Shares of Rio Narcea Gold Mines Ltd. (NYSE:RNO) continue to trade nearly 10% above the $5 per share takeover offer from Lundin Mining Corp. (LMC) in early April. While investors may be anticipating that a competing bidder will enter the fray, as Norilsk Nickel and Xstrata PLC battle it out for fellow nickel miner LionOre Mining International Ltd., Rio Narcea shareholders may not be so lucky.
However, the current share price for this 8,000 tonne per year producer could be justified, but not because of a possible bidding war, according to Desjardins analyst John Hughes. While he thinks a rival offer is unlikely, the existing bid could be raise 10% to 15%, he told clients in note.
As a result, Mr. Hughes maintained his C$5 price target on Rio Narcea shares, but lowered his recommendation to “sell” from “hold.”