Lundin set to spend big on copper, incoming CEO says

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Underground at the Lundin Mining’s Candelaria Mine in Chile. Source: Lundin Mining Corp.

Lundin Mining Corp. [LUN-TSX; LUMI-Sweden] is looking to spend up to US$3 billion to acquire new copper assets following its failed bid to acquire Nevsun Resources Ltd. [NSU-TSX; NYSE AMERICAN].

Nevsun rejected the offer from Lundin and has since entered a definitive agreement with China’s Zijin Mning, which has pledged to acquire all of the outstanding shares of Nevsun for $1.86 billion or $6 a share.

During an interview with Reuters News Service, Lundin’s incoming CEO Marie Inkster said Lundin will stick with its strategy of disciplined bids and a focus on low-risk jurisdictions. She said an ideal acquisition would be a mine that would operate for at least 10 years in low-risk areas.

Inkster said she will direct her exploration team and new head of corporate development Peter Rockandel to chase down “all avenues” for mergers and acquisitions. Lundin Chairman Lukas Lundin has previously said that he would be prepared to spend as much as US$3 billion on a base metal asset. The company could also shell out up to US$150 million to buy a promising exploration company and would consider staged-investments in small miners that are tied to exploration results.

Lundin is a diversified Canadian base metals mining company with operations in Chile, the United States, Portugal and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin holds an indirect 24% equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.

The company recently announced a 27% increase in mineral reserves and a 20% hike in contained copper at its flagship Candelaria Mine in Chile.

Total estimated measured and indicated mineral resources at Candelaria have jumped 29% to 952.5 million tonnes at 0.65% copper, from 740.9 million tonnes at 0.70% copper on June 30, 2017. This increase reflects the continued success of the exploration campaigns both in the underground mines and at the newly discovered Espanola surface deposit, which contains an estimated measured and indicated resource of 51.4 million tonnes at 0.41% copper.

On Friday, Lundin shares eased 1.93% or $0.125 to $6.34. The 52-week range is $10.22 and $5.99.

The Candelaria Copper Mining Complex consists of two adjacent copper mining operations, including Candelaria and Ojos del Salado that produce copper concentrates from an open pit and underground mines. The complex it indirectly owned by Lundin Mining with an 80% stake, and Sumitomo Corp. of Japan, which has 20%.

Lundin acquired its ownership interest from Freeport-McMoRan Inc. [FCX-NYSE] in 2014.

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Filed in: Gold, Resources

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