HudBay to buy Lundin Mining

HudBay Minerals Inc. is taking over Lundin Mining Corp. in an all-stock friendly deal that will create a company that can take advantage of the opportunities presented by the market turmoil, the companies said.

The resulting company will be the second largest base metals miner in Canada, based on market capitalization. It has excellent internal growth prospects, "and has the size and strength to take advantage of opportunities over the next 18 months," Lundin president and CEO Phil J. Wright said in a release.

The combined company will have about $900 million cash and debt of about $240 million US, the companies said.

Existing Lundin shareholders will get 0.3919 of a HudBay share, a premium of about 32 per cent on the average Lundin price over the past 30 trading days, the companies said.

As part of the deal, HudBay is injecting about $135 million into Lundin by buying stock from treasury valued at $1.40 a share.

The combined company will be headed by HudBay's president, Allen J. Palmiere.

The stock of both companies has fallen sharply recently. HudBay shares, which peaked at $22.14 in the past year, lost about 40 per cent of their value Friday, crashing $2.07 to $3.16 in TSX trading.

Lundin has traded for as much as $10.32 in the past year. It closed up four cents at $1.05.

The combined company will have cooper, zinc, lead, gold and silver production in Canada, Portugal, Sweden, Spain and Ireland, and development projects in the Democratic Republic of Congo and Guatemala.

Directors of both companies have approved the deal, which is expected to close by the end of May next year.