Takeover rumours boost EuroZinc
Shares rise 9% to close at 52-week high
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Font: * * * * Lori McLeod, Financial Post
Published: Saturday, August 19, 2006
Takeover rumours gave shares of EuroZinc Mining Corp. a big boost yesterday, with research from BMO Nesbitt Burns suggesting the base metals miner's take-out value could be in the range of $4.25 to $4.60 per share.
"Word on the Street is that a deal is brewing," said a source, who asked not to be named.
A EuroZinc spokeswoman declined comment.
EuroZinc's shares rose 9% yesterday to close at a 52-week high of $3.42 in Toronto, on four times their average daily trading volume. At this time last year, the stock was trading well under $1 per share.
A report from BMO's hedge fund sales department puts EuroZinc's net asset value at $3.54 per share. It then added a takeover premium of 20%-30%, putting the miner's potential sale price as high as $4.60 per share.
"If a multiple bidder scenario were to materialize, the premium to NAV [net asset value] could rise," further boosting the price EuroZinc could fetch, according to the report.
Canadian miners Aur Resources Inc., Inmet Mining Corp., and Lundin Mining Corp. might all interested, as could Sweden's Boliden AB, according to BMO.
EuroZinc's primary asset is the Somnicor mine in southern Portugal, Europe's largest underground copper mine. It also owns an idled zinc mine in the region.
Merger and acquisition in the mining sector has been heated lately, as prices and demand stay strong and inventories remain low.
EuroZinc also appears to trade at a discount to its peers, the report said, which could make it an especially attractive takeover candidate.
© National Post 2006
