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Lundin emerges as front-runner for Freeport Chile copper mine

Lundin produces copper, zinc, nickel and lead from mines in Europe, Africa and the United States.


Canada's Lundin Mining Corp. is emerging as the front-runner to buy a major Freeport-McMoRan Copper & Gold Inc. copper mine in Chile, sources familiar with the matter said.

Toronto-headquartered Lundin would pay more than $2-billion for the Candelaria mine, according to people familiar with the current proposal. It would partner with Franco-Nevada Corp., which would pay up to $1-billion for a stream of the mine's future gold production, the sources said.

The base-metals miner has been hunting for a copper acquisition for more than two years. Its chief executive officer Paul Conibear told The Globe and Mail in April, 2013, that assets with at least a 10-year mine life and capable of producing some 50,000 tonnes of copper per year would be ideal.

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At the time, Mr. Conibear said the company had a strong balance sheet, no debt and has been on the lookout for the right deals for the last year and a half.

If Lundin's proposal succeeds, the Chilean mine would boost Lundin's copper production significantly.

The interest in copper assets comes after a tumultuous few months for the red metal, used in construction and power generation. It dropped below $3 (U.S.) a pound on fears that China's slowing economy would weaken demand, though has since rebounded and is trading around $3.25.

Lundin produces copper, zinc, nickel and lead from mines in Europe, Africa and the United States. The company has partnerships with Arizona-based Freeport on the Tenke Fungurume copper mine in the Democratic Republic of Congo, as well as a refinery in Finland.

During the commodity boom a few years ago, Lundin tried to merge with fellow Canadian miner Inmet Mining Corp. before Inmet was taken over last year by First Quantum Minerals Ltd. It also fended off a hostile takeover attempt by Equinox Minerals Ltd. in 2011, which was later taken over by Barrick Gold Corp.

Lundin has since bought a small copper and nickel mine in Michigan.

Freeport, one of the largest copper companies in the world, has been moving into the U.S. oil and gas market and has been selling assets to pay down its hefty debt load. The miner recently sold its Eagle Ford shale assets to Canada's Encana Corp. for $3.1-billion.

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Freeport had been aiming to announce the sale of Candelaria by mid year, one source said. But the company's process has been delayed because it is waiting to hear from the mine's minority owner Japan's Sumitomo Corp., which holds a 20-per-cent stake in the Chilean mine.

Barrick Gold's former CEO Aaron Regent had also expressed an interest in Candelaria, the sources said. Mr. Regent is looking to build a new mining company and has been on the hunt for assets through his investment firm Magris Resources Inc. It is not known whether Mr. Regent or another company will top Lundin's proposal.

Last year, Mr. Regent teamed up with two senior mining companies and private equity firm Blackstone to buy Glencore PLC's Las Bambas copper project. But his bid fell through when one of the miners backed out, one source said. The project was eventually sold to a Chinese consortium for nearly $6-billion.

A spokesman for Freeport said the company doesn't comment on speculation. Lundin, Franco-Nevada and Magris declined comment.

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About the Author
Economics Reporter

Rachelle Younglai is The Globe and Mail's economics reporter. More


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