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UPDATE 3-Lundin says still explores sale options, shares up
April 29, 2011 / 10:56 AM / 6 years ago

UPDATE 3-Lundin says still explores sale options, shares up

* Media reports interest from Chinese consortium

* Shares up 10.67 pct at C$9.23 on TSX

* At current shr price, company worth about C$5.4 bln (Adds details)

By Julie Gordon

TORONTO/STOCKHOLM, April 29 (Reuters) - Lundin Mining (LUN.TO) shares surged on Friday after a newspaper reported it it was in talks to be acquired by a Chinese-led consortium, although the Canadian copper miner said it was still exploring sale options.

Stock in Lundin, initially halted at the market open, was up more than 10 percent mid-day in Toronto to C$9.23 after the Globe and Mail newspaper reported a consortium headed by China’s Jinchuan Group Ltd, and including sovereign wealth fund China Investment Corp, was preparing a takeover bid.

“It is understood that a handful of U.S. and Canadian pension funds and private-equity investors have also been invited to join the buying group,” the newspaper said.

The global copper market has become the latest battleground for control of global resources after the red metal hit record highs earlier this year amid ravenous demand from China.

Lundin put itself up for sale in March after receiving a hostile takeover offer from Australian miner Equinox Minerals EQN.TOEQN.AX, even as it was in merger talks with Inmet Mining IMN.TO to create a $9 billion copper company.

At current market prices and given its 581.85 million shares outstanding, the company would be worth about C$5.4 billion ($5.7 billion), about a billion dollars more than it was worth the day before merger talks with Inmet were announced.

Lundin issued a statement on Friday, but did not directly address the Globe and Mail report.

“Lundin Mining Corp reiterates its previous announcement that it is undertaking a strategic process to explore options to create shareholder value and shareholders will be advised of any material developments in this regard,” it said.

The company added there is “no assurance” it will enter into any deal or transaction based on its strategic process.

RED METAL DEALS

Earlier this week, Barrick Gold Corp (ABX.TO), the world’s largest gold producer, announced a C$7.3 billion deal to buy copper-producer Equinox, trumping a rival offer from China’s Minmetals.

As part of the agreement, Equinox will drop its bid for Lundin.

“This is a consolidating market. The takeout of Equinox, and most likely Lundin, greatly reduces the field that’s available. So clearly, as the choices for investors contract, the higher the share prices of the remaining companies should go,” said George Topping, an analyst at brokerage and investment banking firm Stifel Nicolaus.

Topping said that if Lundin were to garner a bid with a similar premium to the one Barrick offered for Equinox, it could be worth as much as C$10.50 a share.

The main attraction of Lundin is likely to be its near 25 percent stake in the Tenke Fungurume copper and cobalt mine in the Democratic Republic of the Congo. Freeport McMoran (FCX.N) holds a 56 percent stake in that project.

“Minmetals are still out there roaming around, so don’t discount them,” Topping added.

Minmetals Chief Executive Andrew Michelmore told Reuters in an interview this week that the company was still in the hunt for multibillion-dollar mining assets after being outbid by Barrick for Africa-focused Equinox. [ID:nL3E7FS66E]

Tenke is expected to produce 130,000 tonnes of copper cathode this year. Lundin also produces zinc, lead, nickel and copper at various projects in Europe.

Chinese miners are looking for global assets to meet strong demand from the country’s rapidly growing economy, which is the world’s largest consumer of copper.

$1=$0.95 Canadian Additional reporting by Pav Jordan, Editing by Mike Nesbit and Peter Galloway

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