Workers operate digging equipment in giant open pits during the excavation of ore at a copper and cobalt mine (Photographer: Simon Dawson/Bloomberg)

China Moly Said Among Potential Bidders for Tenke Mine Stake

(Bloomberg) -- China Molybdenum Co. is among companies that have held talks with Lundin Mining Corp. about acquiring Lundin’s minority stake in the Tenke Fungurume cobalt mine, people familiar with the matter said.

Lundin is trying to exit the venture and has had discussions with potential buyers, including China Moly, for its 24 percent stake in the Democratic Republic of the Congo mine, the people said, asking not to be identified because the discussions are private. The situation remains fluid and all options are on the table, the people said.

Lundin closed 6.2 percent higher in Toronto Thursday, while China Moly shares fell 1.2 percent at the end of Hong Kong trading Friday.

Toronto-based Lundin also has the option to match China Moly’s bid for a 56 percent stake the latter bought from Freeport-McMoRan Inc. in May. As Freeport’s partner in the project, Lundin has a right of first offer, or ROFO, on the stake. The ROFO was extended last week until Sept. 29.

Lundin has also discussed the possibility of borrowing from a third party to exercise the ROFO, one of the people said. In that scenario, Lundin would then transfer either the 56 percent Freeport stake or its combined 80 percent ownership in Tenke to the lender, the person said.

If the right of first offer expires before a deal is reached, Lundin probably will continue sale discussions over its minority holding as it looks to exit the joint venture, according to the person.

Complicating matters, Gecamines, the DRC’s state mining company that owns the remaining 20 percent of Tenke, said this month it submitted an offer for Freeport’s stake in the mine and would put together a group to finance the purchase.

Spokesmen for China Moly and Lundin declined to comment. Representatives for Freeport and Gecamines didn’t immediately respond to requests for comment.

Freeport’s agreement with China Moly, which is making the acquisition via a 70 percent interest in Bermuda-based TF Holdings Ltd., isn’t subject to approval or pre-emption by Gecamines, which is a shareholder in only the local entity, Phoenix-based Freeport said.