Lundin Mining said on Wednesday that it expects to be able to update shareholders by the end of this month on discussions to sell all or part of the company, but cautioned that a deal is not a certainty.
“I think we should be in a position to give a pretty good update come the end of this month and give some indication in terms of which direction we’re heading and whether a transaction is likely to arise or not,” Chief Executive Phil Wright said on a conference call.
The diversified base metal miner began to look at strategic alternatives after a proposed C$9 billion tie-up with Canadian rival Inmet Mining fell apart in March.
The failed deal with Inmet kicked off an M&A frenzy among mid-tier base metal miners. The proposed “merger of equals” fell apart after Equinox Minerals launched a hostile C$4.7 billion bid for Lundin.
Equinox’s move prompted Chinese metals trader Minmetals Resources to make an unsolicited C$6.3 billion bid for Equinox, the bid recently failed after Equinox agreed to be acquired by the world’s top gold miner, Barrick Gold, in a C$7.3 billion takeover.
The slew of M&A activity has been driven largely by higher metal prices, which have swelled the coffers of miners across the globe. Prices for gold, copper and other metals have recently hit record highs, driven by surging demand from China, India and other emerging economies.
Wright said Lundin is continuing to explore all options including a sale of individual assets. If Lundin does opt to sell individual assets it expects the potential tax impact to be limited to between $100 million and $110 million.
Lundin owns a 24 percent 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.
“There is good interest in Tenke, very good interest in Tenke,” said Wright. “There is another group of companies that I think are interested in our European assets and there is a subsequent group of companies that are interested in the business overall.”
“I’m not releasing numbers and details at this stage, but we’re not talking about a handful of companies at this stage, the data room is very active.”
Shares of Lundin were slightly lower after the miner reported a weaker than expected profit late on Tuesday, falling 1.6 percent to C$8.75 on Wednesday morning on the Toronto Stock Exchange.
© Thomson Reuters 2011