Nevsun Resources Ltd. (NSU, Financial) soared 17.91% to $4.41 per share on the New York Stock Exchange on Wednesday, on the heels of the agreement reached with Zijin Mining Group Co. Ltd. (SHSE:601899, Financial) for the sale to the Chinese metal producer of its ordinary stock in an all-cash deal.
The parties agreed that one share of Nevsun Resources is valued at $6 Canadian dollars ($4.60 U.S.), which represents a 57% premium to the unaffected closing price as of May 7, 2018, for a total consideration of approximately $1.41 billion.
On May 7, Lundin Mining Corp. (LUN.TO) disclosed its intention to the public to acquire Nevsun Resources and on July 26 it launched the hostile take-over bid of $4.75 Canadian dollars per share of the target company.
The board of directors of Nevsun Resources is recommending the shareholders of the company accept the offer of Zijin Mining Group.
Zijin Mining Group's acquisition proposal requires that Nevsun Resources tenders at least 66.67% of its total issued and outstanding shares.
This transaction is value accretive for the assets of Nevsun Resources because Zijin Mining Group Co. Ltd is one of the most important operators of metal producing assets in China. The company has massive financial resources that can be used to upgrade the portfolio of Nevsun Resources and several years of experience in the mining industry.
In 2017 the Chinese group was in 1200th place in the Forbes Global 2000, in third place amid the public gold miners of the world and in 82th place in the Fortune China 500 list.
Zijin Mining Group holds a large accumulation of mineral resources in China. The group has about 30.06 million tons of copper, approximately 1347.41 tons of gold and about 9.5 million tons of lead, zinc, molybdenum and tungsten. Zijin Mining Group is the largest producer of gold in China and is ranked second for the production of copper and zinc.
Following the news, the share price of Nevsun shot up and is now far above the 200- 100- and 50-day simple moving average lines. On Wednesday about 4.5% of total shares outstanding or 13.64 million ordinary shares of Nevsun Resources were traded on the NYSE American. The average volume of common shares traded is 2.4 million over the last 10 days and is 822,270 over the last three months. The stock has climbed 94% for the 52 weeks through Sept. 5.
The market capitalization of Nevsun Resources is $1.13 billion. The price-book ratio is 1.87 versus an industry median of 1.74, and the EV-to-EBITDA is 63.8 versus an industry median of 9.3.
The 52-week range is $1.98 to $4.41.
During the second quarter of 2018,Ă‚ Paul Tudor Jones bought 31,390 shares of Nevsun Resources.
Francisco GarcĂ Âa ParamĂ©s increased his holding by 10.11% to 3,152,859 shares, Jim Simons increased his holding by 1.6% to 1,801,200 shares and John Burbank increased his holding by 72.14% to 3,245,100 shares.
Nevsun Resources Ltd. is reporting 302.59 million shares outstanding, of which 41.95% is held by institutions.
Disclosure: I have no positions in any security mentioned in this article.
