November 15, 2016 / 8:17 PM / 2 years ago

UPDATE 1-Lundin Mining hopeful of Congo blessing for mine stake sale

(Recasts with CEO interview, adds Freeport comment)

By Nicole Mordant

Nov 15 (Reuters) - Canada’s Lundin Mining Corp is hopeful that the sale of its stake in the Tenke Fungurume copper-cobalt mine in the Democratic Republic of Congo will not be challenged by the country’s state-owned miner, Lundin’s chief executive said on Tuesday.

Lundin announced earlier it had agreed to sell its 24 percent interest in Tenke, one of the world’s largest copper mines, to Chinese private equity firm BHR Partners for about $1.14 billion in cash.

The deal comes after Tenke’s majority owner, U.S. copper miner Freeport-McMoRan Inc, agreed in May to sell its 56 percent stake to China Molybdenum Co Ltd (CMOC) for $2.65 billion.

Congo state miner Gecamines, which owns 20 percent of Tenke, has objected to the Freeport sale, saying it was not informed beforehand and that it has a right to make an offer first for Freeport’s stake if it is to be sold. Freeport denies that Gecamines has such a right.

Contrary to the Freeport announcement, which came as a surprise to Gecamines, Lundin had “ample communications with them months ago,” Lundin CEO Paul Conibear said.

As a minority shareholder in Tenke, Lundin’s sale of its stake is also “not the big event,” he said in an interview.

The closing of the Freeport sale has been held up for months while Lundin, which had a right of first offer on Freeport’s stake, weighed its options. With the sale of its stake, Lundin has now waived that right.

“We anticipate that the sale to CMOC will be completed before the end of 2016,” Freeport spokesman Eric Kinneberg said in an email.

The Lundin sale is expected to close in the first half of 2017.

Conibear said Lundin, which also mines zinc and nickel, plans to use the proceeds from the sale to expand production at its Neves-Corvo zinc mine in Portugal and for a small expansion at its Swedish zinc and copper mine.

The Toronto-based miner was also keen to start paying shareholders a dividend and would make a decision on doing so soon.

Acquisitions are on the back burner as the company focuses on existing assets, Conibear said.

“The cupboard’s bare right now. It’s the first time in five years that we haven’t actively been studying or negotiating an asset,” he said.

Lundin’s shares were up 0.79 percent at C$6.40 on the Toronto Stock Exchange. (Additional reporting by Gaurika Juneja in Bengaluru; Editing by Gopakumar Warrier and Meredith Mazzilli)

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