What a difference a day makes!
Will the ghost of last year’s hastily aborted Hudbay/Lundin Mining deal walk again after Lundin releases its fourth quarter earnings February 23rd?
I have to admit that I was part of that choir of negative Nellies; only now I’m not so sure. It wasn’t long after the friendly merger was cancelled – in fact only three months later – that Lundin raised $188 million from a bought deal that priced the shares at $2.05 each. Hudbay was offering a stock swap that comprised a 32% premium to Lundin’s then stock price of under a buck, a deal which today would only represent an approximate 18% premium, based on the market for their respective shares.
So now the question in my mind is merely whether someone – presumably but not necessarily Hudbay – will come in with another offer for Lundin Minerals in the months to come. And if so, would it match or exceed the 32% premium offered a year ago? I think at the very least Lundin shares are not fully priced – but Lundin is an edgy company with projects in edgy places, notably the Democratic Republic of the Congo where it owns 24.75% of the Tenke Fungurume copper cobalt open pit mine.
Tenke will initially produce 115,000 tonnes copper cathode and 8,000 tonnes cobalt per year and has a 40 year mine life. Some nice diggings there in elephant country! But the caveat can be summed up with the simple letters TIA – ‘this is Africa’.