Lundin Mining to Buy Josemaria Resources; Shares Plunge

Lundin Mining (TSE: LUN) announced Monday that it has signed a deal to acquire 100% of the issued and outstanding shares of Josemaria Resources.

Expanding Copper Holdings

Pursuant to the transaction, Josemaria shareholders will receive total consideration of approximately C$625 million on a fully diluted basis, which represents C$1.60 per Josemaria common share. The transaction will see a maximum aggregate cash consideration of C$183 million. The consideration would represent a premium of 31% compared to Josémaria’s closing price on Friday.

With this acquisition, Lundin Mining gets full control of the Josemaria copper-gold project in the province of San Juan in Argentina. The world-class Josemaria project is a unique, late-stage opportunity with a clear path to production.

Together with Josemaria, Lundin Mining is positioning itself as a major copper producer with a diversified portfolio of high-quality, long-lived base metal assets.

Management Commentary

Lundin Mining CEO Peter Rockandel said, “The acquisition of the Josemaria project complements Lundin Mining’s existing portfolio of high-quality mines and highlights our focus on disciplined copper-focused growth to create long-term shareholder value. Josemaria is a world-class copper project that has many characteristics which make it the ideal project for Lundin Mining to advance in the next phase of our growth. Leveraging our technical expertise, financial strength, and drawing on the Josemaria team’s in-country knowledge, we believe this opportunity will create meaningful value for all stakeholders.

“The addition of Josemaria will elevate Lundin Mining’s position to a major base metals producer with high-quality, low-cost copper exposure.”

Wall Street’s Take

On December 14, J.P. Morgan analyst Patrick Jones maintained a Buy rating on LUN and set a price target of C$11.80. This implies 28.3% upside potential.

Overall, LUN scores a Moderate Buy analyst consensus rating based on five Buys and 11 Holds. The average Lundin Mining price target of C$12.19 implies 32.5% upside potential to current levels.