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Failed HudBay bid proved prescient

ANDREW WILLIS

00:00 EDT Tuesday, April 07, 2009

It appears HudBay Minerals' HBM-T deposed CEO Allen Palmiere just might have known what he was doing.

Just a few weeks ago, Mr. Palmiere was pushed out of HudBay for supporting a merger with cash-strapped Lundin Mining LUN-T.

Well, Lundin is cash-strapped no more and, in a stunning reversal, is now worth more than its erstwhile buyer. The copper miner raised $164-million on Friday in a bought deal led by GMP Securities.

Since bottoming out at 72 cents a share in February, when the HudBay merger plan was falling apart, Lundin shares have tripled. The company sports a $1.2-billion market capitalization.

HudBay, on the other hand, has a $976-million market cap. The stock is up 19 per cent from where it traded before the controversial Lundin transaction was announced. (HudBay didn't offer shareholders a vote on it; regulators ruled shareholder approval was required, and the deal was scotched.)

Mr. Palmiere and the HudBay board were knocked for overpaying for Lundin when the takeover was unveiled back in November, a period when credit and equity markets were all but closed and Lundin could not raise capital. HudBay did make a loan to Lundin that helped keep the company going.

Five months and a rally in copper later, support for the bought deal shows investors see Lundin as a promising base metal play.