EuroZinc Mining and Lundin Mining are to merge to create a copper and zinc producer with a market capitalisation of about $3 billion.
Under the deal, each EuroZinc common share will be automatically exchanged at a ratio of 0.0952 of Lundin Mining common shares.
Lundin shareholders will continue to hold their existing common shares, the companies said.
Existing EuroZinc shareholders will own about 56.9 per cent, and Lundin holders will own about 43.1 per cent of the combined company, which will be called Lundin Mining.
The deal is conditional upon EuroZinc and Lundin shareholders approving the deal by 66.7 per cent and 50.1 per cent, respectively, as well as other approvals.
Both sides agreed to pay a break fee to the other party of $40 million under certain circumstances, and each company has granted the other a right to match a competing offer.