Lundin Mining's Candelaria copper mine in Chile, which it bought from Freeport in 2014 for $1.8bn. Photo: Lundin Mining

Lundin Mining's Candelaria copper mine in Chile, which it bought from Freeport in 2014 for $1.8bn. Photo: Lundin Mining

 
 

Clock Ticking” on Timok
Copper Deal in Serbia

Issue 157, March 2016

Lundin Mining, backed by billionaire Lukas Lundin, has made a bold $263m move onto Serbia's fast emerging copper belt, threatening to kick-off a takeover tussle, as interest in the district hots up.

Copper giant Freeport-McMoRan, which is trying to pay down its debt pile of $20bn, has sold Lundin Mining part of its massive Timok discovery, seen as the world's largest new copper discovery for several decades. Timok is co-owned by explorer Reservoir Minerals, which shot up 16 per cent on news of the deal.

Reservoir has 60 days to exercise a right-of-first-refusal and has $33m in cash, putting a counter-bid out of reach, but its exercise rights are “very strategic to other global players”, said brokers at Canaccord Genuity, as companies elbow in on the asset.

Rio Tinto made a surprise move into the district late last year, striking a separate copper joint-venture with Reservoir. Rio has also been linked by analysts in London to a possible bid for Lundin Mining, as it chases an expansion of its copper business, whilst Reservoir has strategic backing from deep-pocketed funds and a Chinese smelter.

“Drafts Move”

Timok has emerged as a globally significant asset since its discovery four years ago, as mining groups manoeuvre for top-tier copper deposits. Rio could “do a drafts move,” one analyst said in private, “try and take out Reservoir and then have a tug of war over Timok.” It could also team-up with Reservoir and take Lundin's share of the deal.

Insiders declined to comment, but Reservoir is understood to be actively weighing its options. The company released a statement to the stock exchange saying it has been “in discussions with Freeport and several other parties” for “the past few months.” It has until early May to decide if it will exercise its rights and will “update the market in due course.”

On a conference call, Lundin Mining's chief executive Paul Conibear said he had been monitoring Timok since 2013 and has been in discussions...

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“The clock has started ticking.”

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