Talk to the Hand: Nevsun Gets on with Business, Ignores Amended Offer

Euro Sun Mining (TSX:ESM) has taken out the checkbook in an attempt to convince Nevsun (TSX:NSU) to come to the table on its proposed acquisition of the fellow Canadian miner.

In a release on Monday (June 4), Euro Sun detailed amendments to its portion of the joint proposal with Lundin Mining (TSX:LUN) to acquire Nevsun and its European and African copper assets.

Euro Sun has amended its portion of the offering to include C$150 million in cash and C$150 million in Euro Sun stock to sweeten the deal, which Nevsun rejected last month.

The overall offer is C$5 per share for all Nevsun stock, which including Euro Sun’s contribution, is made up from C$600 million in cash from Lundin Mining and C$600 million in Lundin Mining stock.

Previously, Euro Sun would have only offered stock. Lundin Mining’s share of the roughly C$1.5 billion offer is unchanged.

In the release, Euro Sun claimed that it was ready and willing to engage with the so-far uninterested Nevsun, going so far as to claim that shareholders representing 30 percent of Nevsun have “expressed support for the Euro Sun led offer and encourage all parties to actively engage in a friendly transaction.”

Under the proposal, Lundin Mining would acquire Nevsun’s European assets while Euro Sun would acquire the Bisha copper mine in Eritrea – a project the president of Euro Sun G. Scott Moore said the company was eager to get working on.

“We have extensive operational experience across Africa and look forward to meaningful investment into Eritrea and the Bisha mine allowing it to meet its full potential,” said Moore.

But Nevsun has continued to show little to no interest in the proposal, with a spokesperson telling The Globe and Mail yesterday that the amended proposal does little to interest the company or address concerns raised in its response last month.

Euro Sun had been the primary target of Nevsun’s rebuttal to the unsolicited offer, saying it was “not an attractive partner” with difficulty financing operations, and calling Euro Sun’s Romanian copper project, Rovina a “unpermitted, capital intensive ultra-low-grade asset …determined (by Nevsun) to be highly unattractive.”

They also slammed the companies desire to take control of Bisha, which is 40-percent owned by the Eritrean government, “which has no relationship with Euro Sun.”

“A negative reaction by the government would compromise Bisha. As such, the non-binding unsolicited proposal is potentially destructive of significant shareholder value and the existing relationships with our partner associated with Bisha,” said Nevsun at the time.

Nevsun has not released any official response to the amended proposal, appearing to not hear the company over the sound of accolades from the Serbian government in a release on Tuesday (June 5), detailing progress at the Timok project.

In the release, Nevsun fluffed up its credentials on the European copper project, which last month it accused Lundin Mining and Euro Sun of undervaluing in their offer – going so far as to wheel out Serbian government officials who praised the miner for the progress.

The minister for mining and energy Aleksandar Antić was quoted saying his ministry “confirms its continued support to Nevsun and the (Timok upper zone) project. We are committed to supporting Nevsun as it rapidly advances the project toward production.”

Nevsun’s Bisha mine produced 71.6 million pounds of zinc and 8.9 million pounds of copper in Q1 2018, and the Timok project is entering its construction phase with a feasibility study due to be completed by mid-2019.

Nevsun’s value on the Toronto Stock Exchange enjoyed a jump following Euro Sun’s release yesterday, but is overall unmoved, sitting at C$4.27. Shares in Euro Sun are currently trading at C$1.25.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.