You're a mean one, Mr. Market. After picking up enough copper and zinc resources to build a thousand Whovilles, one Canadian miner has been swiftly punished by investors with all the empathy of the Dr. Seuss antagonist.
As the full value of this acquisition by Canada's HudBay Minerals comes to light in time, however, I believe that investors' hearts may yet grow larger. Announced at a value of C$800 million ($630 million), HudBay's acquisition of Lundin Mining
One HudBay stakeholder called the move "an embarrassing value destructive transaction," vowing to oppose the deal. By contrast, the move was quickly embraced by Lundin's board, which no doubt cheered a timely cash infusion through a C$135.8 million ($110 million) loan. Upon completion of the deal, HudBay expects to hold C$900 million ($731 million) in cash. Considering the resources thus acquired, I believe this deal is a steal for HudBay.
HudBay gains five new operating mines, including the Zinkgruvan zinc mine in Sweden. Zinkgruvan boasts silver reserves of around 35 million ounces, which will be sold to Silver Wheaton
As for development projects, HudBay picks up a 25% stake in the world-class Tenke-Fungurume project in the Democratic Republic of the Congo. Operated by majority owner Freeport-McMoRan
Despite the remarkable rally among metal miners in recent days, investors appear acutely uncomfortable with mergers and acquisitions in this climate. The visible strength in shares of Cliffs Natural Resources
Over at CAPS, 995 members have rated five-star pick Lundin Mining an outperform. Whether you think this merger is Foolish or folly, please come share your thoughts and counsel with our community of investors. CAPS is free and fun!
Fool contributor Christopher Barker is the commodore of copper, and the Colonel Klink of zinc. He can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Clifs Natural Resources, Freeport-McMoRan, Silver Wheaton, and Teck Cominco. The Motley Fool has a disclosure policy.