owns 19.9% of UCL. they have a different understanding of sovereign risk and have decided to take the high reward punt that i have spoken of. You dont have to be crazy to invest here but visionary maybe.......
Lundin dreams of $10-billion empire ANDY HOFFMAN, From Thursday's Globe and Mail
Lukas Lundin has never been shy about his ambitions to build Lundin Mining Corp. into a major international enterprise. For months he's been telegraphing the Vancouver company's intent to pull the trigger on a big acquisition.
Now, in the space of less than a week, Mr. Lundin has followed through and then some. In the past seven days he has unveiled a pair of billion-dollar deals, including a $1.4-billion all-stock offer Wednesday for Tenke Mining Corp., which owns a 25-per-cent stake in a copper deposit in the Democratic Republic of Congo that is one of the largest undeveloped ore bodies in the world.
Last week the company tacked on nickel to its portfolio with a $1-billion all-cash offer for Rio Narcea Gold Mines Ltd., which owns the Aguablanca nickel mine in Spain.
Mr. Lundin, who at 48 sits atop his family's expanding empire of resource assets, is promising there's more growth to come.
“I think in the next two years we'll be a $10-billion company,” he said in an interview, referring to Lundin Mining, the flagship base metals miner in the Lundin Group of companies. Mr. Lundin is chairman of Lundin Mining, which has a current market value of about $4-billion.
The two deals come at a time of frenzied consolidation in the mining industry, driven by soaring metal prices because of increased industrial demand from China.
If the acquisition of Tenke succeeds, the promising copper project will be added to Lundin's existing slate of four operating base metal mines in Portugal, Sweden and Ireland. Including the developing Ozernoe zinc project in Russia, Mr. Lundin believes the company's prospects are unparalleled in the industry at a time of soaring demand and record base metal prices.
“We are an unbelievable growth story, with our stuff in Russia — it's the fifth-largest zinc deposit in the world. Tenke is probably the largest copper deposit in the world. Plus we have expansion plans in Portugal and Sweden.
“There's no other growth story like this out there,” Mr. Lundin said.
Tenke, which is developing the Tenke Fungurume project with operating partner Freeport-McMoRan Copper & Gold Inc., which owns 58 per cent of the project, is already part of the Lundin Group of companies.
The Swedish Lundin family, whose mining roots were planted by Mr. Lundin's father, the late Adolf Lundin who died last year, owns nearly 20 per cent of Tenke.
The Tenke bid needs the support of two-thirds of that company's shareholders. Lundin Mining shareholders, which include Lundin family interests holding roughly 12 per cent, must vote 50.1 per cent in favour of the deal for it to proceed.
Frank Holmes, chief executive officer of mutual fund company U.S. Global Investors Inc., which owns 1 per cent of Tenke's shares as well as a stake in Lundin Mining, said he fully supports the acquisition and the game plan of Mr. Lundin.
“We are in total agreement with his vision. He's becoming the Swedish BHP Billiton of the world. . . . We'll take the Lundin paper. We are very happy in maintaining our key position with a true visionary and entrepreneur,” he said.
Lundin Mining has been long considering a bid for Tenke, which also owns gold exploration projects in South America that will be spun off into a separately traded company, since before its $1.8-billion acquisition of EuroZinc Mining Corp. last year.
Since then, interest in the Congo's rich copper deposits has grown exponentially as the African country's political situation has stabilized somewhat following years of civil war.
Late last year, the board of Phelps Dodge Corp., which was later purchased by Freeport for $26-billion (U.S.), gave the Tenke project the go-ahead.
Construction is already under way with 1,000 workers on site and production is expected to begin in late 2008.
The Tenke mine is expected to initially produce 115,000 tonnes of copper a year and 8,000 tonnes of cobalt.
However, production could be ramped up to 400,000 tonnes of copper a year after 11 years of mining, executives said on a conference call.
“We have some of the best assets in the business now.
“Tenke Fungurume is like Sudbury in 1925,” Mr. Lundin said, referring to the rich nickel deposit in the Sudbury Basin that spawned storied Canadian base metal miners Inco Ltd. and Falconbridge Ltd.
Last year, Inco and Falconbridge were respectively snapped up by foreign mining giants Companhia Vale do Rio Doce (CVRD) of Brazil and Xstrata PLC of Switzerland.
Lundin Mining is trying to fill the market void created by the loss of the Sudbury stalwarts and, even with the soaring prices of copper, zinc and nickel, Mr. Lundin thinks the current bull run has plenty left to go.
“I'm highly confident the cycle will keep going for another five years,” he said.
The Vancouver executive, who in his spare time enjoys endurance motorcycle races across Africa and Asia, said he discussed the planned bid for Tenke with Freeport CEO Richard Adkerson over lunch recently.
Lundin has the right to match any competing offers for Tenke and will be paid a $30-million break fee if Tenke accepts a higher bid.
GMP Securities acted as Lundin's financial adviser and Dundee Securities Corp. was retained by Tenke.
Lundin shares fell 98 cents yesterday on the Toronto Stock Exchange to $13.90 in heavy trading of more than 22 million shares.
UCL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
