Nevsun Resources (TSX: NSU; NYSE: NSU) has agreed to Zijin Mining’s (HGK: 2899) friendly take-over bid which values Nevsun at $6 per share or $1.86 billion. Nevsun shares jumped nearly a dollar on the news and now sit at $5.80 per share.
The news comes nearly a month after Nevsun’s board of directors recommended shareholders reject a take-over bid from Lundin Mining (TSX: LUN) that valued Nevsun at $4.75 per share.
Zijin will formally make its offer by Sept. 18, 2018. Nevsun’s board has recommended Nevsun shareholders continue to reject the Lundin take-over bid, which will expire on Nov. 9, 2018, claiming the offer “ignored the fundamental value of Nevsun’s assets.”
Nevsun’s primary assets are its producing Bisha zinc-copper mine in Eritrea and its Timok copper-gold project in Serbia.
The company approved an extension to the Bisha mine in June that will keep the mine operating to 2022. The extension adds 3.3 million tonnes of open pit ore that will produce 470 million lb. payable zinc and 52 million lb. payable copper.
In late June the company announced a maiden inferred resource for its Timok Lower Zone. The porphyry project is a joint-venture with Freeport-McMoRan (NYSE: FCX) and contains 1.7 billion inferred tonnes grading 0.86% copper and 0.18 gram gold, or 0.96% copper equivalent, for 31.5 billion lb. copper and 9.6 million oz. gold. The Lower Zone remains open to the north and at depth.
A few months earlier, Nevsun tabled a pre-feasibility study on the Timok Upper Zone. The project has a US$1.82 billion after-tax net present value at an 8% discount rate and an 80% after-tax internal rate of return, all at a US$3.15 per lb. copper price. Copper is currently valued at US$2.70 per pound.
Shares of Nevsun have a 52-week range of $2.50 to $5.81. The company has a $1.4 billion market capitalization.