Lundin eyes Irish zinc in ARCON merger

Vancouver – Lundin Mining (LUN-T) is offering to buy ARCON International Resources an Irish zinc and lead producer, in a cash and share deal worth US$122.7 million.

Lundin Mining is offering ARCON US$63 million in cash, and 5.6 million shares for ARCON’s share capital. ARCON shareholders will end up holding a 14% stake in Lundin Mining following the merger.

The offer values ARCON’s shares at some US54, which represents a 30% premium over ARCON’s average closes over the last three months, although it is a discount from ARCON’s most recent share price.

The offer, requires 80% approval from ARCON’s shareholders, however, with the support of Sir Anthony O’Reilly, who owns 65% of the company’s shares, it looks like a done deal.

Tony O’Reilly (junior), the chairman of ARCON is also very supportive of the deal and will be invited to join the board of Lundin Mining.”It is important for my family to add shareholder value,” says O’Reilly (junior). “This is an opportunity to grow with like-minded people going forward.”

ARCON produces zinc and lead from its Galmoy mine in Kilkenny County, which has been in operation since 1997.The combined company, will have yearly zinc production of some 152,000 tonnes and 46,000 tonnes of lead along with copper and silver. It will be left with a healthy cash position of US$45 million.

The deal will serve to strengthen Lundin Mining’s position when it comes to negotiating smelter contracts, owing to its larger production base. “Lundin Mining will nearly double its zinc production and increase its reserves by 50%, in exchange for some 20% of its equity,” says Ted Posey, Lundin Mining’s President during a conference call.