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Lundin Mining ditches junior partner, offers all cash deal worth $1.4-billion for Nevsun Resources

Lundin Mining Corporation says it intends to make an all cash offer worth $4.75 a share for Nevsun Resources Ltd., modifying an earlier proposal that was worth slightly more, but consisted of stock and cash, and was made in conjunction with a junior partner.

Nevsun rejected an earlier $5 buyout proposal from Lundin and Euro Sun Mining Inc. because of its “problematic” deal structure. In May, Euro Sun Mining Inc. proposed acquiring Nevsun’s mine in Eritrea, and at the same time Lundin said it intended to purchase a promising development project in Serbia. Doubts also arose about how Euro Sun, whose market capitalization is only $51-million, would be able to finance its share of the deal.

In an interview in May, after the initial proposal was tabled, Nevsun’s chief executive officer Peter Kukielski, told the Globe and Mail that he was open to a takeover deal, but insisted he wanted “cash and Lundin shares and nothing else.”

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Ostensibly, the latest proposal, which sees Lundin going it alone, buying the entire company, and offering cash, is giving Mr. Kukielski what he wants.

In a release on Monday evening, Lundin said its proposal is “full and fair value.”

Lundin’s $4.75 a share proposal, worth $1.4-billion, is 12.8 per cent above Nevsuns’ Monday’s closing price on the Toronto Stock Exchange.

Mr. Kukielski was not available for comment on Monday evening.

While Vancouver-based Nevsun has an existing copper and zinc mine in Eritrea, its high-grade, copper-gold project in Serbia called Timok, is its most prized asset. Analyst consider Timok to be one the world’s most desirable undeveloped copper assets. Toronto-based Lundin has tried and failed to acquire Timok on a number of occasions, bidding US$265-million in 2016 to buy it from then owner Freeport McMoRan Inc.

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