Nevsun's Bisha mine, in Eritrea
Photo by: Nevsun Resources
VANCOUVER (miningweekly.com) – Canadian base metals producer Nevsun Resources remained mum on Monday regarding a C$1.5-billion unsolicited proposal disclosed by suitors Lundin Mining and Euro Sun Mining.
Toronto-based Lundin said it had been unable to successfully engage Nevsun in “meaningful discussions” after several attempts.
"After months of attempting to reach an agreement, we are disappointed that Nevsun has prevented its shareholders from considering our premium proposals and, at this point in time, we believe that all Nevsun shareholders should be made aware of this opportunity. We remain fully committed to negotiating a transaction with Nevsun under the very attractive terms proposed,” Lundin president and CEO Paul Conibear said.
According to Lundin, it first submitted a proposal to Nevsun on February 7, and a further proposal on February 25, both of which were rejected. On April 3, Lundin submitted a proposal to Nevsun to acquire Nevsun's European assets, including the Timok project, in Serbia, for cash and shares, which was also rejected.
Since then, Lundin has found a partner to lead the acquisition of the entire Nevsun at a significant premium, and submitted a new proposal on April 30. That proposal would allow Nevsun shareholders to continue to benefit from the advancement of the Timok project and from Lundin’s operations, as well as maintain material exposure to the Bisha mine, in Eritrea, as shareholders of Euro Sun and benefit from Euro Sun’s 100%-owned Rovina Valley gold/copper project, in the Tethyan Belt of Romania. This proposal too was rejected by Nevsun on Monday, prompting the public outing of the corporate pursuit.
Under the combined Lundin and Euro Sun proposal, Nevsun was valued at about C$1.5-billion – a 30% premium over Nevsun’s TSX-quoted market capitalisation of C$1.15-billion as at market close on Monday.
Nevsun did not respond to Mining Weekly Online’s request for comment by the time of publication.
Under the most recent combined deal, Lundin and Euro Sun believe they have identified a way to create significant value by proposing C$5 per Nevsun share, comprising C$2 in cash funded by Lundin and C$2 in shares of Lundin, plus C$1 in shares of Euro Sun. Under that proposal, Lundin would own the European assets of Nevsun, including the Timok project, and Euro Sun the remainder of Nevsun, including the Bisha mine and Nevsun's cash balance.
The C$5-a-share value represents a 40% premium to Nevsun’s closing price on April 30; a 54% premium to Nevsun's 30-day volume weighted average price on the TSX for the period ended April 30; and a 92% premium to Nevsun's closing price of C$2.61 on the TSX on February 6, the day before Lundin made its initial overture to Nevsun.
Conibear noted that the company’s significant experience in underground construction and mining, and record of operating in Europe had previously demonstrated its ability to be a strong and reputable developer of the Timok project. “Given the significant near-term financing needs of the Timok project and our strong balance sheet, the timing is ideal for Lundin Mining to acquire the Timok project and bring it into production as soon as possible,” Conibear said.
The addition of an operating asset to Euro Sun’s portfolio is expected to substantially de-risk the development of the Rovina Valley gold/copper porphyry project, in Romania.