Vancouver — Advancing its plan to become a major international mining house, Lundin Mining (LUN-T, LMC-X) has tabled a $1.4-billion all-stock deal to acquire sister company Tenke Mining (TNK-T, TNKDF-O).
The latest in a series of acquisitions for Lundin, the deal brings Tenke’s 24.75% interest in the giant Tenke Fungurume copper-cobalt deposit, in the Democratic Republic of the Congo (DRC), into its portfolio of base metal operations.
Under a plan of arrangement, Tenke shareholders will be offered 1.73 Lundin shares for each Tenke share they hold. The offer is a 31.2% premium over Tenke’s 20-day volume-weighted average trading price as of April 10.
When the deal closes, pending regulatory and shareholder approvals, Lundin Mining will have 389.9 million shares outstanding, with Tenke shareholders owning about 27% of the total.
Mine construction is under way at Tenke Fungurume, with a measured and indicated resource of 235 million tonnes grading 3% total copper (2.2% acid soluble copper) and 0.31% total cobalt (0.22% acid soluble cobalt) contained mostly in oxide and mixed oxide-sulphide mineralization.
Expected to come on-stream by early 2009, the open-pit mine is expected to initially produce 115,000 tonnes (over 250 million lbs.) of copper cathode and 8,000 tonnes (17.6 million lbs.) of cobalt annually over a projected 40-year mine life.
Freeport-McMoRan Copper & Gold (FCX-N) recently absorbed Phelps Dodge and its 57.75% interest in the project. DRC state mining company Gnrale des Carrires et des Mines (Gcamines) has 17.5%.
Tenke Mining’s copper and gold properties in Argentina and Chile will be spun out to its shareholders.
A week prior to its bid for Tenke, Lundin tabled an all-cash takeover bid for nickel-gold producer Rio Narcea Gold Mines (RNG-T, RNO-X) valued at about $865 million.
Shares of Lundin slipped almost a dollar apiece in trading on April 11, closing at $13.90. Tenke shares closed up $4.42 at $23.95 on the takeover offer.
Lundin owns four mines: the Neves-Corvo copper-zinc operation in Portugal; the Zinkgruvan zinc-lead-silver and Storliden copper-zinc mines in Sweden; and the Galmoy zinc-lead mine in Ireland. Additionally, its Aljustrel zinc project in Portugal is being developed, with production expected by late 2007.
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