Shares in base metals producer Nevsun Resources (TSX, NYSEMKT:NSU) skyrocketed on Tuesday after the company’s board unanimously rejected a Cdn$1.5-billion (about $1.2bn) unsolicited bid from fellow Canadian miners Lundin Mining and Euro Sun Mining.
The suitors had disclosed late on Monday the takeover offer for Vancouver-based Nevsun, noting their disappointment for not having been able to reach a deal.
“After months of attempting to reach an agreement, we are disappointed that Nevsun has prevented its shareholders from considering our premium proposals,” the companies said, adding that they would continue trying to ink a deal with Nevsun.
“At this point in time, we believe that all Nevsun shareholders should be made aware of this opportunity,” they said.
Their Cdn$5 a share proposal, which consists a mix of cash and shares in both Lundin and Euro Sun, represents a 31% premium compared to Nevsun’s closing price on the Toronto Stock Exchange on Monday, they said.
Lundin said it first approached Nevsun on February 7, submitting a new proposal on February 25, both of which were rejected. On April 3, Lundin presented Nevsun with a fresh offer to acquire its European assets for cash and shares, which was also rejected.
The targeted company claims the proposal undervalues its Timok copper-gold project in Serbia. It also believes that junior miner Euro Sun, is “not an attractive partner” as it has had difficulty raising financing.
Other than Timok, Nevsun has another key asset — the Bisha copper-zinc mine in Eritrea. Under the rejected proposal, Euro Sun would gain control of the that mine, while Lundin would own and fund the development of Timok.
In 2016, Lundin tried and failed to buy Timok from previous owner Freeport McMoRan.
Shares in Nevsun were up more than 18% to Cdn$4.51 by 9:54 a.m. Toronto time, still below the Cdn$5 a share the takeover proposal values the company at.