M&A in Canada: Lundin Mining adopts poison pill after merger cancelled lun.to, czx.v, tnr.v, sgc.v, tck, bhp, fcx, rio, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, bls.to

 

  With Inmet it was the road into the nowhere, now Lundin Mining is still open to Equinox offer. Freeport McMoran move still could be in the cards for Lundin Mining jewel - Tenke Fungurume. It will be difficult for Lukas Lundin to defend the company with anything better than 10CAD on the table now - we will still consider that it is the very good deal for the buyer.

  We will monitor other companies with Lukas Lundin or his companies involvement now Canada Zinc Metals, TNR Gold, NGeX Resources, Sunridge Gold and Fortress Minerals.

"Let's the bidding game begin! We have mentioned quite a few times that Tenke Fungurume is a crown jewel for any mining company with its high grade Copper and cobalt deposit. Equinox has basically confirmed it in one of the interviews by its CEO - they are going after the Tenke Fungurume stake which belongs to Lundin Mining. We should not discount the egos involved as well: Lukas Lundin was trying to buy out Equinox before and now "the table has turned" - Equinox will be the least option for him to sell the company with his name.
   How long Freeport McMoran will be waiting to enter the game?"

Lundin adopts poison pill after merger cancelled


2011-03-29 19:05 ET - News Release

Mr. Phil Wright reports

LUNDIN MINING ADOPTS SHAREHOLDER RIGHTS PLAN AND COMMENCES PURSUIT OF ALTERNATIVES TO MAXIMIZE SHAREHOLDER VALUE

Lundin Mining Corp.'s board of directors has adopted a limited duration shareholder rights plan to enable a full consideration of strategic alternatives.

Commenting on the adoption of the rights plan, Phil Wright, the president and chief executive officer of Lundin Mining, said: "This plan has been put in place to ensure that we have adequate time to explore all alternatives to bring value to Lundin shareholders. Our exploration of alternatives starts immediately, and we will be actively and aggressively looking for the best value transaction.

"The rights plan ensures that we can do this in a considered and structured way and get the best result for our shareholders," Mr. Wright said.

In a previous Stockwatch news release earlier today, Lundin Mining announced that it has mutually terminated its proposed merger with Inmet Mining Corp. and has agreed that Inmet's right to a break fee of $120-million will be preserved in connection with the unsolicited offer of Equinox Minerals Ltd.

The board continues to recommend that shareholders reject the Equinox offer, on its own merits, for the reasons detailed in the directors circular mailed to registered shareholders on March 21, 2011, and available on SEDAR.

Commenting on the plans to pursue alternative transactions, Lukas Lundin, chairman of Lundin Mining, said: "Our hands have been completely tied in defending against the lowball, risky Equinox bid because of the Inmet agreement.

"Having agreed to terminate with Inmet, we can now pursue new alternatives to significantly improve shareholder value and get a proper premium if we do a change of control transaction.

"I am not against selling if it achieves an excellent financial return to shareholders, but I will not support selling at bargain prices," Mr. Lundin said.

Scotia Capital, as financial adviser, and Cassels Brock & Blackwell LLP, as legal adviser, will continue to assist the company in responding to the unsolicited offer announced by Equinox.

The board will make every effort to maximize value for the benefit of Lundin Mining shareholders and will update shareholders from time to time of its efforts.

Details of the rights plan

The rights plan is intended to ensure that in the context of the unsolicited takeover proposal for Lundin Mining common shares announced by Equinox, the board has sufficient time to identify, develop and negotiate alternatives to maximize shareholder value. The rights plan also seeks to ensure the fair treatment of shareholders and to provide them with adequate time to properly assess any potential takeover bid without undue pressure.

Prior to the termination of the proposed merger with Inmet, the company has been subject to customary no-shop clause obligations under the terms of the arrangement agreement with Inmet, which has rendered the company unable to seek other value enhancing alternatives to Equinox's unsolicited offer.

The board has authorized the issuance of one right in respect of each common share of the company outstanding on March 29, 2011, at 5 p.m. (Eastern Time) and each share issued thereafter. The rights will become exercisable if a person, together with its affiliates, associates and joint actors, acquires or announces an intention to acquire beneficial ownership of common shares which, when aggregated with its current holdings, total 20 per cent or more of the outstanding common shares of the company (determined in the manner set out in the rights plan). Following the acquisition of 20 per cent or more of the outstanding common shares, each right held by a person other than the acquiring person and its affiliates, associates and joint actors would, upon exercise, entitle the holder to purchase common shares at a substantial discount to the market price of the common shares at that time.

The board has the discretion to defer the time at which the rights become exercisable (which it has done in respect of the proposed Equinox offer) and to waive the application of the rights plan and/or redeem the rights if the board determines it is in the best interests of Lundin Mining to do so.

The rights plan permits the acquisition of control of Lundin Mining through a permitted bid, a competing permitted bid or a negotiated transaction. A permitted bid is one that, among other things, is made to all holders of common shares for all of their shares, is open for a minimum of 90 days and is subject to an irrevocable minimum tender condition of at least 50 per cent of the common shares held by independent shareholders. The rights plan will expire on May 31, 2011, at 5 p.m. (Eastern Time).

Although the rights plan is effective immediately, it remains subject to acceptance by the Toronto Stock Exchange. A copy of the rights plan will be available at SEDAR.

The Equinox offer

The board recommends to Lundin Mining shareholders that they reject the unsolicited offer and do not tender their Lundin Mining shares for the following reasons:

The unsolicited offer is inadequate from a financial point of view to Lundin Mining shareholders.

The pro forma debt-to-equity ratio of the combined Equinox and Lundin Mining is excessive and will present increased financial risk and a more highly leveraged capital structure than Lundin Mining and peer group companies. In addition, the lenders to Equinox will have considerable influence over the business decisions of a combined Equinox and Lundin Mining.

Substantially all of Equinox's and Lundin Mining's existing cash balances and projected near-term cash flow will be utilized to pay for: lenders fees; interest charges; and the principal repayments of the debt incurred to finance the cash portion of the consideration payable under the unsolicited offer.

The unsolicited offer would result in a company with increased exposure to geopolitical risks due to the location of Equinox assets in Zambia and Saudi Arabia.

The unsolicited offer is highly opportunistic. Equinox's shares were trading at or near the all-time-high share price when Equinox announced the unsolicited offer, which followed a news release made earlier in February, 2011, on its strategy to expand the Lumwana project. The proposed Lumwana expansion plan is not supported by mineral reserves or mineral resources and is not based on prefeasibility or feasibility studies. To date, the Lumwana mine has significantly underperformed original feasibility study projections disclosed by Equinox.

There are no strategic benefits for Lundin Mining shareholders under the unsolicited offer. The acquisition results in a company with high Africa and Middle East concentration and few, if any, synergies with Lundin Mining's business.

The board has reservations about the experience of the management of Equinox to operate a multimine company, with projects and mines spread across seven countries.

The unsolicited offer is highly conditional and has a substantial risk regarding completion without additional compensation for such risk. Conditions are subject to Equinox's lenders discretion resulting in Equinox, in many instances, not being the ultimate decision maker.

The unsolicited offer may be a violation of Section 5 of the U.S. Securities Act of 1933, as amended.

Lundin Mining's directors, officers and certain shareholders have confirmed that they will not tender their common shares to the unsolicited offer.

Shareholders do not need to take any action in response to Equinox's proposed offer at this time.

We seek Safe Harbor."

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• Copper, Zinc and Cobalt: Equinox to offer $4.8-billion for Lundin takeover at CAD8.1 per share lun.to, czx.v, tnr.v, ngq.to, fcx, eqn.to, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, rio, bls.to, tck (sufiy.blogspot.com)
• Copper, Zinc and Cobalt: LUNDIN MINING ANNOUNCES POTENTIAL UNSOLICITED TAKE-OVER BID lun.to, czx.v, tnr.v, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, rio, bls.to, tck (sufiy.blogspot.com)
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• Canada Zinc Metals: M&A play with tight Zinc supply: "No more ore at Century" czx.v , lun.to, tnr.v, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, rio, bls.to, tck (sufiy.blogspot.com)
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Copper, Zinc and Cobalt: Equinox to offer $4.8-billion for Lundin takeover at CAD8.1 per share lun.to, czx.v, tnr.v, ngq.to, fcx, eqn.to, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, rio, bls.to, tck

    We have discussed yesterday Lukas Lundin and his companies, which could be affected by this bid. We have a nice 26% premium to the Friday's closing already, but we will be very surprised if Lukas Lundin will let this company slip out of his hands for anything less than CAD10.0 per share.

   Now speculation will begin this week whether he will be able to defend the company and stay with Inmet together. The obvious choice will be to change the Inmet merger arrangements and provide some premium to Lundin Mining shareholders - more than Equnox is offering. Can the new suitor materialize as well - we will see it shortly. Freeport McMoRan can step in and consolidate Tenke Fungurume stake, but so far this company was not in a hurry. Equnox bid can change the situation as Lundin Mining team was developing the Tenke Fungurume project in Congo and there is no any benefit for FCX to lose the stake in Tenke Fungurume to another company.

  We will be watching Canada Zinc Metals today and NGeX Resources. We have covered CZX.v yesterday and NGeX is the Global Exploration Company of Lukas Lundin - should he decide to sell Lundin Mining at one point this company can get more of his capital and attention.

"Equinox to offer $4.8-billion for Lundin takeover

Ticker Symbol: C:EQN C:LUN

Equinox to offer $4.8-billion for Lundin takeover

Equinox Minerals Ltd (C:EQN) 

Shares Issued 877,042,919

Last Close 2/25/2011 $6.27

Sunday February 27 2011 - News Release

Also Lundin Mining Corp (C:LUN) News Release

Mr. Craig Williams of Equinox reports

EQUINOX ANNOUNCES TAKEOVER OFFER FOR LUNDIN

Equinox Minerals Ltd. will make an offer to acquire Lundin Mining Corp. for approximately $4.8-billion in cash and shares.

Under the terms of the Offer, Equinox proposes to acquire all of the outstanding common shares of Lundin for a combination of cash and Equinox shares for a total consideration value of C$8.10 per Lundin share. Each Lundin shareholder can elect to receive consideration per Lundin share of either C$8.10 in cash or 1.290

3 Equinox shares plus $0.01 for each Lundin share, subject to a pro-ration based on a maximum cash consideration of approximately C$2.4 billion and maximum number of Equinox shares issued of approximately 380 million. The Offer reflects a 26% premium to the closing price of C$6.45 per Lundin share on the TSX on February 25, 2011.

The Offer is consistent with Equinox's strategy of becoming the leading global pure copper growth company. Equinox believes that the combination of Equinox's and Lundin's world-class asset portfolios will position the combined company to deliver significant value to its shareholders through its superior leverage to near-term strength in copper prices and strong growth profile. The combined group will have an outstanding production growth profile relative to the global copper sector, with a targeted 23% compound annual growth rate in production over the next six years, culminating in planned production of approximately 500,000 tonnes of copper per annum by 2016. Growth would be delivered entirely from lower risk expansions of existing operations and a project currently under construction.

The combination of Equinox and Lundin will also deliver a significantly higher copper production profile over the next six years compared to the profile of a combined Lundin and Inmet Mining Corporation ("Inmet"), delivering approximately 500,000 tonnes of incremental copper over this period. This allows shareholders of both companies to increase their leverage to the anticipated near term strength in copper prices.

Equinox President and Chief Executive Officer, Craig Williams, said "This Offer is clearly superior to the nil-premium merger proposed between Lundin and Inmet. We also believe that our Offer presents an attractive option for Lundin shareholders to elect to receive cash or retain exposure to what we believe would be one of the strongest and lowest risk production and growth profiles in the copper sector today."

Highlights of the transaction

A fully funded C$4.8 billion cash and share Offer for Lundin that demonstrates Equinox's capability to identify and pursue opportunities that deliver on our goal of becoming the leading global pure copper company.

The Offer reflects a 26% premium over the closing price for Lundin shares on February 25, 2011, and therefore represents a clearly superior offer for Lundin shareholders than the recommended Lundin and Inmet nil-premium merger.

Shareholders of both companies benefit from superior leverage to the near-term copper price cycle.

Cements Equinox's position as a leading global pure copper company with a diversified portfolio of world class assets and an outstanding growth pipeline.

The transaction will be immediately accretive for Equinox shareholders on a cash flow and earnings per share basis.

Equinox Chairman, Peter Tomsett, said "The Offer which seeks to combine the world class assets of the two companies demonstrates Equinox's capability to identify and pursue opportunities that present a strong strategic fit with our goal to become the world's leading pure play copper company."

Having taken Lumwana from an exploration project to one of the world's most significant new copper mines over the last 10 years and having successfully acquired the Citadel Resource Group, Equinox strives to continue to deliver shareholder value by building a portfolio of quality assets with embedded growth.

Equinox President and Chief Executive Officer, Craig Williams, said "The combination of the assets of Equinox and Lundin will constitute one of the most attractive and highest quality asset portfolios in the copper sector. The combination of those assets plus the significant near term expansion potential within the portfolio and the highly prospective exploration upside in the world's key emerging copper regions constitutes a combined company that will be one of the world's premier copper companies".

The combined company will consist of five substantial producing operations by mid 2012, providing significant geographic and copper production diversity. Equinox operates the Lumwana mine in Zambia (100%) and is currently constructing the Jabal Sayid project in Saudi Arabia (100%). Lundin's assets include the Tenke Fungurume copper mine (24%) in the Democratic Republic of the Congo, Neves-Corvo in Portugal (100%) and Zinkgruvan in Sweden (100%).

Equinox strongly believes that the Offer will be very attractive to Lundin shareholders and clearly preferable to a nil-premium merger which carries increased development and financing risk. Accordingly, the Equinox board determined to announce the Offer to enable Lundin's shareholders to consider this highly attractive alternative prior to the proposed shareholder vote on the nil-premium merger with Inmet scheduled for March 14, 2011.

Funding

The cash consideration of Equinox's Offer is financed through a US$3.2 billion bridge facility being led by Goldman Sachs Lending Partners and Credit Suisse Securities. Equinox expects the financial strength of the combined company to allow it to return to a net cash position within four years based on current analyst consensus copper price forecasts.

Equinox intends to refinance the bridge facility through a combination of medium and long term debt instruments. Equinox has no plans to undertake an equity raising as part of the refinancing of the bridge.

The Offer

Full details of the Offer will be included in the formal offer and take-over bid circular to be mailed to Lundin shareholders. Equinox expects to formally commence the Offer and mail the offer and circular to shareholders in the coming days.

The Offer will be subject to certain conditions including, without limitation, termination of the existing Lundin-Inmet Arrangement Agreement in accordance with its terms, and a simple majority approval of Equinox shareholders of the issuance of the Equinox shares to be issued under the Offer at a meeting of Equinox shareholders that Equinox expects to occur in early to mid April. Other conditions will include acceptance of the Offer by Lundin shareholders owning not less than two-thirds of Lundin's shares outstanding on a fully-diluted basis, and receipt of applicable regulatory approvals, and other customary unsolicited offer conditions.

Advisors and counsel

Goldman, Sachs & Co. is acting as lead financial advisor to Equinox and TD Securities Inc. is acting as joint financial advisor to Equinox. Equinox's legal counsel is Osler, Hoskin & Harcourt LLP.

North American/European Investment market call and webcast

Equinox will host an analyst and investor conference call and webcast on February 28, 2011 at 10:00am Canadian/US Eastern Standard Time, 3:00pm London Time and 4:00pm Stockholm Time.

Australian/Asian Investment market call and webcast

Equinox will host an analyst and investor conference call and webcast on March 1, 2011 at 9:30am Australian Eastern Daylight Savings Time and 6:30am Perth and Hong Kong Time.

For dial in details please see Appendix A to this announcement.

We seek Safe Harbor.

© 2011 Canjex Publishing Ltd."

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• Canada Zinc Metals to meet with Tongling Nonferrous Metals Group at end of February czx.v , lun.to, tnr.v, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, rio, bls.to, tck (sufiy.blogspot.com)

Copper, Zinc and Cobalt: LUNDIN MINING ANNOUNCES POTENTIAL UNSOLICITED TAKE-OVER BID lun.to, czx.v, tnr.v, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, rio, bls.to, 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

Copper, Zinc and Cobalt: Inmet and Lundin Announce Merger.

    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.

NEWS RELEASE

LUNDIN MINING ANNOUNCES POTENTIAL UNSOLICITED TAKE-OVER BID

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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Lundin Mining drills 36.5 m of 1.44% Cu at Neves-Cuevo, earns $59-million (U.S.) in Q3 lun.to, czx.v, tnr.v, sgc.v, tck, bhp, fcx, rio, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, bls.to

  Yesterday, some headlines suggested that Lundin Mining missed estimate with its reported Q3 numbers - we are not following it yet at the depth sufficient to give here any comments on existing estimations. Earnings reported are mixed with different one time charges and we will need to dig it deeper in order to understand how financials will be effected in the short term by the announced reduced outlook for production for 2010. Nothing so far changed our own valuation and the big picture outlook.

  We are here to talk about the big picture and where this company is positioned in it. It is the play on Tenke Fungurume growth with its Cobalt and Copper production. If you believe in Friedland's future - it is about next 30 years when "phenomeon" of electric cars will drive the demand in Green metal and Lithium. Lundin Mining at these levels will be a potential target for acquisition for the slice of Tenke Fungurume. Freeport McMoran will be the natural suitor and should bid, in our view, at least for the Tenke Fungurume stake - if not for the all company. Another combination from FCX and LUN  will be to announce further expansion in production and sell all this story to the Chinese interests, who are positioned very strongly in the DRC.
    Financial Times picked up the most important for the Lundin Mining future, which market will have yet to reflect in its valuation. "Perception of risk surrounding the Tenke licence increased in August when Canada's First Quantum Minerals was stripped of the last assets in Congo." Market knew about this situation before and Lundin Mining was sold into the ground to  below 3.0CAD during last summer.
   Now, with Tenke Fungurume in full play Lundin Mining will be an easy target below 6.0CAD. Financials will drag the company for a while on the operational side, but Tenke's potential will be the blue sky here. New discovery in Europe will help to the whole picture of resources controlled by this company. The company is highly leveraged to Copper and Zinc prices as well.
     The most interesting will be to see how Lukas Lundin will use this opportunity and address its own growth prospects. Company has 300 mil credit line and can use its own currency for further acquisitions. On the technical side company has made a break out of Cup and Handle pattern to the upside, these days  stock is testing the break out level at CAD6.0 and provide an entry point according to our logic. We will monitor the new research notes coming out - to address the full potential of Tenke Fungurume for the company.

Lundin Mining Q3 presentation

"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."
  

  

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Globe says Lundin Mining target boosted to $8 lun.to, czx.v, tnr.v, mai.to, fcx, rio, bhp, tck, bwr.to, cs.to, imn.to, tko.to, wrn.to, qux.to

We have first upgrades and boost in a share price target for Lundin Mining after the Tenke Fungurume news.

"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."

StockWatch:

Globe says Lundin Mining target boosted to $8

2010-10-26 05:45 ET - In the News

The Globe and Mail reports in its Tuesday edition that Lundin Mining jumped 15 cents to finish Monday at $6.90. The Globe's Darcy Keith writes in the Eye On Equities column that Lundin Mining stock has a 52-week range of $2.91 to $7.04. Lundin Mining will now hold a 24-per-cent ownership interest in the Tenke mine following an agreement between Freeport-McMoRan Copper & Gold and the government of the Democratic Republic of Congo. CIBC World Markets analyst Alec Kodatsky says the deal clears the way for further investment to expand the mine. Mr. Kodatsky boosted his price target by half a buck to $8. UBS Securities Canada analyst Onno Rutten upgraded his rating on Lundin Mining to "buy" from "neutral" with a price target of $5.20 in the Eye column on June 23. The stock was then worth $3.62. TD Securities analyst Greg Barnes maintained Lundin Mining at "buy" in the Eye column on Feb. 24. Lundin Mining stock could then be had for $4.44. Mr. Barnes targeted the stock at $7. The Globe's Allan Robinson wrote on Sept. 18 that Lundin Mining stock still had room to rally. It was then trading at $3.89. The Globe's David Parkinson said Lundin Mining was underpriced on Sept. 2. It was then worth $3.71.

Stockwatch:

FP says HudBay missed a big opportunity with Lundin

2010-10-26 06:03 ET - In the News

See In the News (C-HBM) HudBay Minerals Inc

The Financial Post reports in its Tuesday, Oct. 26, edition that Lundin Mining's successful conclusion of the review of Tenke Fungurume Mining's contracts in the Democratic Republic of Congo must have HudBay Mining shareholders wondering what life would be like now had the Nov. 21, 2008, merger gone through. The Post's Barry Critchley writes that it is a certainty that HudBay shareholders would have ended up a lot better off had the miner been successful in issuing $488-million of stock and buying Lundin. Try about $800-million better off, or $5 to $6 a share given that HudBay has 149 million shares outstanding. HudBay shares closed Monday at $16.39. As of Monday, HudBay has a market cap of $2.44-billion, while Lundin has a cap of $4-billion -- a gap of $1.56-billion. Half the difference, or $780-million, was left on the proverbial table by HudBay shareholders. "By their actions the HudBay shareholders have deprived themselves of an enormous windfall," says an unnamed observer. Another unnamed observer says, "Notwithstanding all the noise at the time, it looks like that the smartest guys in the room were actually" former chief executive officer" Allan Palmiere and the board of HudBay after all."

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  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.

Lundin partner completes positive Tenke review

2010-10-22 07:12 ET - News Release

Mr. Phil Wright reports

LUNDIN ANNOUNCES SUCCESSFUL COMPLETION OF TENKE FUNGURUME CONTRACT REVIEW PROCESS

Lundin Mining Corp. has learned the government of the Democratic Republic of Congo (DRC) and Freeport-McMoRan Copper & Gold Inc. have successfully concluded the review of Tenke Fungurume Mining's (TFM) contracts. The joint news release reports as follows:

QUOTE

KINSHASA, DRC and PHOENIX, AZ, October (22), 2010 - The government of the Democratic Republic of Congo (DRC) and Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) announced today the successful conclusion of the review of Tenke Fungurume Mining's (TFM) contracts. The conclusion of the review process by the DRC government confirms that the Tenke Fungurume contracts are in good standing, and acknowledges the parties' continuing commitment to the rights and benefits granted under the existing TFM contracts.

In connection with the review, the parties will incorporate clarifying language that its rights and obligations are governed by the mining convention. TFM's key fiscal terms, including a 30-per-cent income tax rate, 2-per-cent mining royalty rate and 1-per-cent export fee, will continue to apply and are consistent with the rates in the DRC's current mining code.

His Excellency the Minister of Mines of the DRC and FCX chief executive Richard Adkerson issued the following joint statement: "We are pleased to announce completion of the contract revisitation process for Tenke Fungurume Mining. The parties worked cooperatively to reach a mutually satisfactory conclusion of the issues raised during the process. This important milestone provides the basis for future cooperation and enables TFM to pursue additional investments to develop this massive project to its full potential."

Mr. Adkerson expressed his appreciation to His Excellency the President of the DRC, His Excellence the Minister of Mines and the Minister's staff for their efforts in completing the review. Mr. Adkerson stated: "We are committed to continuing our positive partnership with the DRC government and providing significant benefits to the Congolese people for decades to come. We look forward to continued development of Tenke Fungurume into one of the world's premier copper and cobalt operations, using world-class standards for environmental management and social programs. The project will provide large and sustainable benefits associated with employment, infrastructure development, taxes, royalties and other benefits to the government and Congolese people over its long life."

TFM agreed to several additional commitments, including an increase in Gecamines ownership interest in TFM from 17.5 per cent to 20 per cent; an additional royalty of $1.2-million for each 100,000 metric tonnes of proven and probable copper reserves above 2.5 million metric tonnes; additional payments totalling $30-million to be paid in six instalments upon reaching certain production milestones; conversion of $50-million in intercompany loans to equity; and a payment of $5-million for surface area fees. In addition, TFM has agreed to expand Gecamines's participation in TFM management and reiterated its commitment to the use of local services and Congolese employment. In connection with the agreed modifications, the parties have agreed to increase the annual interest rate on advances from the current rate of LIBOR plus 2 per cent to LIBOR plus 6 per cent. These terms have been agreed to by TFM, its shareholders and the DRC government and will be incorporated into the related agreements.

The Tenke Fungurume mining concessions are located in the Katanga province of the DRC approximately 110 miles northwest of Lubumbashi. Copper production commenced last year on the approximately $2-billion initial development project, the largest such capital investment in the DRC in recent years. Current operations are designed to produce approximately 250 million pounds of copper and 18 million pounds of cobalt per year and the operation is currently being expanded to approximately 290 million pounds of copper per annum starting in 2011. The initial development project was designed and constructed in world-class fashion, using leading-edge technology and following international best practice standards for environmental management, occupational safety and social responsibility. TFM continues to engage in drilling activities, exploration analysis and metallurgical testing, and has commenced feasibility studies to evaluate the potential of this highly prospective mining district that will enable significant future expansion and enhance the long-term partnership with Gecamines, the government of the DRC, and the Congolese people. In the aggregate, through June 30, 2010, tax and related payments to government institutions, transfer bonuses, and social spending within the DRC has totalled approximately $370-million since the project's inception. TFM estimates more than two-thirds of the economic benefits from the project remain in the DRC in the form of taxes, royalties and duties, and the provision of local services."

UNQUOTE

The company notes that the shareholding change benefiting Gecamines will be shared proportionately by Lundin Mining and Freeport-McMoRan Copper & Gold Inc. As a result Lundin Mining's equity interest in TFM will reduce from 24.75 per cent to 24 per cent. The company will benefit from the increase in the annual interest rate on advances from the current rate of LIBOR plus 2 per cent to LIBOR plus 6 per cent.

Commenting on the news, Lukas Lundin, chairman of Lundin Mining, said, "We are very pleased to have achieved this resolution which has important benefits as we and our partners continue to pursue the significant potential of the highly prospective mineral district at Tenke Fungurume."

We seek Safe Harbor."

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