identification and successful completion of additional equity or debt financing or continued profitable operations. There can be no assurances that the Enlarged Group will be successful in completing additional financing or achieving profitability. The consolidated financial statements do not give effect to any adjustments relating to the carrying values and classification of assets and liabilities that would be necessary should the Enlarged Group be unable to continue as a going concern.

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The Lundin Mining Group runs its business in different countries and strives to run its business in as tax efficient a manner as possible. The tax systems in certain of these countries are complicated and subject to changes. By this reason, future negative effects on the operating results of the Enlarged Group due to changes in tax regulations cannot be excluded.

The mining industry is highly competitive. The Lundin Mining Group competes with other companies, including major mining companies. Some of these companies have greater financial resources than the Enlarged Group and, as a result, may be in a better position to compete for future business opportunities.

The Enlarged Group's business is dependent upon continued support of existing management. The loss of any key member of the Enlarged Group's existing management could adversely affect the Enlarged Group's prospects.

Lundin Mining Shares are quoted in CAD$ on the Toronto Stock Exchange and Lundin Mining SDRs are quoted in Swedish kronor on the O-list of the Stockholm Stock Exchange. The euro value of Lundin Mining Shares and/or Lundin Mining SDRs can therefore be affected by exchange rate fluctuations.

As Lundin Mining Shares are not admitted to the Official Lists of the UK Listing Authority and the Irish Stock Exchange, or to trading on the Stock Exchanges, trading in Lundin Mining Shares may be subject to trading costs which differ from those payable in respect of shares traded on the Stock Exchanges.

Lundin Mining currently has no plans to seek a listing for its shares or SDRs in London or Dublin, nor to offer any broking facilities in those jurisdictions. Therefore it may be administratively more difficult for a holder of Lundin Mining SDRs resident in Ireland/United Kingdom to dispose of those shares.

Lundin Mining is not subject to the disclosure, corporate governance and shareholder protection requirements of the Irish Stock Exchange or the UK Listing Authority or the London Stock Exchange. In particular, while Lundin Mining's Articles of Association do facilitate an offering of equity on a pre-emptive basis, such types of offering are less common for Canadian companies than would be the case for Irish companies. In addition, the costs for Lundin Mining of a pre-emptive offering into jurisdictions such as Ireland and the UK may, because of regulatory requirements in those jurisdictions, be prohibitive.

Lundin Mining Shares and Lundin Mining SDRs may fall as well as rise in value.

Lundin Mining has not paid dividends on its Common Shares in the last five years and it has no present intentions of paying any dividends on its Common Shares, as it anticipates that all available funds will be invested to finance the growth of its business. The directors of Lundin Mining will determine if and when dividends should be declared and paid in the future, based on Lundin Mining's financial position at the relevant time.

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The Merger Offer which is being made by Lundin Mining complies with the Irish Takeover Rules and, where relevant, the respective rules and regulations of the Irish Stock Exchange and the UK Listing Authority and is subject to the terms and conditions set out below and in the accompanying Form of Acceptance. The Merger Offer and any acceptances thereunder are governed by Irish law and subject to the exclusive jurisdiction of the courts of Ireland which exclusivity shall not limit the right to seek provisional or protective relief in the courts of another State, during or after any substantive proceedings have been instituted in Ireland, nor shall it limit the right to bring enforcement proceedings in another State on foot of an Irish judgment.

The Merger Offer will be subject to the following conditions:

(a)    valid acceptances being received (and not, where permitted, withdrawn) by not later than 3.00 p.m. (Dublin time) on the initial closing date (or such later time(s) and/or date(s) as Lundin Mining may, subject to the Irish Takeover Rules, decide) in respect of not less than 80 per cent (or such lower percentage as Lundin Mining may decide) in nominal value of the ARCON Shares Affected, provided that this condition shall not be satisfied unless Lundin Mining shall have acquired or agreed to acquire (whether pursuant to the Merger Offer or otherwise) ARCON Shares carrying in aggregate more than 50 per cent of the voting rights then exercisable at a general meeting of ARCON.

For the purposes of this condition:

(i)     any ARCON Shares which have been unconditionally allotted shall be deemed to carry the voting rights they will carry upon their being entered in the register of members of ARCON; and

(ii)    the expression ''ARCON Shares Affected'' shall mean:

A.   ARCON Shares which have been issued or unconditionally allotted on or before the date the Merger Offer is made, excluding any ARCON Shares which have been cancelled after the date on which the Merger Offer is made; and

B.    ARCON Shares which have been issued or unconditionally allotted after the date the Merger Offer is made but before the time at which the Merger Offer closes, or such earlier date as Lundin Mining may, subject to the Irish Takeover Rules, decide (not being earlier than the date on which the Merger Offer becomes unconditional as to acceptances or, if later, the initial closing date), excluding any ARCON Shares which have been cancelled after the date on which the Merger Offer is made;

but excluding any ARCON Shares which, on the date the Merger Offer is made, are already in the beneficial ownership of Lundin Mining within the meaning of section 204 of the Companies Act, 1963;

(b)   unless or to the extent otherwise agreed with the Panel, Admission becoming effective or (if determined by Lundin Mining and subject to the consent of the Panel) becoming effective subject only to (i) the creation of such Lundin Mining SDRs and/or (ii) the Merger Offer becoming or being declared unconditional in all respects;

(c)   all of the ARCON Mining Licences, Access Rights or ARCON Planning Permissions remaining in full force and effect, or, if applicable, being obtained and there being no notice in writing of an intention to revoke or adversely modify or not to renew the same at the time at which the Merger Offer becomes otherwise unconditional or any adverse action being taken thereunder by any ministerial or local authority (other than adverse action which would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) and none of the ARCON Mining Licences or ARCON Planning Permissions being terminated or adversely modified and there being no material breach of the terms or conditions of any of the ARCON Mining Licences or ARCON Planning Permissions at the date on which the Merger Offer becomes otherwise unconditional (except where the consequence of the material breach of any such ARCON Mining Licence or ARCON Planning Permission would not be material (in value

35

terms or otherwise) in the context of the Wider ARCON Group taken as a whole) provided that where any ARCON Planning Permission is not in full force and effect, or there has been a notice in writing of an intention to revoke or adversely modify or not to renew the same at the time at which the Merger Offer becomes otherwise unconditional (a ''Default Event'') then this condition will be treated as satisfied unless the Default Event is material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole;

(d)   no central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory or investigative body, including any national anti-trust or merger control authorities, court, tribunal, trade agency, professional association, environmental body, any analogous body whatsoever or tribunal in any jurisdiction (each a ''Third Party'') having decided to take, institute or implement any action, proceeding, suit, investigation, enquiry or reference or having made, proposed or enacted any statute, regulation or order or having withheld any consent or having done or decided to do anything which would or might reasonably be expected to:

(i)    make the Merger Offer or its implementation, or the acquisition or the proposed acquisition by Lundin Mining of any shares in, or control of, ARCON, or any of the material assets of ARCON void, illegal or unenforceable under the laws of any jurisdiction, or otherwise, directly or indirectly, restrain, revoke, prohibit, materially restrict or materially delay the same or impose additional or different conditions or obligations with respect thereto (except for conditions or obligations that would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) or otherwise challenge or interfere therewith (except where the result of such challenge or interference would not have, or would not reasonably be expected to have, a material adverse effect on the Wider ARCON Group taken as a whole);

(ii)    result in a material delay in the ability of Lundin Mining, or render Lundin Mining unable, to acquire some or all of the ARCON Shares or require a divestiture by any member of the Wider Lundin Mining Group of any shares in ARCON;

(iii)   (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) require, prevent or delay the divestiture by any member of the Wider Lundin Mining Group or by any member of the Wider ARCON Group of all or any portion of their respective businesses, assets (including, without limitation, the shares or securities of any other member of the ARCON Group) or property or (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) impose any limitation on the ability of any of them to conduct their respective businesses (or any of them) or own their respective assets or properties or any part thereof;

(iv)   impose any material limitation on or result in a material delay in the ability of Lundin Mining to acquire, or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership of shares (or the equivalent) in, or to exercise voting or management control over, ARCON or (to the extent ARCON has such rights) any member of the Wider ARCON Group which is material in the context of the Wider ARCON Group taken as a whole or (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) on the ability of any member of the Wider ARCON Group to hold or exercise effectively, directly or indirectly, rights of ownership of shares (or the equivalent) in, or to exercise rights of voting or management control over, any member of the Wider ARCON Group which is material in the context of the Wider ARCON Group taken as a whole;

(v)   (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group, taken as a whole) require any member of the Wider Lundin Mining Group or any member of the Wider ARCON Group to acquire or offer to acquire any shares or other securities (or the equivalent) in, or any interest in any asset owned by, any member of the Wider ARCON Group owned by any third party;

(vi)   impose any limitation on the ability of any member of the ARCON Group to integrate or coordinate its business, or any part of it, with the businesses of any member of the Wider ARCON Group (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole);

(vii)  result in any member of the Wider ARCON Group ceasing to be able to carry on business in any jurisdiction in which it presently does so (except where the consequences thereof would not be

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(viii) cause any member of the Wider ARCON Group to cease to be entitled to any Authorisation (as defined in paragraph (e) below) used by it in the carrying on of its business (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group, taken as a whole); or

(ix)  otherwise materially adversely affect the business, profits, assets, liabilities, financial or trading position of any member of the Wider ARCON Group (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole);

(e)   all necessary notifications and filings having been made, all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction in which ARCON or any subsidiary or subsidiary undertaking of ARCON which is material in the context of the ARCON Group taken as a whole (a ''Material Subsidiary'') is incorporated or carries on business which is material in the context of the Wider ARCON Group taken as a whole having expired, lapsed or having been terminated (as appropriate) (save to an extent which would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) and all statutory or regulatory obligations in any jurisdiction in which ARCON or a Material Subsidiary shall be incorporated or carry on business which is material in the context of the Wider ARCON Group taken as a whole having been complied with (save to an extent which would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole), in each case, in connection with the Merger Offer or its implementation and all authorisations, orders, recognitions, grants, consents, clearances, confirmations, licences, permissions and approvals in any jurisdiction (''Authorisations'' and each an ''Authorisation'') reasonably deemed necessary by Lundin Mining for or in respect of the Merger Offer having been obtained on terms and in a form reasonably satisfactory to Lundin Mining from all appropriate Third Parties, (except where the consequence of the absence of any such Authorisation would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) all such Authorisations remaining in full force and effect, there being no written notice of an intention to revoke or vary or not to renew the same at the time at which the Merger Offer become otherwise unconditional and all necessary statutory or regulatory obligations in any such jurisdiction having been complied with (except where the consequence of the absence of any such Authorisation would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole);

(f)    all applicable waiting periods and any other time periods during which any Third Party could, in respect of the Merger Offer or the acquisition or proposed acquisition of any shares or other securities (or the equivalent) in, or control of, ARCON or any member of the Wider ARCON Group by Lundin Mining, institute or implement any action, proceedings, suit, investigation, enquiry or reference under the laws of any jurisdiction which would be reasonably expected adversely to affect (to an extent which would be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) any member of the ARCON Group, having expired, lapsed or been terminated;

(g)   except as disclosed, there being no provision of any arrangement, agreement, licence, permit, franchise, facility, lease or other instrument to which any member of the Wider ARCON Group is a party or by or to which any such member or any of its respective assets may be bound, entitled or be subject and which, in consequence of the Merger Offer or the acquisition or proposed acquisition by Lundin Mining of any shares or other securities (or the equivalent) in or control of, ARCON or any member of the ARCON Group or because of a change in the control or management of ARCON or otherwise, would or would be reasonably expected to result (except where, in any of the following cases, the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as whole) in:

(i)    any monies borrowed by, or any indebtedness or liability (actual or contingent) of, or any grant available to any member of the Wider ARCON Group becoming, or becoming capable of being declared, repayable immediately or prior to their or its stated maturity;

(ii)    the creation or enforcement of any mortgage, charge or other security interest wherever existing or having arisen over the whole or any part of the business, property or assets of any member of the Wider ARCON Group or any such mortgage, charge or other security interest becoming enforceable;

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(iii) any such arrangement, agreement, licence, permit, franchise, facility, lease or other instrument or the rights, liabilities, obligations or interests of any member of the Wider ARCON Group thereunder, or the business of any such member with, any person, firm or body (or any arrangement or arrangements relating to any such interest or business) being terminated or adversely modified or any adverse action being taken or any obligation or liability arising thereunder;

(iv)  any material assets or interests of, or any material asset the use of which is enjoyed by, any member of the Wider ARCON Group being or falling to be disposed of or charged, or ceasing to be available to any member of the Wider ARCON Group or any right arising under which any such asset or interest would be required to be disposed of or charged or would cease to be available to any member of the Wider ARCON Group otherwise than in the ordinary course of business;

(v)    any member of the Wider ARCON Group ceasing to be able to carry on business;

(vi)   the value of, or financial or trading position of any Material Subsidiary being prejudiced or adversely affected; or

(vii)  the creation of any liability or liabilities (actual or contingent) by any member of the Wider ARCON Group;

unless, if any such provision exists, such provision shall have been waived, modified or amended on terms satisfactory to Lundin Mining;

(h)   except as disclosed and/or save as publicly announced (by the delivery of an announcement to the Irish Stock Exchange or the London Stock Exchange or otherwise publicly disclosed in the ARCON Group annual report for the year ended 31 December 2003) by ARCON, no member of the Wider ARCON Group having, since 31 December 2003:

(i)    issued or agreed to issue additional shares of any class, or securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible or exchangeable securities (except for (A) issues to ARCON or wholly-owned subsidiaries of ARCON, or (B) upon any exercise of options under the ARCON Share Option Schemes);

(ii)    recommended, declared, paid or made any bonus, dividend or other distribution other than bonuses, dividends or other distributions lawfully paid or made to another member of the Wider ARCON Group;

(iii)   (save for transactions between two or more members of the ARCON Group (''intra-ARCON Group transactions'')) made or authorised, proposed or announced any change in its loan capital (save in respect of loan capital which is not material (in value terms or otherwise) in the context of the ARCON Group taken as a whole);

(iv)  save for intra-ARCON Group transactions, implemented, authorised, proposed or announced its intention to propose any merger, demerger, reconstruction, amalgamation, scheme or (except in the ordinary and usual course of trading) acquisition or disposal of (or of any interest in) material assets or shares (or the equivalent thereof) in any undertaking or undertakings (except in any such case where the consequences of any such merger, demerger, reconstruction, amalgamation, scheme, acquisition or disposal would not be material (in value terms or otherwise) in the context of the ARCON Group taken as a whole);

(v)   except in the ordinary and usual course of business entered into or materially improved, or made any offer (which remains open for acceptance) to enter into or improve, the terms of the employment contract with any director of ARCON or any person occupying one of the senior executive positions in the ARCON Group or permitted a variation in the terms or rules governing the ARCON Share Option Schemes;

(vi)  (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the ARCON Group, taken as a whole) issued or agreed to issue any loan capital or (save in the ordinary course of business and save for intra-ARCON Group transactions) debentures or incurred any indebtedness or contingent liability;

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(vii) purchased, redeemed or repaid or announced any offer to purchase, redeem or repay any of its own shares or other securities (or the equivalent) or reduced or made any other change to any part of its share capital;

(viii) (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) (A) merged with any body corporate, partnership or business, or (B) and save for intra-ARCON Group transactions acquired or disposed of, transferred, mortgaged or encumbered any material assets or any right, title or interest in any asset (including shares and trade investments);

(ix) (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole), entered into or varied any contract, transaction, arrangement or commitment or announced its intention to enter into or vary any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise) which is of a long term, onerous or unusual nature or magnitude or which is or would be materially restrictive on the business of any member of the Wider ARCON Group;

(x)    waived or compromised any claim which would be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole;

(xi)   (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group, taken as a whole) been unable, or admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) ceased or threatened to cease to carry on all or a substantial part of any business;

(xii)  (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) made or agreed to any significant change to the terms of the trust deeds constituting the pension schemes established for its directors and/or employees and/or their dependants or to the benefits which accrue, or to the pensions which are payable thereunder, or to the basis on which qualification for or accrual or entitlement to such benefits or pensions are calculated or determined, or to the basis upon which the liabilities (including pensions) of such pension schemes are funded or made, or agreed or consented to any change to the trustees involving the appointment of a trust corporation;

(xiii) (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole) and save for voluntary solvent liquidations, taken any corporate action or had any legal proceedings instituted against it in respect of its winding-up, dissolution, examination or reorganisation or for the appointment of a receiver, examiner, administrator, administrative receiver, trustee or similar officer of all or any part of its assets or revenues, or (A) any analogous proceedings in any jurisdiction, or (B) appointed any analogous person in any jurisdiction in which ARCON or any Material Subsidiary shall be incorporated or carry on any business which is material in the context of the ARCON Group taken as a whole;

(xiv) entered into any agreement, contract or binding commitment or passed any resolution or made any offer or announcement with respect to, or to effect any of the transactions, matters or events set out in this condition; or

(xv)  except in the case of amendments to the memoranda or articles of association of subsidiaries which are not material, amended its memorandum or articles of association;

(i)     except as disclosed and/or save as publicly announced by ARCON (by delivery of an announcement to the Irish Stock Exchange or the London Stock Exchange or otherwise publicly disclosed in the ARCON Group annual report for the year ended 31 December 2003) on or prior to the issue of the Announcement:

(i)    there not having arisen any adverse change or deterioration in the business, assets, financial or trading position or profits of ARCON or any member of the Wider ARCON Group (save to an extent which would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole);

(ii)    no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider ARCON Group is or would reasonably be expected to become a party (whether as

39

plaintiff or defendant or otherwise) and no investigation by any Third Party against or in respect of any member of the Wider ARCON Group having been instituted or remaining outstanding by, against or in respect of any member of the ARCON Group (save where the consequences of such litigation, arbitration proceedings, prosecution or other legal proceedings or investigation are not or would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole);

(iii)   no contingent or other liability existing or having arisen which would reasonably be expected to affect adversely any member of the Wider ARCON Group (save where such liability is not or would not be material (in value terms) in the context of the Wider ARCON Group taken as a whole); and

(iv)   no steps having been taken which are likely to result in the withdrawal, cancellation, termination or modification of any licence, consent, permit, Access Right or authorisation held by any member of the Wider ARCON Group which is necessary for the proper carrying on of its business and which is material in the context of the Wider ARCON Group;

(j)    except as disclosed, Lundin Mining not having discovered that any financial, business or other information concerning the Wider ARCON Group which is material in the context of the Wider ARCON Group taken as a whole and which has been publicly disclosed, is materially misleading, contains a material misrepresentation of fact or omits to state a fact necessary to make the material information contained therein not misleading (save where the consequences thereof would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as a whole);

(k)   except as disclosed and/or save as publicly announced (by delivery of an announcement to the Irish Stock Exchange or the London Stock Exchange or otherwise publicly disclosed in the ARCON Group annual report for the year ended 31 December 2003) by ARCON on or prior to the issue of the Announcement, Lundin Mining not having discovered:

(i)    that any member of the Wider ARCON Group or any partnership, company or other entity in which any member of the Wider ARCON Group has an interest and which is not a subsidiary undertaking of ARCON is subject to any liability, contingent or otherwise (save where such liability is not or would not be material (in value terms or otherwise) in the context of the Wider ARCON Group taken as whole);

(ii)    in relation to any release, emission, discharge, disposal or other fact or circumstance which has caused or reasonably might impair the environment or harm human health, that any past or present member of the Wider ARCON Group has acted in material violation of any laws, statutes, regulations, notices or other legal or regulatory requirements of any Third Party (except where the consequences thereof would not be material (in value terms or otherwise) in the context of the ARCON Group, taken as a whole);

(iii)   that there is, or is likely to be, any liability, whether actual or contingent, to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the Wider ARCON Group or any other property or any controlled waters under any environmental legislation, regulation, notice, circular, order or other lawful requirement of any relevant Authority (whether by formal notice or order or not) or Third Party or otherwise (save where such liability is not or would not be material (in value terms or otherwise) in the context of the ARCON Group taken as a whole); and

(iv)   except as disclosed, that circumstances exist at the date the offer is made which are likely to result in any actual or contingent liability to any member of the Wider ARCON Group under any applicable legislation referred to in sub-paragraph (iii) above to improve or modify existing or install new plant, machinery or equipment or to carry out any changes in the processes currently carried out (save where such liability is not or would not be material (in value terms or otherwise) in the context of the ARCON Group taken as a whole);

(l)     except as disclosed, no member of the ARCON Group being in default under the terms or conditions of any material facility or agreement or arrangement for the provision of loans, credit or drawdown facilities, or of any security, surety or guarantee in respect of any facility or agreement or arrangement for the provision of loans, credit or drawdown facilities to any member of the ARCON Group (save where such default is not or would not be so material (in value terms or otherwise) in the context of the ARCON Group taken as a whole);

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(m)   for the purposes of the conditions set out above:

(i)    ''ARCON Group'' means ARCON and its subsidiaries and subsidiary undertakings;

(ii)   ''disclosed'' means fairly disclosed by or on behalf of ARCON in writing (or in written form), to Lundin Mining or Macquarie or its respective employees, officers or advisers at any time up to 18 March 2005 or orally at formal due diligence meetings between representatives of Lundin Mining and ARCON;

(iii)   ''initial closing date'' means 3.00 p.m. (Dublin time) on the date fixed by Lundin Mining as the first closing date of the Merger Offer, unless and until Lundin Mining in its discretion shall have extended the initial offer period, in which case the term ''initial closing date'' shall mean the latest time and date at which the initial offer period, as so extended by Lundin Mining, will expire or, if earlier, the date on which the Merger Offer become or are declared unconditional in all respects;

(iv)  ''initial offer period'' means the period from the date of the Merger Offer Document to and including the initial closing date;

(v)   ''parent undertaking'', ''subsidiary undertaking'', ''associated undertaking'' and ''undertaking'' have the meanings given by the European Communities (Companies: Group Accounts) Regulations, 1992;

(vi)   ''substantial interest'' means an interest in 20 per cent or more of the voting equity capital of an undertaking;

(vii) ''Wider ARCON Group'' means ARCON or any of its subsidiaries or subsidiary undertakings or associated companies (including any joint venture, partnership, firm or company or undertaking in which any member of the Lundin Mining Group (aggregating their interests) is interested) or any company in which any such member has a substantial interest; and

(viii) ''Wider Lundin Mining Group'' means Lundin Mining or any of its subsidiaries or subsidiary undertakings or associated companies (including any joint venture, partnership, firm or company or undertaking in which any member of the Lundin Mining Group (aggregating their interests) is interested) or any company in which any such member has a substantial interest.

Subject to the requirements of the Panel, Lundin Mining reserves the right (but shall be under no obligation) to waive, in whole or in part, all or any of the above conditions apart from conditions (a) and (b).

The Merger Offer will lapse unless all of the conditions set out above have been fulfilled or (if capable of waiver) waived or, where appropriate, have been determined by Lundin Mining to be or to remain satisfied on the day which is 21 days after the later of: (i) the initial closing date, (ii) the date on which condition (a) is fulfilled or (iii) such later date as Lundin Mining may, with the consent of the Panel (to the extent required) decide. Except for condition (a), Lundin Mining shall not be obliged to waive (if capable of waiver) or treat as satisfied any condition by a date earlier than the latest day for the fulfilment of all conditions referred to in the previous sentence, notwithstanding that any other condition of the Merger Offer may at such earlier date have been waived or fulfilled or that there are at such earlier dates no circumstances indicating that the relevant condition may not be capable of fulfilment.

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The following terms apply, unless the context otherwise requires, to the Merger Offer.

Except where the context requires, any reference in Parts B and C of this Appendix I and in the accompanying Form of Acceptance:

(i)    to the ''Merger Offer'' shall include any revision, variation or renewal thereof, or extension thereto;

(ii)   to the Merger Offer being, becoming or being declared ''unconditional'' shall be construed as a reference to the Merger Offer (as the case may be) being, becoming or being declared unconditional as to acceptances whether or not any other condition thereof remains to be fulfilled and includes the Merger Offer (as the case may be) being declared unconditional;

(iii)  to the ''acceptance condition'' shall mean the condition as to acceptances of the Merger Offer set out in paragraph (a) of Part A of this Appendix I and references to the Merger Offer becoming unconditional as to acceptances shall be construed accordingly;

(iv)   to the ''Offer Document'' shall mean this document and any other document containing, or containing details of, the Merger Offer;

(v)    to an ''extension of the Merger Offer'' includes an extension of the date by which the acceptance condition has to be satisfied; and

(vi)   to ''acceptances'' of the Merger Offer shall include deemed acceptances of the Merger Offer.

(a)    The Merger Offer will initially be open for acceptance until 3.00 p.m. (Dublin time) on 11 April 2005. Although no revision is envisaged, if the Merger Offer is revised it will remain open for acceptance for a period of at least 14 days (or such other periods as may be permitted by the Panel) following the date on which written notification of the revision is posted to ARCON Shareholders. Except with the consent of the Panel (to the extent required), no revision of the Merger Offer may be made and no revision of this document may be posted after 6 May 2005 or, if different, the date which is 14 days prior to the last date on which the Merger Offer can become unconditional.

(b)    The Merger Offer, whether revised or not, shall not (except with the consent of the Panel to the extent required) be capable of becoming unconditional as to acceptances after 5.00 p.m. (Dublin time) on 20 May 2005 (or any other time or date beyond which Lundin Mining has stated that the Merger Offer will not be extended and in respect of which it has not withdrawn that statement), nor of being kept open for acceptance after that time or date unless it has previously become unconditional, provided that Lundin Mining reserves the right, with the permission of the Panel (to the extent required), to permit the Merger Offer to become unconditional at a later time(s) or date(s).

(c)    If the Merger Offer becomes or is declared unconditional, the Merger Offer will remain open for acceptance for not less than 14 days after the date on which it would otherwise have expired. If the Merger Offer has become unconditional and it is stated by Lundin Mining that it will remain open until further notice, not less than 14 days' notice in writing prior to the closing of the Merger Offer will be given to those ARCON Shareholders who have not accepted the Merger Offer.

(d)    If a competitive situation (as defined by the Panel) arises after a ''no extension'' statement or a ''no increase'' statement (as defined by the Panel), Lundin Mining may, if it has specifically reserved the right to do so at the time the statement is made or otherwise, with the consent of the Panel, withdraw its statement that it will not increase the Merger Offer provided that it complies with the requirements of the Irish Takeover Rules and in particular that:

(i)    it announces the withdrawal as soon as possible and in any event within four business days of the firm announcement of the competing offer or other competitive situation;

(ii)   ARCON Shareholders are notified in writing of the withdrawal at the earliest practicable opportunity or, in the case of ARCON Shareholders with registered addresses outside Ireland and the UK or whom Lundin Mining knows to be nominees holding ARCON Shares for such persons, by written announcement in Ireland and the UK; and

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Lundin Mining may, if it specifically reserves the right to do so at the time the statement is made, choose not to be bound by the terms of a ''no extension'' statement and/or a ''no increase'' statement if it would otherwise prevent the posting of an increased or improved offer provided that such offer is recommended for acceptance by the board of directors of ARCON, or in other circumstances permitted by the Panel.

3. Acceptance condition

(a)    Except with the consent of the Panel (to the extent required) or otherwise in accordance with the Irish Takeover Rules, for the purpose of determining whether the acceptance conditions are satisfied, Lundin Mining may only take into account acceptances received in respect of which all relevant documents are received by Capita Corporate Registrars Plc:

(i)    by 1.00 p.m. (Dublin time) on 20 May 2005 (or any other time and/or date beyond which Lundin Mining has stated that the Merger Offer will not be extended and in respect of which it has not withdrawn that statement); or

(ii)   if the Merger Offer is extended with the consent of the Panel, such later time(s) or date(s) as the Panel may agree.

If the latest time at which the Merger Offer may become unconditional as to acceptances is extended beyond 5:00 p.m. (Dublin time) on 20 May 2005, acceptances received and purchases made in respect of which the relevant documents are received by Capita Corporate Registrars Plc after 1:00 p.m. (Dublin time) on that date may (except where the Irish Takeover Rules permits otherwise) only be taken into account with the agreement of the Panel.

(b)    Except as otherwise agreed by the Panel, and notwithstanding the right reserved by Lundin Mining to treat a Form of Acceptance as valid even though not entirely in order or not accompanied by the relevant share certificate(s) and/or other document(s) of title or not accompanied by the relevant transfer to escrow:

(i)    an acceptance of the Merger Offer will only be treated as valid for the purposes of the acceptance condition if the relevant requirements of Rule 10.3 and, if applicable, Rule 10.5 of the Irish Takeover Rules are satisfied in respect of it;

(ii)   a purchase of ARCON Shares by Lundin Mining or its nominees (or if Lundin Mining is required by the Panel to make an offer for ARCON Shares under Rule 9 or Rule 37 of the Irish Takeover Rules by a person acting in concert with Lundin Mining or its nominees) will only be treated as valid for the purposes of the acceptance condition if the relevant requirements of Rule 10.4 and, if applicable, Rule 10.5 of the Irish Takeover Rules are satisfied in respect of it; and

(iii)  before the Merger Offer may become or be declared unconditional, Capita Corporate Registrars Plc must have issued a certificate to Lundin Mining (or its agent) which states the number of ARCON Shares in respect of which acceptances have been received which comply with Rule 10.3 and, if applicable, Rule 10.5 of the Irish Takeover Rules and the number of ARCON Shares otherwise acquired, whether before or during the Offer Period, which comply with the relevant provisions of this paragraph 3(b). A copy of such certificate will be sent to the Panel as soon as possible after it is issued.

(c)    For the purpose of determining whether the acceptance condition to the Merger Offer is satisfied, Lundin Mining shall not be bound (unless required by the Panel) to take into account any ARCON Shares which have been unconditionally allotted or issued or which arise as a result of the exercise of subscription or conversion rights before the determination takes place.

4. Announcements

(a)    Without prejudice to paragraph 5 below, by 8.00 a.m. (Dublin time) on the business day (the ''relevant day'') following the day on which the Merger Offer is due to expire or become unconditional or is revised or extended (as the case may be), or such later time and/or date as the Panel may agree in relation to the Offer, Lundin Mining shall make an appropriate announcement and simultaneously inform the Irish Stock Exchange and the London Stock Exchange of the position. In the Lundin Mining announcement, it will

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also state (unless otherwise permitted by the Panel to the extent required) the total number of ARCON Shares and rights over ARCON Shares (as nearly as practicable):

(i)    for which acceptances of the Merger Offer have been received by Capita Corporate Registrars Plc;

(ii)    acquired or agreed to be acquired by or on behalf of Lundin Mining or by any person deemed to be acting in concert with Lundin Mining for the purposes of the Merger Offer during the course of the Offer Period;

(iii)   held by or on behalf of Lundin Mining or any person deemed to be acting in concert with Lundin Mining prior to the Offer Period; and

(iv)   for which acceptances of the Merger Offer have been received by Capita Corporate Registrars Plc from any person acting or deemed to be acting in concert with Lundin Mining for the purposes of the Merger Offer;

and the announcement will specify the percentage of the ARCON Shares represented by each of these figures.

Any decision to extend the time or date by which the acceptance condition in relation to the Merger Offer has to be fulfilled may be made at any time up to, and will be announced not later than, 8.00 a.m. on the relevant day (or such later time or date as the Panel may agree) and the announcement will state the next expiry time and date, (unless the Merger Offer is then unconditional, in which case a statement may instead be made that the Merger Offer will remain open until further notice) and the information specified in (i), (ii), (iii) and (iv) of this paragraph 4(a).

(b)    In calculating the number of ARCON Shares represented by acceptances and/or purchases, Lundin Mining may only include acceptances and purchases if they could be counted towards fulfilling the acceptance condition under Rules 10.3 and 10.4 and, if appropriate, 10.5 of the Irish Takeover Rules, unless the Panel agrees otherwise. Subject to this, Lundin Mining may include or exclude, for announcement purposes, acceptances and purchases not in all respects in order or which are subject to verification.

(c)    In this Part B of Appendix I references to the making of an announcement or the giving of notice by or on behalf of Lundin Mining include the release of an announcement by Lundin Mining or one of its associates as to the press and the delivery by hand or telephone, telex or facsimile or other electronic transmission of announcement to the Irish Stock Exchange and the London Stock Exchange. An announcement made otherwise than to the Irish Stock Exchange and the London Stock Exchange will be notified simultaneously to the Irish Stock Exchange and the London Stock Exchange.

5. Rights of withdrawal

(a)    If Lundin Mining, having announced the Merger Offer to be unconditional, fails by 3.30 p.m. (Dublin time) on the relevant day (or such later time and /or date as the Panel may agree in relation to the Merger Offer) to comply with any of the other requirements specified in paragraph 4(a) above, an accepting ARCON Shareholder may withdraw his acceptance of the relevant offer by written notice signed by such person and delivered either by post to Capita Corporate Registrars Plc, PO Box 7117, Dublin 2, Ireland or, if by hand (during normal business hours only), to Capita Corporate Registrars Plc, Unit 5, Manor Street Business Park, Manor Street, Dublin 7, Ireland, on behalf of Lundin Mining. Subject to paragraph 2(b) of this Part B of Appendix I to this document, this right of withdrawal may be terminated not less than 8 days after the relevant day by Lundin Mining confirming, if that is the case, that the Merger Offer is still unconditional as to acceptances and complying with the other requirements specified in paragraph 4(a) above. If such confirmation is given, the first period of 14 days referred to in paragraph 2(c) above will run from the date of such confirmation and compliance.

(b)    If by 3.00 p.m. (Dublin time) on 2 May 2005 (or such later time(s) and/or date(s) as the Panel may agree in relation to the Merger Offer) the Merger Offer has not become unconditional as to acceptances, an accepting ARCON Shareholder may at any time thereafter withdraw his acceptance by written notice delivered by post to Capita Corporate Registrars Plc, PO Box 7117, Dublin 2, Ireland or, if by hand

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(during normal business hours only), to Capita Corporate Registrars Plc, Unit 5, Manor Street Business Park, Maner Street Dublin 7, Ireland any time before the earlier of:

(i)    the time that the Merger Offer becomes unconditional as to acceptances; and

(ii)   the final time for the lodgement of acceptances which can be taken into account in accordance with paragraph 2(b) of this Part B of Appendix I to this document.

(c)    If the ''no increase statement'' is withdrawn in accordance with paragraph 2(d) above, any ARCON Shareholder who accepts the relevant offer after the date of the statement may withdraw his acceptance thereafter by written notice in the manner referred to in paragraph 5(a) above for a period of 8 days after the date on which the notice withdrawing such statement is posted to ARCON Shareholders.

(d)    Except as provided by this paragraph 5, acceptances shall be irrevocable.

(e)    In this paragraph 5, ''written notice'' (including any letter of appointment, direction or authority) means notice in writing bearing the original signature(s) of the relevant accepting ARCON Shareholder accepting the relevant offer or his/their agent(s) duly authorised in writing (evidence of whose appointment and authorisation in a form satisfactory to Lundin Mining is produced with the notice). Telex, email or facsimile transmission or copies will not be sufficient to constitute written notice. No notice which is postmarked in, or otherwise appears to Lundin Mining or its agents to have been sent from Australia, Japan, South Africa or the United States or any other unlawful jurisdiction will be treated as valid.

6. The Cash Alternative

(a)    The Cash Alternative is conditional only on the Merger Offer becoming unconditional in all respects. It will remain open until 3.00 pm (Dublin time) on 11 April, 2005 provided that, if the Merger Offer is then unconditional (or is then capable of being declared unconditional and is extended) the Cash Alternative will be extended for at least 14 days thereafter. If the Merger Offer is not then declared unconditional and is extended beyond that time and date, the right is reserved to lapse or close the Cash Alternative or to extend it at that time. If the Cash Alternative lapses or closes, the right is also reserved to reintroduce a Cash Alternative as long as the Merger Offer continues to be unconditional.

(b)    The execution by or on behalf of an ARCON Shareholder of the Form of Acceptance containing an election for the Cash Alternative will constitute:

(i)    an election for the Cash Alternative in respect of the first 1,000 ARCON Shares registered in the name of such ARCON Shareholder and, if applicable, his agreement to the acquisition of the balance of his ARCON Shares on the same terms as the Merger Offer;

(ii)    if the ARCON Shares concerned are in certificated form, an irrevocable request and authority to Lundin Mining to procure the despatch by post of a cheque in respect of the cash amount payable to such ARCON Shareholder in respect of his election for the Cash Alternative, at such ARCON Shareholder's risk to the person or agent whose name and address (outside the United States, South Africa, Australia or Japan) are set out in Box 2 of the Form of Acceptance or, if no name is set out to the first-named holder at his registered address (outside the United States, South Africa, Australia or Japan);

(iii)   if the ARCON Shares concerned are in uncertificated form, or if either of the provisos in subparagraph h(iii) of paragraph 1 of Part C of Appendix I to this document apply, an irrevocable request and/or authority to Lundin Mining or its respective agents to procure the creation of an assured payment obligation in favour of the ARCON Shareholder's payment bank in accordance with the CREST assured payment arrangements in respect of the consideration payable to such shareholder in respect of his election for the Cash Alternative, provided that if the ARCON Shareholder concerned is a CREST member whose registered address is in the United States, South Africa, Australia or Japan, such consideration shall not be paid in this manner, nor by cheque despatched by post; and

(iv)    authorities in the terms referred to in this Part B of Appendix I.

(c)    Where an ARCON Shareholder has more than 1,000 ARCON Shares the Cash Alternative shall include an offer by Lundin Mining to acquire the balance of his ARCON Shares on the same terms as the Merger Offer.

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(d)    Any ARCON Shareholder who sub-divides his holding of ARCON Shares after 18 March 2005 by transferring part of his holding to a person, or persons, connected with him (as defined by section 10 of the Taxes Consolidation Act, 1997) and more than one election for the Cash Alternative is received in respect of such new sub-divided holdings, such sub-divided holdings shall be treated as if they were a single holding and the elections for the Cash Alternative shall be pro-rated amongst the sub-divided holdings so that the Cash Alternative will only be paid to such persons in respect of no more than 1,000 ARCON Shares.

7. Revisions of the Merger Offer

(a)    Although no revision of the Merger Offer is envisaged, if the Merger Offer (in its original or any previously revised form(s)) is revised (either in its terms or conditions or in the value or form of the consideration offered or otherwise and whether or not the basic terms of the Merger Offer (in the original or any previously revised form(s)) are revised), and such revised Merger Offer represents, on the date on which such revision is announced (on such basis as Lundin Mining may consider appropriate), an improvement (or no diminution) in the value of the consideration when compared with that previously offered, the benefit of the revised Merger Offer will, except as provided in paragraphs 7(c), 7(d) and 8 below, be made available to the holders of any ARCON Shares who have accepted the Merger Offer (in its original or any previously revised form(s)) and not validly withdrawn such acceptance (''Previous Acceptors''). The acceptance by or on behalf of a Previous Acceptor of the Merger Offer in its original or any previously revised form(s) will, subject as provided in paragraphs 7(c), 7(d) and 8 below, be treated as an acceptance of the Merger Offer as so revised and shall also constitute the separate appointment of any director of Lundin Mining as his attorney with authority to accept any such revised Merger Offer on behalf of such Previous Acceptor and, if such revised Merger Offer includes alternative forms of consideration, to make on his behalf elections for and/or accept alternative forms of consideration in such proportions on his behalf as such attorney in his absolute discretion thinks fit and to execute on behalf of and in the name of such Previous Acceptor all such further documents (if any) as may be required to give full effect to such acceptance and/or election. In making any such election, such attorney and/or agent will take into account the nature of any previous election made by the Previous Acceptor and such other facts or matters as he may reasonably consider relevant.

(b)    Lundin Mining reserves the right (subject as provided in paragraphs 7(c), 7(d) and 8 below) to treat an executed Form of Acceptance relating to the Merger Offer (in its original or any previously revised form(s)) which is received after the announcement of the Merger Offer in any revised form as a valid acceptance of the revised Merger Offer, and such acceptance will constitute an authority and request in the terms of paragraph 7(a) above (as the case may be) mutatis mutandis on behalf of the relevant ARCON Shareholder.

(c)    The deemed acceptances referred to in paragraphs 7(a) and 7(b) above will not apply and the power of attorney and authorities conferred by such paragraphs will not be exercised by any director of Lundin Mining if, as a result thereof, the Previous Acceptor would (on such basis as Lundin Mining may consider appropriate) thereby receive less in aggregate in consideration than he would have received in aggregate in consideration as a result of his acceptance of the Merger Offer in the form in which it was originally accepted by him or on his behalf unless the Previous Acceptor has previously agreed otherwise in writing.

(d)    The deemed acceptances referred to in paragraphs 7(a) and 7(b) above will not apply and the authorities conferred by those paragraphs will be ineffective to the extent that a Previous Acceptor shall lodge with the Capita Corporate Registrars Plc, within 14 days of the posting of the document containing the revised Merger Offer, a Form of Acceptance in which he validly elects to receive the consideration receivable by him under such revised Merger Offer in some other manner.

8. General

(a)    Except with the consent of the Panel, the Merger Offer will lapse unless all the conditions to the Merger Offer have been satisfied or (if capable of waiver) waived by 5.00 p.m. (Dublin time) on 2 May 2005 or by 5.00 p.m. (Dublin time) on the date which is 21 days after the date on which the Merger Offer becomes unconditional as to acceptances, whichever is the later, or such later date as Lundin Mining, with the consent of the Panel, may decide. If the Merger Offer lapses for any reason:

(i)    it will not be capable of further acceptance;

(ii)   accepting ARCON Shareholders and Lundin Mining will not be bound by any Form of Acceptance submitted before the time the Merger Offer lapses; and

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(iii)   in respect of ARCON Shares held in certificated form, the Form of Acceptance, share certificate(s) and/or other document(s) of title will be returned by post (or by such other method as the Panel may approve to the extent required) within 14 days of the Merger Offer lapsing or being withdrawn to the person or agent whose name and address (outside Australia, Japan, South Africa or the United States or any other unlawful jurisdiction) is set out in Box 5 on page 3 of the Form of Acceptance or, if none is set out, to the first named holder at his or her registered address (outside Australia, Japan, South Africa or the United States or any other unlawful jurisdiction) and in respect of ARCON Shares held in CREST, Capita Corporate Registrars Plc will immediately upon the lapsing of the Merger Offer give TFE Instructions to CRESTCo to transfer all ARCON Shares held in escrow balances to the original available balances of the ARCON Shareholders concerned and the Form of Acceptance will be returned by post (or by such other method as the Panel may approve) within 14 days of the Merger Offer lapsing or being withdrawn to the person or agent whose name and address (outside Australia, Japan, South Africa or the United States or any other unlawful jurisdiction) is set out at the top of page 3, or, if appropriate, Box 5 on page 3 of the Form of Acceptance or, if none is set out, to the first named holder at his or her registered address (outside Australia, Japan, South Africa or the United States or any other unlawful jurisdiction).

(i)    No acknowledgement of receipt of any Form of Acceptance, transfer by means of CREST or document of title will be given by, or on behalf of Lundin Mining. All communication, notices, certificates, documents of title and remittances to be delivered by, or sent to or from, ARCON Shareholders or their designated agent(s) will be delivered or sent at their own risk.

(j)    Without prejudice to any other provision in this Part B of Appendix I to this document, Lundin Mining reserves the right to treat acceptances of the Merger Offer as valid if received by or on behalf of any of them at any place or places or in any manner determined by any of them otherwise than as set out herein or in the Form of Acceptance.

(k)    Lundin Mining reserves the right to notify any matter (including the making of the Merger Offer) to all or any ARCON Shareholder(s) with (a) registered address(es) outside Ireland or the UK or whom Lundin Mining know to be nominees, trustees or a custodian for such persons by announcement or paid advertisement in any daily newspaper published and circulated in each of Ireland and the UK in which case such notice shall be deemed to have been sufficiently given notwithstanding any failure by any such shareholders to receive such notice, and all references in this document to notice in writing by or on behalf of Lundin Mining shall be construed accordingly.

(l)    If Lundin Mining is required by the Panel to make an offer for ARCON Shares under the provisions of Rule 9 of the Irish Takeover Rules, Lundin Mining may make such alterations to the conditions and terms of the Merger Offer, as are necessary to comply with the provisions of that Rule.

(m)    If the Merger Offer becomes or is declared unconditional in all respects and sufficient acceptances have been received, Lundin Mining intends to apply the provisions of section 204 of the Companies Act 1963 to acquire compulsorily any outstanding ARCON Shares not acquired or agreed to be acquired pursuant to the Merger Offer or otherwise on the same terms as the Merger Offer.

It is intended that, subject to and following the Merger Offer being declared unconditional in all respects, and subject to any applicable requirements of the Stock Exchanges or the UK Listing Authority, Lundin Mining will procure that ARCON applies for cancellation of the listing of the ARCON Shares on the Official Lists and for cancellation of trading of ARCON Shares on the markets of the Stock Exchanges. It is expected that such cancellations will take effect no earlier than 20 Business Days after the Merger Offer becomes or is declared unconditional in all respects.

(n)    All references in Appendix I to this document to any statute or statutory provisions shall include a statute or statutory provision which amends, consolidates or replaces the same (whether before or after the date hereof).

(o)    The Lundin Mining SDRs to be issued in connection with the Merger Offer will be created, credited as fully paid, will rank pari passu in all respects with the existing Lundin Mining SDRs, including the right to receive all dividends and other distributions declared, made or paid after the issue of the Lundin Mining SDRs. ARCON Shares which are the subject of the Merger Offer will be acquired by Lundin Mining fully paid and free from all liens, charges, encumbrances, equitable interests, rights of pre-emption and other third party rights of any nature whatsoever and together with all rights now or hereafter attaching thereto, including the right to receive in full all dividends and other distributions declared, paid or made after 18 March 2005, the date on which the Merger Offer was announced.

(p)    Fractions of Lundin Mining SDRs will not be distributed to ARCON Shareholders and their entitlements will be rounded down to the nearest whole number of Lundin Mining SDRs and fractional entitlements will be aggregated and sold in the market for the benefit of the relevant ARCON Shareholders as described in paragraph 23(e) of Part 2 of this document.

(q)    In relation to any acceptance of the Merger Offer in respect of a holding of ARCON Shares which is in CREST, Lundin Mining reserves the right to make such alterations, additions or modifications to the terms of the Merger Offer as may be necessary or desirable to give effect to any purported acceptance of the Merger Offer, whether in order to comply with the facilities or requirements of CREST or otherwise, provided such alteration, addition or modification is consistent with the requirements of the Irish Takeover Rules or is otherwise made with the consent of the Panel.

(r)    Due completion of a Form of Acceptance will constitute an instruction to Lundin Mining that, on the Merger Offer becoming unconditional in all respects, all mandates, instructions and other instruments in force relating to holdings of ARCON Shares will, unless and until revoked or varied, continue in full force in relation to payments or notices in respect of the Lundin Mining SDRs, provided that if an ARCON Shareholder holds existing Lundin Mining SDRs, the mandates, instructions and instruments in force for

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such Lundin Mining SDRs will supersede the mandates, instructions and instruments for the ARCON Shares.

ARCON Shareholders resident in a Participating State or the United Kingdom may elect to receive the cash due to them in euro, pounds sterling or US dollars by writing ''YES'' in the appropriate box in Box 7 the Form of Acceptance. If any ARCON Shareholder does not write ''YES'' in any of the boxes in Box 7 of the Form of Acceptance, or writes ''YES'' in more than one of the boxes in Box 7, the cash due to that ARCON Shareholder will be paid in euro if they are resident in a Participating State, pounds sterling if they are resident in the United Kingdom, and US dollars if they are resident anywhere else. The amount of euro or pounds sterling paid to such ARCON Shareholders will be determined by the US$/€, SEK/€, SEK/Stg£ and US$/Stg£ exchange rates obtained by Capita Corporate Registrars Plc from its bankers on receipt of funds for the relevant payment date.

(a)    The making or acceptance of the Merger Offer in, or to or by persons resident in or nationals or citizens of jurisdictions outside Ireland and the United Kingdom, or to persons who are, or were, custodians, nominees or trustees of, citizens, residents or nationals of such jurisdictions (''Overseas Shareholders'') may be prohibited or affected by the laws of the relevant jurisdiction. Such persons should inform themselves about and observe any applicable legal requirements. It is the responsibility of any Overseas Shareholders wishing to accept the Merger Offer to satisfy themselves as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities and the payment of any issue, transfer, or other taxes due in such jurisdiction. Each Overseas Shareholder will be responsible for any such issue, transfer or other taxes and duties due in any overseas jurisdiction in respect of his acceptance of the Merger Offer by whomsoever they are payable and shall indemnify and hold harmless Lundin Mining and all persons acting on behalf of either of them in respect of such issue, transfer or other taxes and duties which they or their agents may be required to pay.

(b)    The Merger Offer is not being made, directly or indirectly in or into the United States, or by use of the United States mails, or by any means or instrumentality (including, without limitation, telephonically or electronically) of United States interstate or foreign commerce, or any facility of a United States national securities exchange nor is it being made in or into Australia, or Japan, South Africa or any other jurisdiction where it would be unlawful to do so (''Unlawful Jurisdiction'') and the Merger Offer should not be accepted by any such use, means, instrumentality or facility from or within Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction. Accordingly, copies of this document and the Form of Acceptance and any related offering documents are not being and must not be mailed, forwarded, sent, transmitted or otherwise distributed in, into or from Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction and persons receiving such documents (including, without limitation, custodians, nominees and trustees) must not distribute, forward, mail or transmit or send them in, into or from Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction. Doing so may render invalid any related purported acceptance of the Merger Offer.

Envelopes containing Forms of Acceptance, evidence of title or other documents relating to the Merger Offer should not be postmarked in Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction or otherwise sent from Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction and all acceptors must provide addresses outside Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction for the receipt of the consideration to which they are entitled under the Merger Offer or for the return of the Form of Acceptance, ARCON share certificates and/or other documents of title in relation to the ARCON Shares.

(c)    An ARCON Shareholder will, subject to paragraphs 9(d) and 9(e) below, be deemed not to have validly accepted the Merger Offer if:

(i)    such shareholder cannot give the representation and warranty set out in paragraph 1(d) of Part B of this Appendix I because such shareholder has received or sent copies or originals of this document, the Form of Acceptance or any related offering documents in, into or from Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction or has otherwise utilised in connection with the Merger Offer, directly or indirectly, the use of mails of, or any means or instrumentality (including, without limitation, facsimile transmission, telex and telephone or email) of interstate or foreign commerce of, or any facility of a national securities

49

exchange of, Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction or for any other reason;

(ii)    such shareholder inserts in Box 5 of the Form of Acceptance the name and address of a person or agent in Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction to whom such shareholder wishes the consideration to which such shareholder is entitled under the Merger Offer to be sent; or

(iii)   in any case, the Form of Acceptance received from such shareholder is received in an envelope postmarked in, or which otherwise appears to Lundin Mining or its agents to have been sent from, or otherwise evidences use of any means or instrumentality of interstate or foreign commerce of, Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction. Lundin Mining reserves the right, in its sole discretion, to investigate, in relation to any acceptance whether the representation and warranty set out in paragraph 1(d) of Part C of this Appendix I could have been truthfully given by the relevant ARCON Shareholder and, if such investigation is made and, as a result, Lundin Mining cannot satisfy itself that such representation and warranty was true and correct, such acceptance shall not, subject to paragraphs 9(d) and 9(e) below, be valid.

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PART C: FORM OF ACCEPTANCE

1.    Without prejudice to the terms of the Form of Acceptance and the provisions of this Part C, each ARCON Shareholder who executes and lodges or who has executed and had lodged on his behalf, a Form of Acceptance with Capita Corporate Registrars Plc irrevocably (and so as to bind himself, his heirs, successors and assigns):

(a)    accepts the Merger Offer in respect of the number of ARCON Shares inserted or deemed to be inserted in Box 1 of the Form of Acceptance on and subject to the terms and conditions set out or referred to in this document and that Form of Acceptance;

(b)    if applicable, elects for the Cash Alternative by the completion of Box 2 of the Form of Acceptance;

(c)    undertakes to execute any further documents, take any further action and give any further assurances which may be required to enable Lundin Mining to obtain the full benefit of this Part C and/or to perfect any of the authorities expressed to be given hereunder and otherwise in connection with his acceptance of the Merger Offer;

(d)    represents and warrants to Lundin Mining that:

(i)    he has not received or sent copies or originals of this document, the Form of Acceptance or any related documents in, into, or from Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction;

(ii)   he has not used in connection with the Merger Offer or the execution or delivery of the Form of Acceptance, directly or indirectly, the mails of, or any means or instrumentality (including, without limitation, facsimile transmissions, telex and telephone) of interstate or foreign commerce of, or any facilities of a national securities exchange of, Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction;

(iii)   in respect of the ARCON Shares to which the Form of Acceptance relates, he is not an agent or fiduciary acting on a non-discretionary basis for a principal who has given any instructions with respect to the Merger Offer from within Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction (unless such person has given all instructions with respect to the Merger Offer from outside Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction);

(iv)  this document, the Form of Acceptance or any related offering documents have not been mailed or otherwise distributed or sent directly or indirectly in, into or from Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction and he is accepting the Merger Offer from outside Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction;

(v)    he has not signed the Form of Acceptance in Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction; and

(vi)   if he is, or is acting on behalf of, a US Person, he or such US Person as the case may be, was outside the United States when the Form of Acceptance was sent;

(e)   appoints, subject to the Merger Offer becoming unconditional in all respects in accordance with its terms and to an accepting ARCON Shareholder not having validly withdrawn his acceptance, Lundin Mining and any of its directors as such shareholder's attorney and/or agent with an irrevocable instruction and authority to the attorney and/or agent to complete and execute all or any form(s) of transfer and/or other document(s) at the attorney's or agent's discretion in relation to the ARCON Shares in respect of which the Merger Offer has been accepted in favour of Lundin Mining or such other person or persons as Lundin Mining or its agents may direct and to deliver such form(s) of transfer and/or other documents(s) together with the share certificate(s) and/or other document(s) of title relating to such ARCON Shares for registration within six months of the Merger Offer becoming unconditional in all respects and to do all such other acts and things as may in the opinion of such attorney and/or agent be necessary or expedient for the purpose of, or in connection with, the acceptance of the Merger Offer and to vest in Lundin Mining or its nominee(s) the ARCON Shares to which such Form of Acceptance relates;

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(f)    appoints Capita Corporate Registrars Plc as such ARCON Shareholder's attorney and/or agent with an irrevocable instruction and authority to the attorney and/or agent subject to the Merger Offer becoming unconditional in all respects in accordance with its terms and to the accepting ARCON Shareholder not having validly withdrawn his acceptance, to transfer to itself (or such other person or persons as Lundin Mining or its agents may direct) by means of CREST all or any of the Relevant ARCON Shares (as defined in paragraph (g) below) (but not exceeding the number of ARCON Shares in respect of which the Merger Offer is accepted or deemed to be accepted);

(g)   appoints Capita Corporate Registrars Plc as such ARCON Shareholder's attorney or agent with an irrevocable instruction and authority to the attorney and/or agent if the Merger Offer does not become unconditional in all respects, to give instructions to CRESTCo, immediately after the lapsing of the Merger Offer (or within such longer period as the Panel may permit, not exceeding 14 days of the lapsing of the Merger Offer), to transfer all Relevant ARCON Shares to the original available balance of the accepting ARCON Shareholder. ''Relevant ARCON Shares'' means ARCON Shares in uncertificated form and in respect of which a transfer or transfers to escrow has or have been effected pursuant to the procedures described in the letter from Lundin Mining contained in this document and where the transfer(s) to escrow was or were made in respect of ARCON Shares held under the same Member Account ID and Participant ID as the Member Account ID and Participant ID relating to the Form of Acceptance concerned (but irrespective of whether or not any Form of Acceptance reference number, or a Form of Acceptance reference number corresponding to that appearing on the Form of Acceptance concerned, was included in the TTE Instruction concerned);

(h)    authorises and requests (subject to the Merger Offer becoming unconditional in all respects and the person accepting the Merger Offer not having validly withdrawn his acceptance):

(i)    ARCON or its agents to procure the registration of the transfer of the ARCON Shares in certificated form pursuant to the Merger Offer and the delivery of the share certificate(s) and/or other document(s) of title in respect thereof to Lundin Mining or as it may direct;

(ii)    subject to the provisions of paragraph 8 of Part B of Appendix I, if the ARCON Shares are in certificated form or if either of the provisos (aa) and (bb) to paragraph (h)(iii) below apply, Lundin Mining, or its agents, to procure the despatch by post or by such other method as the Panel may approve (to the extent Panel approval is required) of the cash element of the consideration to which he is entitled pursuant to his acceptance of the Merger Offer, to the person or agent whose name and address outside Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction is set out in Box 5 of the Form of Acceptance if none is set out, to the first named holder at his registered address outside Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction; and

(iii)   if the ARCON Shares concerned are in uncertificated form, Lundin Mining or its agents to procure the creation of an assured payment obligation in favour of the ARCON Shareholder's payment bank in accordance with the CREST assured payment arrangements in respect of any cash consideration to which such shareholder is entitled under the Merger Offer provided that (aa) Lundin Mining may (if, for any reason, it wishes so to do) determine that all or part of any such cash consideration shall be paid by cheque despatched by post and (bb) if any ARCON Shareholder concerned is a CREST member whose registered address is in Australia, Japan, South Africa or the United States or any other Unlawful Jurisdiction, any cash consideration to which such shareholder is entitled shall be paid by cheque despatched by post and, in each case, sub-paragraph (ii) above shall apply;

(i)    subject to the Merger Offer becoming unconditional in all respects (or if the Merger Offer would become unconditional in all respects or lapse immediately upon the outcome of the resolution in question) and in all other circumstances as the Panel may permit (to the extent permission is required):

(i)    authorises Lundin Mining or its agent to direct the exercise of any votes and any other rights and privileges (including the right to requisition the convening of a general meeting of ARCON) attaching to any ARCON Shares in respect of which the Merger Offer has been accepted or is deemed to have been accepted and not validly withdrawn;

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(ii)   authorises the sending of any notice, circular, warrant, document or other communication which may be required to be sent to him as a ARCON Shareholder in respect of such shares (including any share certificate(s) or other document(s) of title issued as a result of conversion of such ARCON Shares into certificated form) to Lundin Mining at its registered office;

(iii)  authorises any director of, or person authorised by, Lundin Mining to sign any document and do such things as may in the opinion of such agent and/or attorney seem necessary or desirable in connection with the exercise of any votes or other rights or privileges attaching to the ARCON Shares held by him (including, without limitation, signing any consent to short notice of a general or separate class meeting as his agent and/or attorney and on his behalf and executing a form of proxy appointing any person nominated by Lundin Mining to attend general meetings of ARCON (and any adjournments thereof) and attending any such meeting and exercising the votes attaching to the ARCON Shares referred to in (i) of this sub-paragraph (i) of this Part C of Appendix I to this document on his behalf, where relevant, such votes to be cast so far as possible to satisfy any outstanding condition of the Merger Offer);

(iv)   agrees not to exercise any of such rights without the consent of Lundin Mining and irrevocably undertakes not to appoint a proxy for or to attend such general meetings in respect of such ARCON Shares; and

(v)   covenants, agrees, represents and warrants that he is irrevocably and unconditionally entitled to transfer the ARCON Shares in respect of which the Merger Offer is accepted or deemed to be accepted and that the entire legal and beneficial interests in such ARCON Shares will be acquired under the Merger Offer is free from all liens, equities, charges, encumbrances, rights of pre-emption and other third party rights and other interests of any kind whatsoever and together with all rights now or hereafter attaching thereto, including the right to receive and retain all dividends and other distributions (if any) declared, made or paid hereafter;

(j)     (i)    undertakes that he will deliver, or procure the delivery of, to Capita Corporate Registrars Plc, his share certificate(s) and/or other document(s) of title in respect of the ARCON Shares (which are in certificated form) in respect of which the Merger Offer has been accepted, or is deemed to have been accepted and not validly withdrawn, or an indemnity acceptable to Lundin Mining in lieu thereof, as soon as possible and in any event within six months of the Merger Offer becoming, or being declared unconditional in all respects;

(ii)    undertakes that he will give or procure the giving, in accordance with the letter from Lundin Mining contained in this document, of an instruction to transfer those of the ARCON Shares in respect of which the Merger Offer has been accepted or is deemed to have been accepted and not validly withdrawn which are held by him in uncertificated form in CREST to an escrow balance within the member's account in accordance with the facilities and requirements of CRESTCo, as soon as possible and, in any event, so that the transfer to escrow settles within six months of the Merger Offer becoming or being declared unconditional in all respects; and

(iii)   undertakes that in the event that, for any reason, any ARCON Shares in respect of which a transfer to an escrow balance has been effected in accordance with the letter from Lundin Mining contained in this document are converted to certificated form (without prejudice to subparagraph h(ii) above) he will immediately deliver or procure the immediate delivery of the share certificate(s) or other document(s) of title in respect of all such ARCON Shares as so converted to Capita Corporate Registrars Plc, PO Box 7117, Dublin 2, Ireland or, if by hand (during normal business hours only), to Capita Corporate Registrars Plc, Unit 5, Manor Street Business Park, Manor Street, Dublin 7, Ireland or to Lundin Mining at its registered office or as Lundin Mining or its agents may direct;

(k)    agrees that the creation of an assured payment obligation in favour of his payment bank in accordance with the CREST assured payments arrangements as referred to in sub-paragraph h(iii) above shall, to the extent of the obligation so created, discharge in full any obligation of Lundin Mining to pay to him the cash consideration to which he is entitled pursuant to the Merger Offer;

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(l)    agrees that without prejudice to sub-paragraph (d) above, the execution of a Form of Acceptance constitutes an authority to any director of Lundin Mining and/or their respective agents within the terms of paragraph 6(b)(iv) of Part B of this Appendix I;

(m)   agrees that the terms and conditions of the Merger Offer contained in this document shall be deemed to be incorporated in, and form part of the Form of Acceptance which shall be read and construed accordingly, and that on execution the Form of Acceptance will take effect as a deed;

(n)   agrees that, if any provisions of this Appendix I shall be unenforceable or invalid or shall not operate so as to afford Lundin Mining and/or Capita Corporate Registrars Plc and/or any director or agent of either of them the benefit of any authority expressed to be given therein, he shall, with all practicable speed, do all such acts and things and execute all such documents and give all such assurances that may be required or desirable to enable Lundin Mining and/or Capita Corporate Registrars Plc and/or any director or agent of any of them to secure the full benefit of this Appendix I;

(o)    undertakes, subject to the Merger Offer becoming or being declared unconditional in all respects, to do all such acts and things and execute any further documents and to give any further assurances that may be required in connection with the effective transfer of his ARCON Shares in respect of which the Merger Offer shall have been accepted or deemed to have been accepted and authorises and requests any director of Lundin Mining to complete and execute on his behalf an instrument of transfer in favour of Lundin Mining (or as it may direct) of any ARCON Shares in respect of which the Merger Offer is accepted or is deemed to have been accepted and to do any other acts or things that may be necessary or expedient for the purpose of vesting such ARCON Shares referred to in paragraph 1 of this Part C in Lundin Mining, its nominees or such other persons as it may direct and all such acts and things as may be necessary or expedient to enable Capita Corporate Registrars Plc to perform its obligations as escrow agent for the purposes of the Merger Offer;

(p)   agrees to ratify everything which may be done or effected by any director of, or person authorised by, Lundin Mining or by Capita Corporate Registrars Plc (as escrow agent) or any of their respective agents in the proper exercise of any of the powers and/or authorities under this Part C and to indemnify each such person against any losses arising therefrom;

(q)   agrees that the execution of the Form of Acceptance constitutes his submission to the jurisdiction of the courts of Ireland in relation to all matters arising in connection with the Merger Offer and the Form of Acceptance;

(r)    appoints the nominee of Lundin Mining to execute the sale of their fractional entitlements as described in paragraph 25(e) of Part 2 of this document; and

2.     References in this Part C to a ''ARCON Shareholder'' shall include references to the person or persons executing a Form of Acceptance and, in the event of more than one person executing a Form of Acceptance, the provisions of this Part C shall apply to them jointly and to each of them.

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We have audited the consolidated balance sheets of Lundin Mining Corporation as at December 31, 2003 and 2002 and the consolidated statements of operations and deficit and of cash flows for each of the years in the five-year period ended December 31, 2003. These consolidated financial statements are the responsibility of Lundin Mining Corporation's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of Lundin Mining Corporation as at December 31, 2003 and 2002 and the results of its operations and its cash flows for each of the years in the five-year period ended December 31, 2003 in accordance with Canadian generally accepted accounting principles.

(Signed) Deloitte & Touche LLP

Chartered Accountants

Vancouver, British Columbia, Canada,
March 31, 2004 (except as to Note 15 which is as of April 27, 2004)

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NOTES TO THE FINANCIAL STATEMENTS (Amounts are in Canadian dollars, unless otherwise stated)

1. Description of business

Lundin Mining has interests in several gold, silver and base metals properties located in Sweden and Finland. The majority of these properties are currently held by NAN, a publicly traded company on the O-list at Stockholmsbörsen, in which Lundin Mining has a 38.35 percent interest.

2. Significant accounting policies

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (''GAAP'') that require management to make assumptions and estimates that affect the reported amounts and other disclosures in these consolidated financial statements. Actual results may differ from those estimates.

The significant accounting policies used in these consolidated financial statements are as follows:

The consolidated financial statements include the accounts of Lundin Mining and its wholly-owned subsidiaries, South Atlantic (Bermuda) I Ltd., South Atlantic (Bermuda) II Ltd., South Atlantic (Bermuda) IV Ltd., South Atlantic (Norrbotten) Ltd., South Atlantic in Norrbotten HB, South Atlantic (Finland) Ltd. and Vazante Mineração Ltda. All significant inter-company balances and transactions have been eliminated upon consolidation.

Monetary items denominated in a foreign currency are translated into Canadian dollars at the exchange rate prevailing on the balance sheet date. Exchange gains and losses arising from translation are included in operations.

Integrated foreign operations are translated into Canadian dollars as follows: monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date; non-monetary assets, liabilities, revenues and expenses are translated at exchange rates prevailing on the dates of the transactions. Exchange gains and losses arising from translation are included in operations.

Lundin Mining considers NAN to be a self-sustaining foreign operation. Accordingly, in applying the equity method of accounting to its investment in NAN, the Company translates NAN's financial statements into Canadian dollars as follows: assets and liabilities are translated at the exchange rate prevailing on the balance sheet date, and revenues and expenses are translated at exchange rates approximating those prevailing on the dates of transactions. Exchange gains and losses arising from translation are reflected in the cumulative translation adjustments included in shareholders' equity.

Lundin Mining accounts for its investment in NAN using the equity method whereby Lundin Mining's share of its earnings and losses is included in operations and its investment therein adjusted by an equivalent amount. Dividends received are credited to the investment account.

Lundin Mining carries its mining properties at cost less a provision for impairment, where necessary. Lundin Mining also defers exploration and development costs, which are related to specific projects until the commercial feasibility of the projects is determinable. The costs of each property and related expenditures will be amortised over the economic life of the property on a units-of-production basis. Costs are charged to operations when a property is abandoned or when impairment in value that is other than temporary has been determined.

General exploration costs are charged to operations as incurred.

The recovery of amounts capitalised as mineral properties and related expenditures is dependent upon the existence of economically recoverable reserves, the ability of Lundin Mining to obtain the necessary financing to complete their development and upon future profitable operations.

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Lundin Mining accounts for stock-based compensation pursuant to the recommendations of the Canadian Institute of Chartered Accountants Handbook Section 3870, Stock-based Compensation and Other Stock-based Payments, that were effective in 2002. This section established standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based payments in exchange for goods and services. The section requires that all stock-based awards made to non-employees be measured and recognised using a fair-value based method. There were no awards made to non-employees during the years ended December 31, 2001, 2000 and 1999. The section encourages a fair-value based method for all awards granted to directors, officers and employees, but only requires the use of a fair value based method for direct awards of stock, stock appreciation rights, and awards that call for settlement in cash or other assets.

For options granted to directors, officers and employees, Lundin Mining has adopted the disclosure-only provisions of the section, whereby the pro-forma net income (loss) and pro-forma income (loss) per share are disclosed in note 9(b) to the financial statements, as if the fair value based method of accounting had been used.

Lundin Mining accounts for income taxes using the asset and liability method. Under this method, future income tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and liabilities and their respective income tax bases (''temporary differences''), and losses carried forward. Future income tax assets and liabilities are measured using the tax rates expected to be in effect when the temporary differences are likely to reverse. The effect on future income tax assets and liabilities of a change in tax rates is included in operations in the period in which the change is substantively enacted. The amount of future income tax assets recognised is limited to the amount of the benefit that is more likely than not to be realised.

The income (loss) per share is calculated using the weighted average number of common shares outstanding during the year. In calculating diluted income (loss) per share, the treasury stock method is used for the purpose of determining the common share equivalents with respect to outstanding stock options and warrants to be included in the weighted average number of common shares outstanding, if dilutive. The calculation of the diluted income per share for the year ended December 31, 2003 included the dilutive effect of 380,000 stock options outstanding (Note 9(b)) and all of the warrants outstanding (Note 9(c)).

During the year ended December 31, 2001, Lundin Mining adopted the requirements of an accounting guideline issued by the Canadian Institute of Chartered Accountants with respect to enterprises in the development stage (''AcG-11''). The guideline addresses three distinct issues including: (i) capitalization of costs/expenditures; (ii) impairment; and (iii) disclosure. In adopting this guideline as it relates to the application of the equity method of accounting for Lundin Mining's investment in NAN, Lundin Mining has concluded that certain of NAN's exploration costs, which had been deferred by Lundin Mining, were impaired. These costs have therefore been written off, which results in a reduction in the carrying value of Lundin Mining's investment in NAN. As required by AcG-ll, this reduction has been accounted for as a change in accounting policy on a retroactive basis, which resulted in a reduction of $5,980,961 in the balance of retained earnings at January 1, 2001, with no restatement of prior periods.

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Changes in the carrying value of Lundin Mining's investment in NAN are as follows:

At December 31, 2003 and 2002, Lundin Mining had a 38.35 percent interest (11,980,000 shares) in NAN. The quoted market value of Lundin Mining's investment in NAN at December 31, 2003 was $40,235,070 (SEK 224,026,000) ((2002 – $22,638,000 (SEK 124,592,000)) (see Note 8).

Effective April 1, 1999, Lundin Mining sold 155,000 shares of NAN to the President of Lundin Mining and 45,000 shares to an officer of NAN at a price of SEK 12.50 per share. The purchase price was paid through the issuance of two promissory notes with interest at 6.17 percent per annum and were repayable on December 31, 2003, together with accrued interest. Lundin Mining recorded the gain on the sale of the shares as deferred income.

During the year ended December 31, 2003, the principal amount of the two promissory notes was repaid and accrued interest totalling $125,575 was forgiven. Accordingly, the gain on the sale of the shares in the amount of $406,624 previously recorded as deferred income and the forgiveness of the accrued interest totalling $125,575 have been recorded as a gain and loss, respectively, in operations in 2003.

During 2003, Lundin Mining received $1,237,450 in repayment of the amount receivable. The remaining balance of $421,659, after adjustment of the amount receivable for changes in foreign exchange rates, was recorded as a loss in operations in 2003.

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8. Loans payable

Under a credit facility agreement, H&Q, a Swedish brokerage firm, has agreed to lend Swedish denominated funds to Lundin Mining limited to 10 percent of the market value of the NAN shares pledged. The loan was with

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interest at various rates ranging from 6.75 percent to 7.50 percent dependent on the amount of the loan and was secured by 8,980,000 shares of NAN owned by Lundin Mining.

In April 2003, the outstanding loan account with H&Q was transferred to E. Öhman J:or Fondkommission AB (''Öhman'') and was subsequently repaid.

Lundin Mining had also arranged an additional credit facility of SEK 5.5 million with Kaupthing, which was limited to 25 percent of the market value of the NAN shares pledged. This credit facility was secured by 3 million shares of NAN owned by Lundin Mining. The loan was with interest at 7.45 percent. During the year ended December 31, 2003, the loan with Kaupthing was repaid.

(a)   The authorised and issued share capital is as follows:

Authorised – unlimited number of common shares with no par value and one special share with no par value.

(b)   Lundin Mining has a stock option plan (the ''Plan'') in which 750,000 common shares were made available for Lundin Mining to grant incentive stock options to certain directors, officers, employees and consultants of Lundin Mining. The number of common shares reserved under the Plan was based on 10 percent of the issued and outstanding share capital of Lundin Mining. In accordance with the policies of the TSX Venture Exchange, the option exercise price, when granted, reflects current trading values of Lundin Mining's shares and all of the options are subject to a four-month ''hold'' period from the date of grant. The term of any option granted under the Plan will be fixed by the Board of Directors and may not exceed 10 years from the date of grant. No optionee shall be entitled to a grant of more than 5 percent of Lundin Mining's outstanding issued shares. At December 31, 2003, there were 111,000 options available for future grant under the Plan.

The continuity of incentive stock options issued and outstanding during 2003 and 2002 is as follows:

As at December 31, 2003, there were 380,000 options outstanding, with an exercise price of $2.10 each, that expire on May 15, 2004 and 205,000 options outstanding, with an exercise price of $5.00 each, that expire on December 4, 2005.

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If the fair value method had been used, effective January 1, 2002, to account for options granted to directors, officers and employees, Lundin Mining's net income (loss) and income (loss) per share would have been adjusted to the pro forma amounts indicated below.

The fair value of options granted has been estimated using an option-pricing model with the following weighted average assumptions:

The 45,000 options granted to non-employees during the year ended December 31, 2003 (2002 — 119,000 options) were valued using the fair value method with the same option-pricing model assumptions. Stock-based compensation of $100,350 (2002 — $111,458) has been reflected in the financials statements as a charge to operations and a credit to contributed surplus.

(c) As at December 31, 2003, Lundin Mining has the following share purchase warrants outstanding:

During the year ended December 31, 2003, Lundin Mining received a termination fee in respect of Lundin Mining's pursuit of an interest in the Arctic Platinum project. The net amount of the termination fee, after deducting fees, due diligence costs and other expenses, was $381,830.

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The reconciliation of income taxes computed at the Canadian statutory tax rates to Lundin Mining effective income tax rate for the years ended December 31, 2003, 2002, 2001 and 2000 is as follows:

No provision for recovery of income taxes was made during the year ended December 31, 1999 because of the uncertainty of realizing the future tax benefits associated with the loss for tax purposes, and other deductions charged against operations which were deferred for tax purposes.

Temporary differences and carry-forwards which give rise to future income tax assets and liabilities as at December 31, 2003 and 2002 are as follows:

At December 31, 2003, Lundin Mining had accumulated non-capital losses for Canadian income tax purposes of approximately $4,185,000, which expire as follows:

Lundin Mining also has, through its subsidiaries, other tax loss and other deductions carried forward, the amounts of which currently are unlikely to be utilised.

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In October 2001, Lundin Mining agreed to provide a credit facility to NAN. The credit facility was to mature on December 30, 2003 but has been extended to May 31, 2004. The loan bears an interest rate at 8 percent per annum and is secured by a subordinated floating charge over the mining business of NAN. Concurrent with the amendment to the terms of this credit facility, the former Chairman of Lundin Mining agreed to amend the credit facility provided by him to Lundin Mining on similar terms (Note 12(b)(i)).

At December 31, 2003, the balance due from NAN under this credit facility, including accrued interest, was $925,316 (SEK 5,152,092) ((2002 –$1,605,437 (SEK 8,835,644)).

Interest income from the loan to NAN was $172,951 (SEK 964,592) in 2003 ((2002 – $106,412 (SEK 585,644); (2001 – $7,835 (SEK 52,164)).

At December 31, 2003, the balance due under this credit facility, including accrued interest, was $925,316 (SEK 5,152,092) ((2002 – $1,605,437 (SEK 8,835,644)).

Interest expense on the loan was $172,951 (SEK 964,592) in 2003 ((2002 – $106,412 (SEK 585,644); (2001 –$7,835 (SEK 52,164)).

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Lundin Mining is currently engaged in one operating segment, the acquisition, exploration and development of mineral properties, primarily in Canada and Sweden. Geographic segmented information is as follows:

* Consists of interest income and management fee income, and the equity in the income (loss) of the significantly influenced investee.

The fair value at December 31, 2003 of cash, accounts receivable, the loan receivable from NAN, accounts payable, and the amounts due to related parties is estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The fair value of the investment in NAN is disclosed in Note 4.

(a)    By agreement dated March 31, 2004, Lundin Mining agreed to acquire a copper-gold exploration property located in the Kiruna mining district in Northern Sweden from Anglo-American Exploration BV (''Anglo'') and Rio Tinto Mining and Exploration Limited (''Rio''), collectively (''Anglo-Rio''). Lundin Mining can earn a 100 percent interest in the property by expending a minimum of US$ 1 million in the first year and a total of US$ 6 million over a period of three years, and by issuing 187,214 shares in Lundin Mining to Anglo-Rio with a fair value of US$ 500,000. Lundin Mining has granted a four-year buy-back right to Anglo-Rio for the purchase of 60 percent of any proven copper-gold deposit that meets a threshold equivalent to 3 million tonnes of contained copper. The buy-back right will be at a price equal to three times the expenditures incurred by Lundin Mining. Any deposit developed that doesn't meet this threshold will carry a 2.25 percent net smelter return royalty to be paid to Anglo-Rio by Lundin Mining. This transaction is subject to regulatory approval.

(b)    On April 27, 2004, Lundin Mining agreed to acquire a 100 percent interest in North Mining Svenska AB (''NMS'') and a 100 percent indirect interest in Zinkgruvan Mining AB (''ZM'') from Rio Tinto Plc (''Rio Tinto''). This 100 percent interest comprises all of the outstanding shares of NMS and a loan payable by NMS to Rio Tinto. ZM owns the Zinkgruvan mine located in Southern Sweden. The purchase price for NMS and ZM will be US$ 100 million in cash plus payments of SEK 39,699,129 for working capital and a US$ 1 million non-refundable deposit. In addition, Lundin Mining will pay Rio Tinto a maximum of US$ 5 million in price participation payments based on the performance of zinc, lead and silver prices for a period up to two years. Lundin Mining will finance this acquisition through a public equity offering in Canada and Sweden. The acquisition is subject to regulatory approval and completion of the financing.

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No audited accounts have been made up for the financial period ended 31 December 2004. The following is the text of the unaudited interim results announcement of Lundin Mining for the twelve months to 31 December 2004, announced on 2 February 2005. This document contains certain statements that are or may be forward-looking. These statements typically contain words such as ''intends'', ''expects'', ''estimates'' and words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.

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On December 30, 2004 Lundin Mining Corporation (''Lundin Mining'' or the ''Company'') announced that it had acquired all of Boliden's 11,537,000 shares in North Atlantic Natural Resources AB (NAN), corresponding to 36.9 percent of the shares and votes. Total consideration for all of Boliden's NAN shares amounted to 2,176,800 newly issued Lundin Mining shares, corresponding to 6.5 percent of the shares and votes in Lundin Mining on an undiluted basis. Applying the market price paid on the Toronto Stock Exchange for Lundin Mining's shares at the time of acquisition, of CAD10.40 (Swedish krona (''SEK'') 56.32), the total consideration for all of Boliden's NAN shares corresponds to CAD22,638,720. Following the acquisition, Lundin Mining holds 23,117,000 shares in NAN, corresponding to 74.0 percent of the shares and votes of the company.

On December 8, 2004 Lundin Mining announced that it had closed the agreement with Chap Mercantile Inc. (re-named ''Silver Wheaton'') whereby Lundin Mining has agreed to sell all of its silver production from the Zinkgruvan mine in Sweden to Silver Wheaton in consideration for an upfront cash payment of US$50 million (CAD61 million) and 30 million Silver Wheaton shares and 30 million whole share purchase warrants with an aggregate fair value of CAD27.6 million, plus a per ounce payment at a price equal to the lesser of (a) US$3.90 (subject to a consumer price adjustment after three years) and (b) the then prevailing market price per ounce of silver. Each warrant is exercisable at CAD0.80 into one Silver Wheaton common share and expires on August 5, 2009.

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On December 3, 2004 the Swedish Depository Receipts (SDRs) of Lundin Mining were listed on the Stockholmsbörsen O-list.

On January 21, 2005 Lundin Mining made an offer to the remaining shareholders of NAN to acquire their NAN shares for either cash SEK10.75 or 1 Lundin Mining share for 5.3 NAN shares. The prospectus is expected to be distributed to the shareholders of NAN on February 14, 2005 and the offer is expected to close on March 4, 2005.

In January 2005 the Company entered into a hedge program covering hedging USD18 million at the level USD1: SEK6.95.