Lundin Will Consider Sale Of Whole Company, Or Individual Assets

Lundin Mining Corp. (LUN.T) expects to say by the end of May whether it can reach a deal for the sale of the company as a whole or for the sale of individual assets.

"We should be in a position ... to give some indication (by the end of this month) in terms ... of whether a transaction is likely to arise or not," Chief Executive Phil Wright said on a conference call Wednesday, following the release late Tuesday of the copper miner's first-quarter results.

Lundin reported higher year-over-year earnings, but they still fell short of expectations as sales suffered from shipping disruptions.

Toronto-based Lundin effectively put itself up for sale at the end of March after rival copper producer Equinox Minerals Ltd. (EQN.T) dropped its hostile bid for Lundin after agreeing to be acquired by Barrick Gold Corp. (ABX), the world's largest gold producer.

Lundin is open to proposals to either sell the company outright or to sell off its assets piecemeal. But a sale or break-up of Lundin is "not a certainty," Wright said Wednesday.

Lundin spent about US$4.8 million in the first quarter to carry out the strategic process.

The piecemeal sale of Lundin's assets would generate a total tax hit of between US$100 million to US$110 million, but Wright doesn't consider that a deterrent to completing a deal.

"You can't regard (the amount) as being a very material item in the size of the transaction we are talking about," Wright said. He declined to estimate the value of Lundin or its individual mining assets. But the company's current market capitalization is about C$5.18 billion (US$5.41 billion).

The tax hit could be avoided by acquiring Lundin as a whole and selling unwanted assets, Wright said. Lundin has copper, zinc and nickel assets in Spain, Portugal, Sweden and Ireland. It also owns about a 25% stake in the big Tenke Fungurume copper-cobalt mining project in the Democratic Republic of Congo. Phoenix-based Freeport-McMoRan Copper & Gold Inc. (FCX) owns about 58% of Tenke and the Congolese state mining company, La Generale des Carrieres et des Mines, owns the rest.

If Lundin chose to sell its stake in Tenke, it would be obligated to first offer the position to Freeport, which would have three months to agree to Lundin's proposed sale terms. If Freeport rejected these terms, Lundin would have six months to complete a sale at or above the price at which it had offered the stake to Freeport.

Freeport's right of first refusal doesn't apply if Lundin chooses to sell the entire company and the buyer then sells Lundin's Tenke stake.

"We have not formally approached Freeport; we have not put Tenke up for sale per se," Wright said. "Let's see what happens out of the (strategic review) process and decide where we go next."

Wright suggested "tier one" companies are looking at Tenke and in that case it's likely they have already approached Freeport about a possible transaction.

A Freeport spokesman couldn't immediately be reached for comment.

Wright also said a group of companies are looking at Lundin's mining assets in Europe and another group is mulling a possible acquisition of Lundin as a whole.

On the Toronto Stock Exchange, Lundin is down 1.1% to C$8.79.

-By Ben Dummett; Dow Jones Newswires; 416-306-2024; [e-mail]