Miner's shares 11% higher 2011
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Shares of copper producer Lundin Mining Corp. surged by as much as 11 per cent on the Toronto Stock Exchange Friday on continuing speculation the company had found a Chinese buyer, even as the company denied it was on the verge of a deal.
Phil Wright, chief executive with Lundin, told Bloomberg the company was still conducting a strategic review on its options after its proposed $9-billion merger with Inmet Mining Corp. fell apart in March.
"I don't think people should be sitting on the edge of their seats," he said, downplaying expectations of an eminent announcement.
There were reports Friday of interest from a Chinese buying group, including base metal miner Jinchuan Group Ltd. and sovereign wealth fund China Investment Corp.
Calls to Lundin were not returned. The company released a statement repeating Wright's point, but made no comment on interest from the group or other buyers such as China's Minmetals Resources Ltd.
Minmetals attempted to purchase Equinox Minerals Ltd. but was rebuffed earlier this month after the company found a surprise buyer in Barrick Gold Corp.
Investors appear to be expecting a hefty price tag for Lundin, however, as heavy trading sent shares in the company to a close of $9.26 on the Toronto Stock Exchange, up 11.03 per cent, or 92 cents. Shares in the company have risen 27.5 per cent since the beginning of the year.
"It all depends on your view of copper prices," a mining analyst who chose to remain anonymous said. "At $3.75 a pound, Lundin could get $10.30 a share."
One of Lundin's most attractive assets is its 25 per cent stake in the Tenke Fungurume copper mine in the Democratic Republic of Congo. The analyst suspects if Lundin fails to close a sale with the Chinese, who are hungry for base metals such as copper to fuel their economic growth, the company may split its assets up on the market instead.
"Lundin has probably talked to all the traditional companies already. I think there aren't a lot of buyers outside of maybe Inmet for the European assets and maybe Freeport McMo-Ran will want to buy the rest of Tenke," he said. "But it's a lot harder to negotiate when there are three people at the table not two."
Lundin kicked off the whole saga earlier this year when it announced plans to merge with Inmet Mining, but scrapped that when it got a bid from Equinox. However, once Equinox itself became the target of takeover interest, it dropped its bid for Lundin, leaving the company to find another suitor.
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