Lundin Mining Corp: Analysts See Plenty of Upside

Following its takeover of EuroZinc Mining last year, Lundin Mining Corp. (LMC) continues to look for acquisitions to help boost its reserves.

Lundin reported its fourth quarter and full year financial results for 2006 on Feb. 22, the first such results for the merged company.

Despite the fact that its annual earnings per share of $1.01 was below Dundee Securities’ estimate, the firm’s analyst Mike Collison has maintained his “market outperform” rating on the stock. His C$16.70 price target meanwhile, represents upside of more than 30%.

While Lundin has been successful in growing through acquisitions, the company’s highly public search for acquisitions has depressed its stock price, Mr. Collison said in a research note.

While agreeing that investors should be wary of the potential value dilution such purchases can bring, he thinks suggestions from Lundin’s management that it will make one or two acquisition announcements in 2007, poses little risk.

Blackmont Capital analyst Lawrence Smith is also bullish on Lundin, initiating coverage of the company with a “buy” rating and C$15.50 price target.

Mr. Smith points out that 55% of Lundin’s 2007 revenue is expected to come from zinc production, while another 38% should come from copper, both metals he expects will see stronger prices in the near term.

On the subject of mergers, he thinks it is more likely that Lundin will be an acquirer.

LMC 1-yr chart: