Mr. Paul Conibear of Lundin reports
LUNDIN MINING ANNOUNCES INTENTION TO MAKE ALL CASH OFFER TO ACQUIRE NEVSUN RESOURCES LTD.
Lundin Mining Corp. intends to make a formal offer to acquire all of the issued and outstanding common shares of Nevsun Resources Ltd. for cash consideration of $4.75 (Canadian) per share.
The offer price represents a significant premium of 82 per cent to the closing price of $2.61 (Canadian) on Feb. 6, 2018, the date of the first offer to Nevsun related to Lundin's interest in acquiring Timok. This is a 33-per-cent premium to the closing price of $3.58 (Canadian) per share on the Toronto Stock Exchange as of April 30, 2018, the date of Lundin Mining's previously announced prior proposal to Nevsun, and a 40-per-cent premium to the volume weighted average trading price of $3.35 (Canadian) per share on the TSX over the 20 trading days ended April 30, 2018. The offer price values Nevsun at an equity value of approximately $1.4-billion (Canadian) ($1.1-billion (U.S.)).
Paul Conibear, president and chief executive officer of Lundin Mining, commented: "Following our attempts to constructively engage Nevsun since early February, 2018, after having made a series of proposals and observing significant recent changes in the political landscape related to Eritrea, we have determined that the best course now is to make an all-cash offer directly to Nevsun shareholders. Our offer will represent the clearest path for Lundin Mining to acquire the Timok project and for Nevsun shareholders to realize on the value of their investment without dilution and financing risk. We believe that the proposed Nevsun acquisition consideration is full and fair value and represents a significant premium to Nevsun's unaffected share price prior to the announcement of our first proposal."
Benefits to Nevsun shareholders
Lundin Mining believes the offer will be attractive to Nevsun shareholders for the following reasons:
Significant premium to market price: The offer represents a significant premium of 33 per cent to the closing price of $3.58 (Canadian) per share on the TSX as of April 30, 2018. The offer also represents a significant premium of 40 per cent to the volume weighted average trading price of $3.35 per share on the TSX over the 20 trading days ended April 30, 2018.
- Liquidity and certainty of value: The all-cash offer provides an opportunity for Nevsun shareholders to realize immediate liquidity and certainty of value for their entire investment.
- Fully financed cash offer: The offer is not subject to a financing condition.
- High likelihood of completion: Lundin Mining is a highly credible counterparty with significant experience in the mining industry. The company has significant acquisition experience, having successfully completed many both small-scale and large-scale acquisitions.
- Potential for downward share price impact if offer is not accepted: The offer represents a significant premium to the market price of Nevsun shares prior to both Lundin Mining's first offer to Nevsun and following the public announcement of Lundin Mining's prior proposal to acquire Nevsun. If the offer is not successful and no competing transaction is made, Lundin Mining believes it is likely the trading price of Nevsun shares will decline to significantly lower levels.
Intention to make an offer
Lundin Mining intends to commence a formal takeover bid circular in accordance with applicable Canadian securities laws on or about July 27, 2018.
Readers are cautioned that Lundin Mining may determine not to make the offer if Nevsun implements or attempts to implement defensive tactics in relation to the offer, or if Lundin Mining uncovers or otherwise identifies information suggesting that the business, affairs, prospects or assets of Nevsun have been materially impaired, or if Nevsun determines to engage with Lundin Mining to negotiate the terms of a combination transaction and Nevsun and Lundin Mining determine to undertake that transaction utilizing a structure other than a takeover bid such as a plan of arrangement. Accordingly, there can be no assurance that the offer will be made or that the final terms of the offer will be as set out in this news release.
The offer will be undertaken in accordance with National Instrument 62-104, Take-Over Bids and Issuer Bids, and will be subject to a number of customary conditions, including: (i) there being deposited under the offer, and not withdrawn, at least 66-2/3rds per cent of the outstanding shares (calculated on a fully diluted basis), excluding shares held by Lundin Mining, if any; (ii) receipt of all governmental, regulatory and third party approvals that Lundin Mining considers necessary or desirable in connection with the offer; (iii) no material adverse change having occurred in the business, affairs, prospects or assets of Nevsun; and (iv) the statutory minimum tender condition of 50 per cent (which cannot be waived).
TD Securities Inc. and GMP Securities Inc. are acting as financial advisers to Lundin Mining, and Cassels Brock & Blackwell LLP and Paul, Weiss, Rifkind, Wharton & Garrison LLP are acting as Lundin Mining's legal advisers in connection with the offer.
About Lundin Mining
Lundin Mining is a diversified Canadian base metals mining company with operations in Chile, the United States, Portugal and Sweden, primarily producing copper, nickel and zinc. In addition, Lundin Mining holds an indirect 24-per-cent equity stake in the Freeport Cobalt Oy business, which includes a cobalt refinery located in Kokkola, Finland.
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