Lundin, Inmet Mining Agree to Merge to Create Company Valued at $9 Billion

Inmet Mining Corp. and Lundin Mining Corp. agreed to combine to create a Canadian copper producer with a market value of about C$9 billion ($9.1 billion) as the metal traded near a record.

Inmet investors will get 3.4918 shares of Symterra Corp., as the new company will be called, for each of their shares and Lundin investors will receive 0.3333 of a Symterra share, the Toronto-based companies said yesterday in a statement that dubbed the deal a “merger of equals.” Inmet’s Chief Executive Officer Jochen Tilk will be Symterra’s CEO and president.

The agreement, the third major transaction in Canada’s mining industry this week, follows a surge in commodity prices in the past year. There were 1,165 global mining deals announced in the past 12 months worth at least $87.8 billion, compared with 1,007 valued at $43.5 billion a year earlier, according to data compiled by Bloomberg.

“It’s really just a good fit of two smaller companies based on the copper and zinc they produce,” George Topping, a Toronto-based analyst at Stifel Nicolaus & Co., said today in a telephone interview. “It’s a new major base-metals producer.”

Inmet shareholders will own about 53 percent of Symterra if the transaction is completed and Lundin investors will control the remainder, Topping said.

No Premium

“The exchange ratio represents no premium to either party based on the 30-day volume weighted average price on the Toronto Stock Exchange,” the companies said in the statement.

Lundin fell 15 cents, or 1.9 percent, to C$7.75 at 4:10 p.m. in Toronto trading. Inmet rose C$4.63, or 6.2 percent, to C$79.39.

By pooling output from their copper mines, Lundin and Inmet have the potential to produce more than 500,000 metric tons of the metal a year by 2017, the companies said in the statement.

“Copper has got a bullish outlook,” David Lennox, a resource analyst at Fat Prophets in Sydney, said in a telephone interview. “There are not a significant number of major projects coming on.”

Inmet, with operations in Turkey, Spain, Finland and Papua New Guinea, is developing the Cobre Panama copper mine in the Central American country. Lundin has four mines in Europe and a stake in the Tenke Fungurume copper and cobalt project in the Democratic Republic of Congo.

Copper for three-month delivery traded at a record $9,754 a metric ton on the London Metal Exchange on Jan. 4. The metal has gained 28 percent in the past 12 months.

Photographer: Norm Betts/Bloomberg

Inmet’s Chief Executive Officer Jochen Tilk, seen here, will be president of Symterra. Close

Inmet’s Chief Executive Officer Jochen Tilk, seen here, will be president of Symterra.

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Photographer: Norm Betts/Bloomberg

Inmet’s Chief Executive Officer Jochen Tilk, seen here, will be president of Symterra.

‘Compelling’

“The long-term fundamentals of copper are compelling,” Lukas Lundin, chairman of Lundin, said in the statement. “Symterra provides one of the best growth profiles for copper amongst major mining companies.”

Leucadia National Corp. said in a separate statement it would support the deal, which will see its 18 percent stake in Inmet become a 9.4 percent holding in Symterra.

“I like the deal as size is important and it diffuses project and country risk,” said David Davidson, a Toronto-based analyst at Paradigm Capital Inc.

The Lundin-Inmet announcement followed two international mining acquisitions made public this week. Cliffs Natural Resources Inc. agreed on Jan. 11 to buy Canada’s Consolidated Thompson Iron Mines Ltd. for about C$4.9 billion including debt. It plans to expand iron-ore sales to Asia, the world’s largest market for the steelmaking raw material.

Canadian Transactions

On Jan. 10, HudBay Minerals Inc., a Canadian metals producer, said it agreed to acquire Norsemont Mining Inc. for C$520 million to add the Constancia copper project in Peru.

HudBay, based in Toronto, scrapped a C$672.4 million plan to acquire Lundin in 2009 after HudBay investors said the proposed deal undervalued their company’s financial position compared with Lundin’s.

CIBC World Markets and Rothschild Inc. are advising Inmet on the transaction while Torys LLP is providing legal counsel. Scotia Capital is advising Lundin Mining on the financial aspects of the deal and Cassels Brock & Blackwell LLP is providing legal counsel.

To contact the reporters on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net; Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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