Lundin Mining launches hostile C$1.4 bln bid for Nevsun (updated)

Euro Sun Mining

26/07/2018 14:33

(Adds details of offer, comments from Lundin conference call,
background on Nevsun response)
    By Susan Taylor and Rishika Chatterjee
    TORONTO, July 26 (Reuters) - Lundin Mining Corp  LUN.TO 
launched a hostile C$1.4 billion ($1.1 billion) takeover bid for
fellow Canadian base metals miner Nevsun Resources Ltd  NSU.TO 
on Thursday, saying it had failed to convince Nevsun's board to
agree to a friendly deal over the past nine months.
    Cash-rich Lundin, looking to grow its production, has made
five proposals to acquire Nevsun's large, high-grade Timok
copper project in Serbia. With no appetite for Nevsun's Eritrean
mine, it partnered with tiny mine developer Euro Sun Mining
 ESM.TO  on its last buyout proposal for the whole company.
 urn:newsml:reuters.com:*:nL1N1SI1YS  urn:newsml:reuters.com:*:nL3N1SE62X
    That offer, worth about C$1.5 billion, was rejected by
Nevsun as too low.
    Afterwards, Lundin said its best option was to make a direct
offer to Nevsun shareholders to buy the whole company, noting
significant political change in Eritrea.  urn:newsml:reuters.com:*:nL4N1UC56H
    Long-time rivals Eritrea and Ethiopia signed a peace accord
this month, ending decades of hostility. Eritrea, formerly a
province of Ethiopia, waged a 30-year war for independence and
seceded in 1993. But relations soon soured and around 80,000
people died in a 1998-2000 war.  urn:newsml:reuters.com:*:nL8N1U53HI
    Nevsun also said this month that Lundin's C$4.75 offer 
undervalues the company and its assets.  urn:newsml:reuters.com:*:nL4N1UD453 Chief
Executive Peter Kukielski noted a pre-feasibility study which
put the net asset value of Timok's upper zone at $1.82 billion.
 urn:newsml:reuters.com:*:nPn2gXNGDa
    Nevsun has said its special committee of independent
directors and advisers would review any formal offer it
received.    
    In a direct pitch to Nevsun shareholders with its C$4.75 per
share all-cash offer, Lundin said that it became apparent over
time that Nevsun’s management was unlikely to agree to a
transaction despite multiple attempts to address its concerns.
 urn:newsml:reuters.com:*:nGNX6h0mgl Nevsun shares closed Thursday at C$4.76.
    "Each time we presented a proposal, the goal post changed,"
outgoing Lundin Chief Executive Officer Paul Conibear told
analysts.   urn:newsml:reuters.com:*:nL4N1UL5UY  
    The offer is not subject to financing conditions and Lundin
plans to fund the purchase using its $1.5 billion cash on hand
and undrawn credit facility. 
    The offer, open until Nov. 9, requires support from more
than 50 percent of Nevsun shares and regulatory approvals.
    Analysts have said it is unlikely another Canadian mid-tier
miner would compete with Lundin's offer, but the quality and
size of Timok could attract large global diversified companies,
such as Rio Tinto  RIO.L   RIO.L .
    ($1 = 1.3038 Canadian dollars)

 (Reporting by Denny Thomas and Susan Taylor in Toronto and
Rishika Chatterjee in Bengaluru; Editing by Vyas Mohan and Susan
Thomas)
 ((susan.taylor1@thomsonreuters.com; +1 416 941 8083; Reuters
Messaging: susan.taylor1.thomsonreuters.com@reuters.net))