Lumina Copper lures in a suitor, belatedly

It’s been a wild ride, but Lumina Copper got taken out recently for $10 a share by First Quantum Minerals, which will develop Lumina’s monster Taca Taca copper-gold deposit in northern Argentina. The deal values Lumina at $470 million.

I had expected a takeover of Lumina, at one time one of my largest positions, and first wrote the company up at World of Mining on Sept. 12, 2012 when the stock was at $9 and change. I had not expected it to go for $10/share.

Lumina Copper, 5-year chart

For a while, Lumina shares defied gravity – the TSX Venture went off a cliff in the spring of 2011 but Lumina stock rose through 2011 to the spring of 2012, when it scaled heights north of $16. That’s when a rumoured sale fell through … then Argentina nationalized oil firm YPF and … yeah, you know the rest.

The pain became too great at a certain point and I put my capital to work elsewhere, holding on to a reduced holding in an RRSP account. I wrote about that here and touched on the risks of holding, and selling LCC, here.

The Lumina takeover looks very different to those who purchased north of $10 than to those who have either been shareholders for several years or had the fortitude to bottom-feed on LCC when the stock was skidding along at $4 and $5. Shareholders of Ross Beaty’s original Lumina have made many times their money as Beaty has sold several Latin American projects to majors over the years before Taca Taca was the last asset standing. Part of the proceeds came from the sale of Lumina’s royalty portfolio to Franco-Nevada in 2011.

Beaty built his copper portfolio while the metal was out of favour and other investors weren’t interested – an important and timely reminder for resource value investors. As a 10% holder of Augusta Resource, Beaty also cashed in recently when Hudbay sweetened its takeover offer for Augusta and its Rosemont copper deposit in Arizona.

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