Zijin To Sell Shares to Fund Nevsun Takeover

China’s Zijin Mining (HKEX:2899) has revealed it’s mulling over selling 3.4 billion domestic shares to Chinese investors to fund its C$1.86-billion takeover of Canada’s Nevsun Resources (TSX:NSU).

In a Wednesday (January 2) release, the company said that it would be applying with the China Securities Regulatory Commision (CSRC) to raise 8 billion yuan (or around US$1.2 billion) by selling shares to investors in China.

Just last week, Zijin had announced that the friendly takeover bid of Nevsun Resources — which holds the Timok copper project in Serbia and the Bisha copper-zinc mine in Eritrea — had been successful with shares tendered amounting to 89 percent as of December 28, 2018.

The 3.4 billion domestic shares — valued at 0.10 yuan each — represent up to 15 percent of all shares issued by Zijin, with 15 percent the upper limit of total Zijin shares to be sold to fund the Nevsun takeover.

The company said that all funds raised would go towards financing the takeover.

The ultimately successful friendly takeover bid for Nevsun Resources was first announced in early September of 2018, when the Chinese company was revealed by Nevsun to have made a friendly all-cash offer of C$1.86 billion for all Nevsun shares.

The friendly offer was in competition with a hostile takeover bid by fellow Canadian company Lundin Mining (TSX:LUN), which made a low-ball bid of C$1.4 billion in July after having a joint bid of C$1.5 billion rejected in May.

The joint bid had been made together with Euro Sun Mining (TSX:ESM), which Nevsun threw considerable shade on when turning down the offer.

Zijin went on quite the shopping spree in 2018 — besides making the winning bid for Nevsun and it’s Timok project, it was also announced as the winning bidder to become a partner with the Serbian government in the RTB Bor copper complex — located near Timok in Serbia — investing US$1.26 billion for a 63-percent share in the complex.

Zijin’s Wednesday announcement is a proposal to the CSRC, and is subject to shareholder and regulatory approval.

On the Hong Kong stock exchange, Zijin was trading at HKD 2.82 at market close on Wednesday Hong Kong time, down 5.05 percent, while in Toronto the target of its takeover bid, Nevsun was trading almost at Zijin’s purchasing price, at C$5.99.

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