There’s a well known mining power broker in Vancouver who is known to say, “Investing in junior mining is like the World Cup. Occasionally a country like Greece will surprise you, but you can’t go wrong betting on Brazil and Italy.”
There is no doubt he is referring to the Lundin Organization as either Brazil or Italy.
To quote Gianni Kovacevic, who first put me on to the story in his March newsletter, “In 2010 Lundin’s Red Back Mining merged with Kinross in a 7.1B takeover that saw RBI shares climb from $2 to over $30 in a 2 year time span. This year Lundin Mining announced a friendly merger with Inmet Mining in a $9B merger of equals. The Lundin family have been leaders in the natural resource exploration and development space for over 50 years.”
In my personal portfolio, I bought some Lucara Diamond Corp. (TSX: LUC – last at .93) last week in the mid .90’s. Lucara is a ‘road to production’ African diamond story from the Lundin Group that I have been hearing good things about on the street for months, while the share price has gone sideways.
As far as analyst coverage goes, Cormark called Lucara a ‘buy’ with a target of $1.80 in February. BMO rated Lucara ‘outperform’ this past June with a target price of $1.50.
Apparently Lukas Lundin himself is enthusiastic, buying large blocks of shares recently in the open market (See Canadian Insider). Mr. Lundin has a lot of money though, so it’s hard to know for sure if that’s a glowing endorsement or just a founder supporting his market.
Either way, we’ll see how my ‘bet Brazil’ strategy goes. I’m comfortable with the risks and will reevaluate early in the new year, when the first production revenues are expected.
Disclaimer: This is not an endorsement or a recommendation to buy or sell Lucara Diamond Corp. Investing in junior metals and energy shares is very risky and I am prepared to lose 100% of my capital in doing so. I would not recommend anybody else follow my lead. Investors should talk to their investment advisor and do their own due diligence before buying or selling any security. I offer no individual investment advice.