Keen to bring the Timok copper project, in Serbia, into its fold, Canadian firm Lundin Mining has announced that it will take a C$1.4-billion offer directly to Nevsun Resources shareholders, after unsuccessful attempts to engage with the company over the past five months.

Lundin, which earlier this year tried to buy Nevsun in a deal with Canadian junior Euro Sun, is now going at it alone, with a C$4.75 a share cash consideration, which it points out is a 82% premium to the target company’s closing price of C$2.61 a share when it first expressed interest in acquiring Timok.

The offer is also a premium to Nevsun’s closing price of C$4.21 a share on Monday.

The prize for Lundin will be the Timok project, which has a probable reserve of 27-million tonnes at an average grade of 3.3% copper and 2.1 g/t gold, containing 0.89-million tonnes of copper and 1.8-million ounces of gold. A prefeasibility study for the project’s Upper Zone estimates that Timok will produce 1.7-billion pounds of payable copper over ten years.

Nevsun also owns the high-grade Bisha copper/zinc mine in Eritrea, and although Lundin’s directors, reportedly, previously had reservations about investing in the African nation, president and CEO Paul Conibear said on Monday that significant changes had been observed in the political landscape of that country.

“Following our attempts to constructively engage Nevsun since early February 2018, after having made a series of proposals and observing significant recent changes in the political landscape related to Eritrea, we have determined that the best course now is to make an all cash offer directly to Nevsun shareholders.

“Our offer will represent the clearest path for Lundin Mining to acquire the Timok project and for Nevsun shareholders to realise on the value of their investment without dilution and financing risk,” Conibear said.

Lundin will start formal takeover proceedings on July 27.

NEVSUN’S RESPONSE
Meanwhile, Nevsun president and CEO Peter Kukielski said that shareholders should not take any action, pointing out that Lundin’s proposed offer was C$0.25 a share below its latest formal communication of July 3, in which the suitor affirmed its interest in pursuing a transaction at C$5 a Nevsun share, funded in cash and equity.

"This latest announcement from Lundin continues to ignore the fundamental value of Nevsun and its assets. Despite the progress we have made in enhancing Nevsun's value, Lundin's notional takeover offer represents only a 13% premium to Nevsun's closing trading price of C$4.21 a share on the TSX on July 16, and only a 9.1% premium to the volume weighted average trading price of Nevsun's shares over the 30 days ended July 16," he said.

Kukielski added that, since Lundin first expressed interest in Nevsun, the company had released a pre-feasibility study (PFS) for the Timok Upper Zone with an after-tax net asset value of $1.82-billion, received an exploration decline construction permit in February, began construction in May, and in June released an initial inferred resource for the Timok Lower Zone containing 31.5-billion pounds of copper and 9.6-- million ounces of gold.

“At the same time we have extended the mine life at Bisha through 2022, adding 3.3 million tonnes of high-grade ore to the mill, resulting in additional payable production of 470 million pounds of zinc and 52 millions pounds of copper over this time frame. The work we have been doing has also been noticed by several strategic parties that have expressed an interest in participating in the development of Timok," he said.