Lundin May Seal Rio Narcea Deal With Increased Bid

Desjardins analyst John Hughes told clients Wednesday that Lundin Mining Corp.'s (LMC) new and improved bid for Rio Narcea Gold Mines Ltd. (RNO) should finally seal the deal on a transaction that has been in the works since the early spring.

Lundin's new C$5.50 offer for Rio Narcea announced last week is an increase of 50¢ from the original C$5 bid made on April 3, 2007. Described as a "friendly" offer, Rio Narcea is recommending shareholders accept the amended offer, which also includes an unchanged bid of C$1.04 for every outstanding Rio Narcea warrant.

"We expect that this will be the final offer for Rio Narcea and that the current offer will be successful," Mr. Hughes said in a note. As such, he raised his price target on Rio Narcea to match the new bid price and advised clients to "sell" their shares.

Rio Narcea shares closed Tuesday at C$5.45.