Lundin shares jump on BHP takeover talkPublished 1:38 AM, 10 Aug...

Lundin shares jump on BHP takeover talk

Published 1:38 AM, 10 Aug 2011
Last update 8:10 AM, 10 Aug 2011
Reuters

TORONTO/LONDON - Shares of Lundin Mining rose more than 19 per cent, after a British newspaper report cited rumours that mining giant BHP Billiton Ltd could be considering a bid.

The Daily Telegraph's said in its market report that Anglo-Australian miner BHP was rumoured to be in talks with zinc producer Nyrstar, previously linked to Lundin's Zinkgruvan mine in Sweden, over a joint bid for the group.

The report pushed Lundin's shares up 64 Canadian cents to $C5.05 on the Toronto Stock Exchange.

Shares of Lundin have been pummelled in recent months, after a proposed tie-up with Inmet Mining fell apart and its hunt for an alternative proposal failed.

As of Monday, Lundin's Toronto-listed shares had fallen more than 50 per cent and were well below their 52-week high of $C9.31.

Lundin has been considering strategic options since March, when a proposed $C9 billion ($A8.75 billion) tie-up with Canadian rival Inmet fell apart, but the miner said in May it had rejected proposals from suitors as inadequate. It also parted ways with its chief executive, Phil Wright, who stepped down at the end of June.

Lundin and BHP declined to comment. A spokeswoman for Nyrstar said the group did not comment on market rumors and speculation.

BHP has been acquisitive in recent weeks, announcing plans to buy Petrohawk Energy last month for $US12.1 billion.

It agreed earlier this week to acquire a company providing mining services in the Pilbara iron belt in Western Australia from Leighton Holdings for $US727 million.

Lundin owns a 24 per cent stake in Freeport McMoRan's massive Tenke-Fungurume copper-cobalt mine in the Democratic Republic of Congo.

It also owns the Neves-Corvo copper-zinc mine in Portugal, along with other assets in Sweden, Ireland and Spain.

Canaccord Genuity analyst Orest Wowkodaw raised his rating on Lundin to "buy" from "hold" on Tuesday, arguing that the recent selloff in Lundin's shares was overdone.

"While Lundin has encountered operational issues at Neves-Corvo this year, we view the shares as a relatively compelling risk/reward tradeoff at current valuation levels," Mr Wowkodaw said in a note to clients.

"In our view, the recent selloff is well overdone, representing an attractive entry point for investors."

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