VANCOUVER (Reuters) - Nevsun Resources’ (NSU.TO) second biggest shareholder said on Tuesday it is “positively inclined” to an unsolicited C$1.5 billion ($1.16 billion) takeover proposal for the Canadian copper-zinc miner, whose shares rose as much as 24 percent on the approach.
Nevsun should engage more fully with Lundin Mining Corp (LUN.TO) and Euro Sun Mining (ESM.TO), which made the proposal, and run a full sales process, said Jamie Horvat, director of global equities for M&G Investment Management, which owns 9.5 percent of Nevsun.
Canadian miners Lundin and Euro Sun disclosed late on Monday that they had submitted a proposal to Nevsun on April 30 to buy the Vancouver-based company, which owns the large, high-grade Timok copper project in Serbia and the Bisha copper/zinc mine in Eritrea.
Nevsun said on Tuesday its board of directors had unanimously rejected the unsolicited proposal as it was too low and had a “problematic structure.”
The C$5 per share offer included C$2 in cash funded by Lundin, C$2 in shares of Lundin and C$1 in shares of Euro Sun.
Lundin and Euro Sun said they had made public their proposal, which represents a 40 percent premium on Nevsun’s April 30 closing share price, as they believed Nevsun’s shareholders should be “made aware of this opportunity.”
The proposal, however, is not a formal bid, and is Lundin’s fourth approach to Nevsun this year. Lundin declined to comment further.
“We feel this is a pretty fair offer,” Horvat said, adding that Lundin’s management has a strong track record.
Toronto-based Lundin produces copper, zinc and nickel from mines in Americas, Portugal and Sweden. It tried in May 2016 to buy a stake in the Timok project.
Euro Sun is a small non-producing company with a gold project in Romania. It is part of mining promoter Stan Bharti’s asset portfolio.
Lundin was given exclusive month-long access to Nevsun’s data and the CEOs have held repeated meetings on the understanding that Lundin would make a fair-priced, cash-and-share bid, according to Nevsun CEO Peter Kukielski.
“To this day they have failed to deliver,” he said in an interview.
If Lundin made a formal bid, Kukielski said, Nevsun would consider running a full sales process for the company.
But Nevsun said in a statement that Euro Sun was “not an attractive partner,” and has had difficulty raising financing.
Nevsun’s shares last traded 15 percent higher at C$4.41 on the Toronto Stock Exchange. Lundin’s shares were 2.7 percent weaker at C$8.02 and Euro Sun’s were unchanged at C$1.37.
($1 = 1.2967 Canadian dollars)
Reporting by Nicole Mordant in Vancouver; editing by David Gregorio and G Crosse