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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers

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To: Mr. Aloha who wrote (35604)	3/12/2007 4:12:06 PM
From: hank2010	Read Replies (1) of 78421

HudBay thinking of hedging their bets and getting involved in nickel as well as zinc? FNX A Possible Takeover Candidate For HudBay: UBS TORONTO -(Dow Jones)- HudBay Minerals Inc. (HBM.T) said last week that it's considering North American nickel producers as potential merger or acquisition candidates, and UBS Securities Canada sees FNX Mining Co. (FNX.T) emerging as the most likely partner in such a scenario. According to a report by UBS analyst Tony Lesiak, HudBay said during its fourth-quarter conference call that its list of possible candidates includes producers of copper, zinc or nickel. While HudBay has suggested that it would pursue M&A activities in the past, this is the first time the company has mentioned nickel as a possible commodity focus, Lesiak noted. HudBay has experience in the nickel business, having been a producer until the mid-1990s, he added. The analyst pointed out that there are only two operating nickel companies in North America not held by CVRD-Inco and Xstrata PLC (XTA.LN) - FNX Mining and First Nickel Inc. (FNI.T), both of which are based in Sudbury, Ont. Given its comparable size and similarities, Lesiak said FNX emerges as the most likely M&A candidate, as a deal with HudBay would combine two of Canada's most prolific mining camps. HudBay and FNX both hold extensive land packages in their respective regions and operate under a similar business model using exploration to add value, Lesiak said. He added that FNX has mentioned in company presentations that it would consider combinations with other base-metal companies. Based on UBS's estimates, a combination of HudBay and FNX would yield a net asset value of more than C$5.6 billion (US$4.8 billion) and a market capitalization of about C$4.6 billion at current prices, placing the combined entity among the largest of the Canadian intermediates. UBS rates HudBay at buy with a C$27.50 target. The Winnipeg mining-exploration company is trading down 1.9% at C$20.41 in Toronto Monday. UBS doesn't have an investment-banking relationship with HudBay or FNX Mining, and Lesiak doesn't own shares of either company. Company Web Sites: hudbayminerals.com and fnxmining.com -Wendy Tsau; 416-306-2100; AskNewswires@dowjones.com

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