Nevsun shares tank after Reservoir accepts takeover
Nevsun Resources (TSE:NSU NYSEMKT:NSU) shares tanked on Friday after the shareholders of Reservoir Minerals (CVE:RMC) accepted a sweetened offer from the Africa-focused miner according to a Reuters report.
Shares of Nevsun declined 8.2% in early afternoon trade after following yesterday's after-market close announcement that the Vancouver-based company is adding a $2.00 cash payment per Reservoir share, upping the value of the deal by $75 million from the roughly $365 million all-share offer first made in April.
Two dissident Reservoir shareholders, Jing Bao (Asia) and Shandong Xianggung Group Co made an alternative offer to Reservoir shareholders, which may have been a factor in Nevsun tabling a revised offer Nevsun, worth $583 million in New York, already owns a fifth of the Vancouver-based explorer.
Reservoir stock duly went in the opposite direction on Friday, rising 17% on the venture section of the Toronto stock exchange for a valuation of C$568 million.
The agreement provides the companies 100% ownership in the upper zone of the Timok Copper Project in Serbia, which had previously been owned by Reservoir and Freeport McMoRan. Nevsun shareholders will own two-thirds of the combined company.
Nevsun's main asset is the Bisha mine in Eritrea in the Horn of Africa. Nevsun owns 60% (the Eritrean government owns the rest) of the $250 million Bisha mine which started operations as a gold-silver producer in 2010. Three years later Bisha underwent a $110 million expansion to switch to copper concentrate production from supergene ore.
This year the company will pivot again to expand flotation capacity to produce zinc concentrate. Zinc is the best-performing metal in 2016 rising more than 23% in price since the start of the year. Life of mine payable metals at Bisha is put at 470m pounds of copper, 1.7 billion pounds of zinc, 240,000 ounces of gold and 8.2 million ounces of silver.