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Lundin calling Add to ...

After the chief executive of Lundin Mining Corp. announced on Wednesday evening that the company isn't going to be sold after all, investors have voiced their displeasure: In early trading on Thursday, the shares fell 19.5 per cent, bringing them close to a three-month low.

So, now what? Greg Barnes, an analyst at TD Newcrest, maintained a "buy" recommendation on the copper producer but trimmed his target price to $9, a fairly hefty haircut from an earlier target of $10.50.

"Lundin has been trading at premium multiples...versus its peer group [based on net asset values and earnings before interest, taxes, depreciation and amortization] due to expectations for a pending transaction," Mr. Barnes said in a note.

He expects the stock to fall in line with its peers now that there is no takeover premium built in. However, in the range of $6.50 to $7.00 (the shares traded at $6.89 in late-morning trading on Thursday), he believes that they provide a very attractive return.

"An added complication is the impending retirement of CEO, Phil Wright - finding a new CEO for the company could be time consuming in the current environment, which may cause added shareholder uncertainty and slow-down the search for growth opportunities," Mr. Barnes said. That being said, we have a high degree of confidence in Paul Conibear's ability to run the company in the interim."

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  • Lundin Mining Corp
  • Updated July 21 4:00 PM EDT. Delayed by at least 15 minutes.

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