Macro Tsimmis

intelligently hedged investment

LionOre (LNGGF) update #2

Posted by intelledgement on Thu, 03 May 07

The Russians are coming! The Russians are coming!

We were beginning to wonder. It has been over a month since Swiss miner Xstrata (XSRAF) made their lowball all-cash “friendly” (that is, unanimously endorsed by the disloyal-to-the-shareholders LionOre board and CEO) takeover offer of C$18.50/share (US$4.2B). Our thinking is that with nickel prices are at all-time highs, north of US$23/lb., LionOre is worth more like US$7B-to-$9B. Apparently other LMGGF shareholders agreed shared our dissatisfaction with the XSRAF offer to some extent, as the price has been hovering around C$19/share (US$4.3B). But we were wondering if any professional miners agreed with our assessment that LMGGF is grossly undervalued here…and if not, worrying that maybe we were delusional?

Today, thankfully, a serious counteroffer has arrived from Moscow-based Norilsk Nickel (NILSY), the largest mining company in the Russian Federation. The all-cash offer from NILSY is for C$21.50/share for all LMGGF stock (US$4.8B)…and better still, The Street still seems to agree with us that even this offer is too low, as the stock closed up 25%(!) today to over C$23/share.

Stay tuned.


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