Sunday, February 27, 2011

Copper, Zinc and Cobalt: LUNDIN MINING ANNOUNCES POTENTIAL UNSOLICITED TAKE-OVER BID, czx.v, tnr.v,,,,,,,, rio,, tck

  Very interesting: Lundin Mining is back into the spotlight again - Tenke Fungurume stake will not make industry guys sleep well before they can get it. Let's the bidding war begin!
   We will watch tomorrow Canada Zinc Metals as well - last time Lundin Mining was moving up that stock was hitting new highs. Lundin Mining has a stake in that company. Thinking could be along the lines - that if Lundin Mining is taken out Zinc supply will be even more concentrated and CZX.v value, as one of the largest Zinc assets, will be even higher. Another notion could be that Lukas Lundin can bid, potentially, for the CZX.v and take it out from Chinese Tongling at one point and consolidate the area with Teck Resources, which will be supported by the Canada.
    "Go where the growth is - this company is ideally positioned to benefit from Chinese expansion in Infrastructure and Auto sector. We guess that this trip will be dealing with further Akie developments and maybe M&A activity. 
  Zinc and Lead markets are still nowhere near to the Copper excitement about recovery and Reinflation stage of the global economy - it is the good time to consolidate project at this price level of the commodity. Company has issued a news release today on current activities at the Akie project. The stock CZX.v is currently trading below the latest financing at 0.775CAD.
  We hope to get some more news at PDAC this year in the beginning of March in Toronto."
January 13th, 2011

    This deal came even faster than we expected: Lundin Mining is taken out.

"Now market will be taking US13¢ per pound of copper resource as a new benchmark for the new deals. All projects are different, but this deal could be a tipping point and ignite rush for the new deals to secure Copper Supply for Chinese growth."

"It seams to be only yesterday and it is so far away - we are living now in the "new normal", but old values are still here. Decoupling is happening these days after the financial crisis. Lundin Mining after years of waiting - and near death experience with stock price at one point below 0.6CAD  in 2009 - has finally received approval of contract for Tenke Fungurume mine from DRC government. 

  As one of our loyal readers from those days mentioned - we have spent a lot of time writing about this project. We came into it after the war in DRC, when Tenke mining was trading at 0.6CAD and we have seen it sold to Lundin Mining at above 20CAD - sweat memories. Then political uncertainty has taken its force in DRC over the project and we visited the story again only a few times. We are writing here mostly about the companies we are interested in and which we own or have owned before as our investment. We never give any investment advise here - only share our journey and travel notes with you. You have to decide always by yourself: what and when to buy, sell or just enjoy the scenery we are writing about. Always consult with qualified financial adviser, who shares you views and investment goals.

  Tenke Fungurume is back and so we are with our pen and paper to share with you this story again. We have another M&A target in the Copper market now back in business. We would expect a new coverage issued on the company and more investment research from Canadian financial institutions, with potential upgrades on valuation. Company is up today on volume - chart shows the cup and handle formation - break out to the upside is in the cards with high copper prices. The share price will have to reflect new valuation with settled political uncertainty over this huge copper project in DRC. Country discount will always be there, but the fact that Tenke Fungurume is now producing and will expand its production rate at these prices will drive the valuation.
  Lundin Mining presentation: 2010 Bank of America-Merrill Lynch Mining Conference
Tenke Fungurume Video
  Lundin Mining will present now a sizable opportunity as a target itself with market cap at 4 billion now. According to 
CIBC "Be Long What China's Short. M&A will drive this sector activity and we have just a few quality juniors with large copper deposits to go after." 
Lundin Mining is in no way a junior mining company, will have attention from Majors in the Copper sector. Freeport McMoran - J/V partner on Tenke Fungurume - will be a natural suitor for this Jewell. In our logic it have to attempt at least to buy out the share of Lundin Mining in Tenke Fungurume - otherwise it will be done by others and Chinese, who are very active in DRC, will be backed by the DRC government in this case. An outright bid for all Lundin Mining operations could be in the cards as well.

  We believe that Lukas Lundin will have to make his move and show that now - with cash flow from Tenke Fungurume and further expansion of production in DRC - he can build value in Lundin Mining itself. Realisation of the facts, described above, by the market could bring the share price north of CAD10.0 (we will not be surprised to see a target price of this magnitude with company's book value at around CAD5.2 now and E/P at CAD 0.13 in Q2 2010). Lukas will be again in a very favorable position after these very tough few years for the company. He can and should use his currency - shares in the company above CAD10.0 to buy another companies with sizable projects at still undervalued valuations among juniors. He should definitely, in our opinion, to study well opportunities for acquisition in CIBC report. His another company - NGeX Resources is a part of that M&A list with its properties in Argentina, Chile, Africa and Canada is moving up nicely in price these days as well.TNR Gold has a few J/V projects with NGeX Resources in Argentina. Lukas Lundin was buying recently NGeX Resources in the market.

  We won't speculate about Lundin Mining involvement, potentially, in Los Azules story, but will point to the few facts, which are keeping us guessing about the future move.  Lukas was personally involved in TNR Gold as an investor at one point, knows management there very well and Paul Conibear - Senior Vice president of Lundin Mining corporate development - served on the Board of TNR Gold for a few years. By the way - Tenke Fungurume is his baby - we would like to congratulate Paul and all team at Lunidin Mining with this ground breaking achievement for the company. Lukas was investing in Minera Andes before as well, at least before Rob McEwen came into the picture. We do not know, what stake he has now, but he knows the story about Los Azules very well. Rob is more of a gold guy and Lukas knows the basic metals commodity story very well, particularly copper. Will it make sense for Rob to sell Los Azules to Lukas Lundin at the right price after settlement with TNR Gold and clearing the property title?  We do not know at this moment, but any twist in this direction can bring a new dynamic to the all situation regarding Los Azules and its development. It is too early to say more about it at this moment.
  Another interesting move by Lundin Mining could be in its core zinc business with 
Canada Zinc Metals still in the M&A picture. Even after Chinese involvement, company is still at the very attractive levels of valuation. Its Akie deposit represents one of the largest zinc and lead deposits in the world and based in  Canada. With recent financing from Tongling, Chinese giant will have more than 30% in Canada Zinc Metals, Lundin Mining is the second largest shareholder after Tongling now in that company. We were thinking that Mandarin will be the only language for all presentations in that company, but found recently information on the bullboard about Lundin Mining visits to the Akie property - it could be easily confirmed by the management. "As I have a large shareholding in CZX I stay in regular communication with management. A team from Lundin Mining was up at the property not too long ago. Apparently the visit went very well...don't forget Lukas Lundin is a wheeler and dealer. Trust me - others are knocking too.
  Any sophisticated investor (and I know you are one) knows that all it would take is a large pp with another mining company (including Lundin Mining) and the playing field is levelled."
We have mentioned before:  
"Among the other developments today, we have mentioned that Lundin Mining has increased its loan facility and the maturity of the loan - will Lukas Lundin go shopping one day to increase his resource base for the next leg up in this commodity bull? He still maintains stake in Canada Zinc Metals along with all Chinese participants - should someone decide to chase this dragon - story could become very interesting."
  The nearest future will show how our 
Value Web in a very close and interconnected sector will play itself out. Today we can say only one thing - that Lukas Lundin is back after the crisis and he is stronger then ever, our big picture view is the ideal world for his Midas touch. We will expect him making headlines in the nearest future on a different M&A fronts."
Please, do not forget, that we own stocks we are writing about and have position in these companies. We are not providing any investment advise on this blog and there is no solicitation to buy or sell any particular company here. Always consult with your qualified financial adviser before making any investment decisions.



Toronto, February 27, 2011 (TSX: LUN; OMX: LUMI) Lundin Mining Corporation 
(“Lundin Mining” or the “Company”) announced that it has been advised by Equinox Minerals Limited (“Equinox”) that Equinox intends to make an unsolicited take-over bid for the shares of Lundin Mining prior to the open of markets on February 28, 2011.  Lundin is not aware of the terms of the bid.  Until Lundin Mining completes its review of the bid, it will not comment on the proposal.  The Board of Directors of Lundin will update shareholders from time to time following receipt and consideration of the bid.  Shareholders do not need to take any action in response to the bid at this time.

About Lundin Mining
Lundin Mining is a diversified base metals mining company with operations in Portugal, Spain and Sweden, producing copper, nickel, lead and zinc. In addition, Lundin Mining holds a development project pipeline which includes an expansion project at its Neves-Corvo mine along with its equity stake in the world class Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo.

On Behalf of the Board,

Phil Wright
President and CEO
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