Q: Hello 5i, There is a takeover offer for Lumina Gold by a Chinese company. Could you comment as to the possibility of the federal govt opposing the deal and the possibility of a higher offer?
5i Research Answer:
Consider the current trade war scenario, it is not a good time for a Chinese company to make a purchase of a foreign entity. That being said, with a mine in Ecuador and a relatively small size, it would be hard to argue that LUM is a strategic asset to Canada. In a normal environment we might assign odds of a Chinese takeover in the 70% range. Currently, we would lower this to 55% or so, with politics currently more important than economics. Ross Beaty owns 27% and this may limit further offers. But certainly a Canadian company may be interested here now that it is 'in play'. We would hold.