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UPDATE 1-Boliden buys Finnish nickel, copper mine for $712 mln

Published 2016-03-10, 05:53 a/m
© Reuters.  UPDATE 1-Boliden buys Finnish nickel, copper mine for $712 mln
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* Boliden says expects higher metal prices to justify buy
* First Quantum Minerals sells to strengthen balance sheet
* Boliden share drops 3.7 pct

(Adds detail, CFO comments, analyst comment, share reaction,)
STOCKHOLM, March 10 (Reuters) - Swedish mining and smelting
group Boliden BOL.ST will buy Finnish mine Kevitsa from First
Quantum Minerals FM.TO for $712 million, Boliden said on
Thursday, betting on prospects for higher metal prices in the
longer term.
Boliden said the mine, a source of nickel, copper, gold and
platinum, was a good operational and geographic fit and would
yield savings in its Nordic operations.
The cash sum of $712 million on a debt free basis values the
mine at 17 times last year's earnings before interest, tax,
depreciation and amortization of $42 million. Boliden
acknowledged earnings generated amid current depressed prices
for nickel and copper did not warrant the purchase price.
"You need to need to look at what you believe in the long
term prices and where you can get the money. In the short term
this mine is not very attractive," Chief Financial Officer
Mikael Staffas said on a conference call with analysts.
Shares in Boliden were down 3.7 percent at 1053 GMT while
the European raw materials index .SXPP shed 1.1 percent.
Benchmark London Metal Exchange copper CMCU3 fell more
than 25 percent last year, but is up 4 percent this year. Nickel
CMNI3 fell 40 percent last year and is roughly flat in 2016.
Swedbank analyst Ola Sodermark said there had been
speculation Boliden would buy the mine and the market had likely
expected a lower price tag, but he added it could be a good deal
in the long term.
"It is only in times such as these with very tough raw
material markets that they can lay their hands on an asset like
this in their own backyard," Sodermark said.
Canada's First Quantum FM.TO said in a separate statement
it sold the mine to strengthen its balance sheet and improve its
capital structure.
Boliden said Kevitsa employs 380 people and that nickel and
copper each account for roughly 40 percent of its net revenue.
The deal is subject to regulatory approval, it added.

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