Lundin mining merger with Tenke mining could spike the bidding war

It is all happening so fast: only few weeks ago on April 4th Lundin mining announced all cash offer at CAD 5.0 per share of Rio Narcea for all shares outstanding. And now we have a new deal to buy out Tenke mining with their major asset of 24.75% in Tenke Fungurume copper/cobalt mine in Congo. In announced all share deal shareholders of Tenke mining are offered 1.73 shares of Lundin minig for each share, but I will be surprised if Lundin mining will get Tenke at first price offer. Lundin mining motivation is clear: such asset is still under radar of investment crowd and almost not followed by anyone. With construction of mine at full speed and expected first production in 2008 price for Tenke mining will increase dramatically as soon as story will hit news letters and stock becomes followed by analysts. Definitely Lundins would like to keep Tenke Congo assets inside the family line of business as long as it is possible. Now Lundin family hold around 14% in Lundin mining and almost 20% in Tenke minig. It will be much harder to buy out Lundin mining then Tenke mining even at recent price due to much higher capitalisation. After the merger Lunding mining will have aproximatly 389.9 million shares. At 20 day average price before deal announcement on April 15th of CAD 13.51 per share Lunding mining market cap will be CAD 5.3 billion, not a change even for industry hevyweighters like BHP, RIO Tinto or CVRD. But what is the fair price for Tenke shareholders? Tenke Fungurume 24.75% stake was valued at CAD 1.4 billion at the moment of announcement. After conference call a lot of question need to be addressed by Tenke mining's management and Board members. Tenke Fungurume was always portrayed as one of the largest Copper deposits in the world with only half of the concession beein explored. Assessment of price was done on "flat" production of 115000 t of Cu per year without any consideration for premium for increase to 200000 t and later for 400000 annual production. New resource estimate was supposed to be published by mid 2007 which will incorporate all drilling in 2006 year done by Phelps Dodge. Feasibility study was never published in full details and total price assessment process does not look transparent. Companies have Directors which are sitting on the Boards of both Companies and conflict of interest must be definitely addressed. Now Freeport-McMoRan Copper & Gold Inc move will be very interesting: from Phelps Dodge (company was aquired recently by FCX)perspective it will be much cheaper now to bid for outstanding 24.75% of Tenke Fungurume - who could better know the value then the Operator of the property. Will they allow Lundins to keep it or they will try to bid now? In the end shareholders of Tenke mining will be in good hands with Lundins, but as Tenke shareholder I would prefer better price and if more bidders will come we can get easily ratio of 2.5 - 3.0 of Lundin mining share for 1 Tenke mining share. With proposed 73/27 ratio for Lundin mining and Tenke mining shareholders respectively Lundins will have 14%*73%+20%*27%=15.62% it is not a lot to defend against unfriendly offer, but size of the Company will help to prevent losing assets before their full pricing potential. I think that following scenario will be the best for Tenke shareholders:

1. Clear explanation by the Tenke mining Board on price decision on Tenke mining side and conflict of interest must be addressed from Lundins for their integrity for which they are highly respected in minig industry.

2. Bidding war with FCX or Newcomer will help to get higher premium for world class asset in copper/cobalt mine, but in the end it will be better to stay with Lundins at higher ratio of exchange.

2. Fast development of Russian wild card - Ozernoe zinc deposit: with Tenke Fungurume in production it could bring Lundin mining fast to 10 billion mark in market cap.

3. South American projects spin off is very positive. It will allow to concentrate on exploration and acquisition of promising gold prospects, with Lundins back up financing will be not a problem and Paul Conibear's management grip will help to make second success like Tenke in grass root exploration projects. More information on the deal could be found on:

http://cnrp.ccnmatthews.com/client/tenke_mining/release.jsp?year=2007&actionFor=644917&releaseSeq=0
Author is long Tenke mining shares

Lundin mining merger with Tenke mining could spike the bidding war

It is all happening so fast, but I will be surprised if Lundin mining will get Tenke at first price offer. Lunding mining motivation is clear: such asset is still under radar of investment crowd and almost not followed by anyone. With construction of mine at full speed and production in 2008 price for Tenke mining must increase dramatically as soon as it will be covered by analysts. Definitely Lundins would like to keep Tenke Congo assets inside the family line of business as long as it is possible. It will be much harder to buy out Lunding mining then Tenke mining even at recent price due to much higher capitalisation. But what is the fair price for Tenke shareholders? After conference call a lot of question need to be addressed. Tenke Fungurume was always portrayed as one of the largest Copper deposits in the world. Assessment of price was done on "flat" production of 115000 t of Cu per year without any consideration for premium for increase to 200000 t and later for 400000 annual production. New resource estimate was supposed to be published by mid 2007 which will incorporate all drilling in 2006 year done by Phelps Dodge. Feasibility study was never published in full details and total price assessment process does not look transparent. Companies have Directors which are sitting on the Boards of both Companies and conflict of interest must be definitely addressed. Now Freeport-McMoRan Copper & Gold Inc move will be very interesting: from Phelps Dodge perspective it will be much cheaper now to bid for outstanding 24.75% of Tenke Fungurume - who could better know the value then the Operator of the property. Will they allow Lundins to keep it or they will try to bid now? In the end shareholders of Tenke mining will be in good hands with Lundins, but I would prefer better price and if more bidders will come we can get easily ratio of 2.5 - 3.0 of Lunding mining share for 1 Tenke mining share. With proposed 73/27 ration for Lunding mining and Tenke mining shareholders respectively Lundins will have 14%*73%+20%*27%=15.62% not a lot to defend against unfriendly offer, but size of the Company will help to prevent losing assets before their full pricing potential. What will be the best for Tenke shareholders:
1. Clear explanation of price decision on Tenke mining side and conflict of interest must be addressed from Lundins for their integrity.
2. Bidding war with FCX or Newcomer, but stay with Lundins at higher ratio of exchange.
2. Fast development of Russian wild card - Ozernoe zinc deposit, with Tenke Fungurume in production it could bring Company fast to 10 billion mark.
3. South American spin off - will allow to concentrate on exploration and acquisition of promising gold prospects, with Lundins back up financing will be not a problem and Paul Conibear's grip will help second success like Tenke in the making.
http://cnrp.ccnmatthews.com/client/tenke_mining/release.jsp?year=2007&actionFor=644917&releaseSeq=0
Author is long Tenke mining shares

Lundin Mining Announces Successful Completion Of Tenke Fungurume Contract Review Process LUN.to, FCX, CZX.v, TNR.v, BHP, MAI.to, RIO, BWR.to, CS.to, IMN.to, NCU.to, TKO.to, WRN.to, QUX.to

  

  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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Tenke Mining Update Gecamines Transparency Issue

As I wrote before this is one of the most important issues holding stock back.

FCX is ready to advance project in case of its merger with PD.

"Gecamines Mining Contract Reviews Being Done `Calmly' (Update1)
By Antony Sguazzin
Feb. 7 (Bloomberg) -- Gecamines, the state-owned copper mining company, said its review of contracts with foreign companies won't affect their operations in the Democratic Republic of Congo.
While the review may be of concern to investors, it is being carried out in a ``spirit of improvement,'' Paul Fortin, the company's managing director, said today at the Mining Indaba conference in Cape Town.
``It will be a review that is done objectively and calmly with discussions,'' Fortin said. ``It should be viewed as something that will not disturb your operations.''
Congo held its first democratic elections in four decades last year and is now trying to revive its economy after civil wars killed four million people and destroyed already limited infrastructure. The country has some of the world's biggest copper and cobalt reserves.
On Oct. 31, Fortin said in an interview that the equity stakes Gecamines holds in project will be looked and claims where little has been done to explore for metals or develop mines may be reclaimed.
Gecamines' accords with Phelps Dodge Corp., Global Enterprises Co. and Kinross Forrest will be reviewed after the World Bank questioned the transparency of the contracts, the Financial Times reported on Jan. 3.
To contact the reporter on this story: Antony Sguazzin in Johannesburg at asguazzin@bloomberg.net . "

I can not find any source with credible information from Liege Belgium where Congo Mining Workshop took place apart this post from StockHouse BB:

"Fortin on Tenke production

Congo Mining Workshop (01/12/2007) Liège-Belgium
Tenke-Fungurume production forecast:Copper in ktCu 2009=40 2010=40 2011=40 2012=65 2013=141 2014=141 2015=60 Cobalt. in ktCo 2009=02 2010=02 2011=02 2012=05 2013=009 2014=011 2015=08
Total for his presentation with Gecamines-partners: DCP KCC KMT TFM SMK RMbut not CAMEC, AFRICO or Chinese like Covec, Hanrui or Wambao
Copper in ktCu 06=72 07=132 08=196 09=329 10=432 11=515 12=540 13=616 14=616 15=616 Cobalt in ktCo 06=13 07=17.6 08=21.7 09=28.1 10=34.5 11=43 12=46 13=56 14=57 15=52
DCP = NIKANOR = DRC Copper Project ( Tilwezembe - Kananga - KOV)KCC = KATANGA MINING = Kamoto Copper CompanyKMT = FIRST QUANTUM = Kingamiambo Musonoï Tailings SarlTFM = TENKE/PHELPS-DODGE = Tenke Fungurume MiningRM = METOREX = Ruashi Mining (Ruashi - Etoile)"

If it will be confirmed it means that Paul Fortin Managing Director of Gecamines Partner of Phelps Dodge and Tenke mining in Tenke Fungurume project is ALREADY counting production from this project in 2009 (in line with Tenke mining estimates) and question of Transparency in case of Tenke Fungurume Gecamines deal will be resolved and conditions reconfirmed in the nearest future. It will clear hopefully last political hurdle on the way of stock appreciation to its intrinsic value.

Lundin Mining LUN.to LMC is "punished" by Congo situation

I was with Tenke Mining for many years: political risk was always there and will be always there. This was the only reason I could buy this one at 0.9 CAD.

Interpretation of this risk is what matters for the stock price. My own personal take is that all these "news" are actually positive for Lundin Mining. Only if someone is investing after Mad man on BubbleTV sad Buy and without any DD this will be out of the blue.

Revision of all mining licenses in DRC are taking place from the very beginning of this year: you can find information on this blog: just search Tenke mining. Even Doug Casey once has put Tenke Mining on SELL because of it...at 5.o CAD. Should I remind you the price of TNK.to last April?

Actually now information from management is confirmed: Tenke Fungurume is not under question of termination. Renegotiation is another story and could certainly happen, but before you will sell in panic give it a thought:

1. Just check the value of the resources in Tenke Fungurume and discount by the market value of it in Lundin mining. Find conditions of the deal on this blog.

2. If conditions will be different - then previous uncertainty will be resolved and actual value, even still with Congo country risk, will be much higher. NPV of the project assumed long term copper prices of 1.0 USD. Value of Tenke Mining for Lundin Mining based on 8 cents for lb of Cu in the DRC ground. Extension of the resource base was never announced after latest drilling: I will guess that news will come out after "renegotiation".

3. "Renegotiation" are already well under way: Kabila - President of DRC, has visited Washington within last two weeks and met with G.W. Bush. Freeport-McMoran FCX is not a small company: they must have their own connection. There is some information (do not Trade on this one) that it is possible that people who looks like Kabila, his Minister of Defence and Minister of Mines have visited FCX properties in part of former Phelps Dodge which was recently acquired by FCX.

4. There are also some very important provisions in the Tenke Mining and former Phelps Dodge agreement on Tenke Fungurume: if capital required for putting Tenke Fungurume into production will exceed 25% PHD and now FCX will be responsible for all overcup.

As usual all this information does not contain any investment advise and only my thoughts on this particular situation.

If you will insist my advise will be only to read CS and that if you are on a margin or have put your house in ANY stock in the market SELL immediately. In all other cases obtain all information and then entertain yourself with your own thoughts and decisions.

The news could be found here:

http://uk.reuters.com/article/hotStocksNews/idUKL038094520071103

http://www.mining-journal.com/Breaking_News.aspx?breaking_news_article_id=4130

http://www.mining-journal.com/Breaking_News.aspx?breaking_news_article_id=4133

Tenke mining Merger offer from Lundin mining

It all happening so fast, I will be surprised if Lundin mining will get Tenke at first price offer. Definitely Lundins would like to keep Tenke Congo assets inside the family as long as it is possible. It will be much harder to buy out Lundin mining then Tenke mining even at recent price. FCX move will be very interesting: will they allow Lundins to keep it or they will try to bid now? In the end we will be in good hands, but I would prefer better price and if more bidders will come we can get easily ratio of 2.5 - 3.0 for 1 Tenke mining share. Assessment was done on "flat" production of 115k of Cu without any premium for increase to 200k and later for 400k annual production. With proposed 73/27 ration for Lundin mining and Tenke mining shareholders respectively Lundins will have 14%*73%+20%*27%=15.62% not a lot to defend against unfriendly offer, but size of the Company will help to prevent losing assets before their full pricing potential. What will be the best for Tenke shareholders:

1. Bidding war with Newcomer, but stay with Lundins at higher ratio.

2. Fast development of Russian wild card - Ozernoe zinc deposit, with Tenke Fungurume in production it could bring Company fast to 10 billion mark.

3. South American spin off - will allow to concentrate on exploration and acquisition of promising prospects with Lundins back up financing will be not a problem and Paul Conibear's grip will help second success like Tenke in the making.

http://biz.yahoo.com/iw/070411/0237310.html

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."
  

  

Related articles

• 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 (sufiy.blogspot.com)
• The Financial Post says Lundin Mining catches a break with DRC lun.to, czx.v, tnr.v, mai.to, fcx, rio, bhpbwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to (sufiy.blogspot.com)
• LUNDIN Mining ANNOUNCES SUCCESSFUL COMPLETION OF TENKE FUNGURUME CONTRACT REVIEW PROCESS LUN.to, FCX, CZX.v, TNR.v, BHP, MAI.to, RIO, (sufiy.blogspot.com)
• Sunridge Gold completes $10-million private placement, Lundin Mining keeps its stake sgc.v, lun.to, czx.v, tnr.v, ngq.to, bnp, rio, fcx, tck, bwr.to, cs.to, imn.to, ncu.to, tko.to, wrn.to, qux.to, bls.to, (sufiy.blogspot.com)
• Lundin shares surge after DRC mine resolved (financialpost.com)
• Canada Zinc Metals shareholder closer to investing more 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)
• UPDATE 2-Lundin profit misses expectations, shares tumble (reuters.com)
• First Uranium, than Potash, Now Copper and Lithium: Friedland sees blue skies for copper on "phenomeon" of Electric Cars TNR.v, CZX.v, LIT, TSLA, LIT;v, RM.v, LI.V, WLC.v, CLQ.v (sufiy.blogspot.com)
• Credit Suisse: Brace Yourself For $10,000 Copper TNR.v, MAI.v, CZX.v, LUN.to, FCX, CUU.v, RVM.v, BHP, RTP, AUY, BVN (sufiy.blogspot.com)
• Copper in Canada: Copper Fox Metals on the move today CUU.v, TNR.v, CZX.v, LUN.to, FCX, BHP, RTP, CS.to, BWR.to, IMN.to, IVN.to, QUX.to, TKO.to, QUX.to, NCU.to, GMO (sufiy.blogspot.com)
• Lukas Lundin's NGEX drills 13 metres 3.3% Cu at Aradaib prospect in Eritria NGQ.to, SGC.v, NSU.to, AUY, GG, FCX, BHP, TCK, LUN.to, CXZ.v, TNR.v, AMM.to, GRC.to, NEM, RGLD, RTP (sufiy.blogspot.com)
• CIBC: Los Azules, Minera Andes and TNR Gold in the report: Tne Next Leg of Growth in the Copper Supply Chain TNRNG.to, CZX.v, ABX, FCX, BHP, TCK, BVN, AUY, RTP, LUN.to, BAJ.to, BWR.to, CS.to, EQN.to, IMN.to, NCU.to, IVN.to, WRN.to, TKO.to, QUX (sufiy.blogspot.com)
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Tenke Mining Hungry Chinese Dragon needs more food

With recent spike in volume somebody is clearly accumulating serious position in Tenke mining, Merger between FCX and PD will be voted on 14th of March, after that we can expect fast developments on financing front and resource estimation with drill results accounted from PD 2006 exploration programme. Important that Argentina's projects Value will be realised before possible Takeover TNK.to. I hope it will be in the way of spin off with dividend in kind transaction. Paul Conibear has told before that FCX even more aggressive with Tenke Fungurume story:

"Supply constraints, China demand underpin prices: FCX
Mine supply constraints, along with continuing strong Chinese demand, look set to underpin copper prices in coming years, Richard Adkerson, president and CEO of Freeport-McMoRan Copper & Gold, said during the last week of February.
"We feel good about demand but particularly good about supply," Adkerson told the BMO Capital Markets 2007 Global Resources Conference in Tampa, Florida, via webcast. "We know how tough it is to find new sources of copper and develop them in today's world .... In the past few years the industry has fallen short of its supply targets. We're just not seeing new Grasbergs and Escondidas," he said.
One potential new project is Tenke Fungurume in the Democratic Republic of Congo, partly owned by Phelps Dodge. Freeport is in the process of acquiring fellow US copper producer Phelps Dodge, and expects to complete the transaction next month.
Part-owner Tenke Mining announced February 26 that the feasibility study had been completed for the first phase of production at Tenke Fungurume, targeting initial output of around 115,000 mt/year of Grade A-quality copper cathode and 8,000 mt/year of cobalt. Full production of copper is scheduled to occur as early as the fourth quarter of 2008, with full cobalt production as early as the end of the first quarter of 2009.
"To have Tenke Fungurume in the same company with Grasberg [Freeport's copper-gold mine in Indonesia] is an exciting part of what we have before us," Adkerson said.
An executive with minority shareholder Tenke Mining said he didn't expect the newly elected government in the DRC to implement any new tax measures that would delay production. "The Congo needs successful mining projects like this to go ahead [rather] than change the tax code," president and CEO Paul Conibear said during the same conference. "Can they change things? Will they change things? I don't think so," he said. "I think President [Joseph] Kabila knows he has to help instill investor confidence for him to achieve his goals of stabilizing the country."
Meanwhile, lagging mine output is making life "tough" for smelters, Adkerson suggested: "There's more than adequate smelter capacity and a shortage of concentrate."
On the demand side, China will be "an important source of demand to the industry for years to come," he said. While Adkerson acknowledged that soaring copper prices had seen some substitution away from the metal in certain sectors, noticeably plumbing - "substitution is a fact of life and a function of high prices" - he argued that copper's particular physical properties continued to make it the preferred choice in most of its applications.
The combined Freeport-Phelps Dodge - which will be the world's second-largest copper producer behind Chilean state miner Codelco - will be well positioned to weather any downturn in copper prices, Adkerson said.
"If prices were to get to a low level, we have a set of assets that can respond to it," he said, adding: "We would be in a position to flex production more aggressively than Phelps Dodge was able to in the past." Freeport's Grasberg copper-gold mine "can generate profits at any level of prices," Adkerson said.
Assuming 2007 average copper prices of $2.50/lb and average gold prices of $600/oz, along with achievement of current 2007 sales estimates, the company's PT Freeport Indonesia unit has estimated its annual 2007 unit net cash costs, including gold and silver credits, will be about 63cts/lb.
The London Metal Exchange cash copper settlement price March 2 was $6,056/mt ($2.75/lb), while spot gold reached an afternoon fix in London at $651.90/oz.
Consolidation moves in recent years have left the copper industry as a whole in a better position to respond to a price downturn than in the past when a fragmented sector saw smaller companies needing to continue producing regardless of prevailing prices, Adkerson suggested.
Created: March 6, 2007"

Tenke Mining news from African Mining Congress

Mention where these news were posted:

http://eng.zgjrw.com/News/2007212/English/358557824300.html

As I wrote before Chinese are very active in the region, they are securing natural resources and other assets for worthless dollars which they have plenty (reserves are around 1 trillion USD). They are building railroads and roads to secure supply lines to feed their Dragon. Tenke mining will be bought out in the end and it is important that all Argentina and Chile properties will be spined off before that otherwise there will be no value for them in the purchase price. Dividend in kind like Capstone Mining did when they spined off Silverstone Resources comes to mind.

Apart from Chinese following the story about 17 investors now attending the Congress and will be visiting Tenke Fungurume site today. Feasibility study must be finished already and should be released in next couple of weeks.

"¡¡¡¡PHELPS Dodge Corp and Tenke Mining Corp expect to secure financing for their Tenke Fungurume project in the Democratic Republic of the Congo by September, taking them a step closer to building the continent's biggest copper mine.¡¡¡¡2006Öйú½ðÈÚÄê¶ÈÈËÎï»î¶¯ÆÀÑ¡
The two companies will borrow a "significant" portion of the US$650 million needed to build the 400,000-metric-ton-a-year mine, Tenke Chief Executive Officer Paul Conibear said in an interview in Zambia. Most of the money will be borrowed from export credit agencies and "multilateral" lenders, he said. Multilateral lenders include International Finance Corp, Bloomberg News said.
"We're looking at getting the debt in place in the third quarter," Conibear said at the African Mining Congress in Victoria Falls, Zambia. "There are very few commercial banks at the table."
Record copper prices and the peaceful elections last year have attracted miners back into the country, five years after the end of a civil war that left four million dead. The central African country, as big as western Europe, has about 10 percent of the world's copper reserves.
Phelps, based in Phoenix, and Tenke, based in Vancouver, own a combined 83 percent of the project. They favor multilateral lenders because of longer repayment periods, lower interest rates and their "political clout," Conibear said. N.M. Rothschild & Sons Ltd. is advising them on financing.
Gecamines, the Congo's state-owned copper producer, owns the balance of the project and doesn't have to fund any of its development cost."

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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