The Chinese miner has wooed Nevsun with a C$1.86-billion offer, well above the hostile takeover offer from Lundin Mining.
China’s Zijin Mining (HKEX:2899) has been revealed to be the attractive alternative to Lundin Mining (TSX:LUN), which has been teased by the board of Nevsun Resources (TSX:NSU) in the back-and-forth over takeover bids for the Canadian miner in the last few months.
In a release on Wednesday morning (September 5), Nevsun triumphantly let the cat out of the bag, announcing a friendly all-cash agreement for Nevsun to be acquired by Zijin for C$1.86 billion — well above what Lundin had on the table.
Zijin is offering C$6 per share, which according to the release, represents a premium of 57 percent over Nevsun’s unaffected closing price of C$3.82 on May 7 this year — the day Lundin first had a crack at its fellow Canadian miner.
Nevsun chastised Lundin again in today’s release, pointing out that the new offer was “C$1.25 per Nevsun share, or 26 percent, more than the C$4.75 per share hostile takeover bid for Nevsun launched by Lundin on July 26, 2018.”
Chair of the Nevsun board, Ian Pearce, said the Zijin offer was “an excellent outcome for our shareholders, and the result of a rigorous and competitive global process to generate maximum value for Nevsun’s outstanding assets.”
Nevsun’s board has unanimously recommended that shareholders accept the offer, while its advice to ignore Lundin’s offer remains the same.
Lundin’s offer expires on November 9.
The Chinese company is paying quite the premium. In a note to clients, analysts at Raymond James said that the Zijin offer “represents more than full value,” and “leaves little room for another bidder to make a higher offer that still allows for an economic return on investment given the permitting and construction costs ahead.”
The company sees a lot in Nevsun though, chairman of Zijin, Chen Jinghe, said that Nevsun had been a safe pair of hands with its operations.
“As the new owner we will continue that focus, and we look forward to working with stakeholders in Eritrea and Serbia to advance these mining and development assets,” said Jinghe.
“At the Bisha mine in Eritrea, our objective will be to further extend the life of the mine and explore for new deposits. At the Timok project in Serbia we intend to rapidly develop the Upper Zone and bring it into production, and continue to advance and define the world-class potential of the Lower Zone.”
Zijin is a global miner with interests around the world — it works with Ivanhoe Mines (TSX:IVN) as partner at the Kamoa-Kakula copper project in the Democratic Republic of Congo and with Barrick Gold (TSX:ABX) at the Porgera gold mine in Papua New Guinea.
The Fujian-based miner has been making a lot of noise in Serbia recently, where Timok is based. Only last week, the Serbian government announced Zijin was the winning bidder of the tender process for the formerly state-owned RTB Bor copper mining and smelting complex.
Zijin will be taking on a 63-percent stake in the complex for US$1.26 billion.
With this morning’s news, the Chinese company will be investing almost US$3 billion to stake a claim in Serbian copper interests.
Raymond James noted that with these two back-to-back transactions and acquisitions, the Chinese miner was well-positioned “to unearth synergies by processing Timok concentrate at the RTB Bor smelter.”
In Toronto, Nevsun’s share price rocketed by 17.31 percent on Wednesday morning to C$5.795 by 11:15 a.m. EST.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.