Engineering & Mining Journal

OCT 2018

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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NEWS-LEADING DEVELOPMENTS 6 E&MJ • OCTOBER 2018 www.e-mj.com con-tribution to net income of approx- imately $230 million, or income of ap- proximately $0.75 per diluted share. Nevsun Agrees to $1.41B Takeover Bid by Zijin Mining On September 5, Nevsun Resources Ltd. announced it has entered into a definitive agreement with Zijin Mining in a takeover bid where it will acquire all of the issued and outstanding shares of Nevsun for US$1.41 billion. The cash offer represents a premium of 57% over Nevsun's unaffected closing price of C$3.82 on May 7, the day Lun- din Mining Corp. first publicly announced its intention to acquire Nevsun. Zijin's of- fer is 26% more than the hostile takeover bid launched by Lundin on July 26. Nevsun's Board of Directors unani- mously recommended that sharehold- ers accept Zijin's offer, while still recom- mending that it rejects the Lundin offer. The Lundin offer will expire on November 9. "This premium transaction is an ex- cellent outcome for our shareholders, and the result of a rigorous and competitive global process to generate maximum val- ue for Nevsun's outstanding assets," said Ian Pearce, chair of Nevsun's Board of Directors. "The all-cash consideration of C$6 per share better reflects the funda- mental value of Nevsun's mining and de- velopment assets, while also providing an appropriate change of control premium to our shareholders." Chen Jinghe, chairman of Zijin, said, "Nevsun is an exceptional operator, with a strong focus on safe, efficient and sus- tainable mining practices. As the new owner, we will continue that focus, and we look forward to working with stake- holders in Eritrea and Serbia to advance these mining and development assets. "At the Bisha mine in Eritrea, our objective will be to further extend the life of the mine and explore for new deposits. At the Timok Project in Serbia, we intend to rapidly develop the Upper Zone and bring it into production, and continue to advance and define the world- class potential of the Lower Zone." Nevsun's Board of Directors had previ- ously rejected the hostile bid from Lundin because it believed it ignored the funda- mental value of Nevsun's assets. Formed in 1993, Zijin is based in Fujian, China, and is a global mining company specializing in gold, copper, zinc and other mineral resource explo- ration and development. Among Zijin's substantial global mining activities are strategic partnerships with Toronto-based Barrick Gold Corp., related to the Porgera mine in Papua New Guinea; and Vancou- ver-based Ivanhoe Mines Ltd., related to the Kamoa-Kakula copper project in the Democratic Republic of Congo. Zijin also completed a board-supported takeover of Norton Gold Fields Ltd., an Australian mining company, in 2015. Northern Star Acquires Pogo Gold Mine in Alaska Northern Star Resources plans to buy the high-grade Pogo gold project in Alaska from Sumitomo for $260 million. Sumi- tomo Metal Mining Co., the mine opera- tor, holds an 85% interest and Sumitomo Corp. owns the remaining 15% interest. Northern Star said it seized what it be- lieves to be an outstanding opportunity because Pogo meets all its key criteria, which centers on maximizing financial returns by owning and investing in Tier-1 projects in Tier-1 jurisdictions. Northern Star Executive Chairman Bill Beament said Pogo is a world-class pro- ject with an 8-million-ounce-gold endow- ment, producing 3.8 million oz at 13.6 grams per metric ton (g/mt) over the past 12 years. He said the mine's location in Alaska, a Tier-1 mining jurisdiction, is compelling. Pogo is in the Tintina Mineral Belt, the metal province is a 200-km wide, 1,200-km-long arc stretching across much of the Alaskan interior to the south- eastern Yukon. The region is host to most- ly gold deposits, where more than 50 million oz of gold resources have been de- fined in the last 20 years, but also hosts copper, lead, zinc, silver and tungsten. The Tintina Mineral Belt was the focus of the 1890s Klondike gold rush and has experienced a resurgence of activity since the late 1990s, stemming from major dis- coveries such as Donlin Creek, Fort Knox and the Casino deposits. The terms of the acquisition and the potential to grow Pogo's resources and reserves, mine life, production and cash- flow made it an exceptional deal, accord- ing to Beament. "All the metrics of this acquisition are enviable," he said. "The price, at $63/oz, creates an opportunity to generate sub- stantial value." "Pogo is a Tier-1 project in a Tier-1 jurisdiction with a long track record of producing about 300,000 oz/y," he add- ed. "Globally, there are only 17 mines that produce more than 300,000 oz/y in the Tier-1 jurisdictions of Australia, U.S. and Canada." And Pogo, along with their Jundee and Kalgoorlie operations, would give North- ern Star the potential to have three mines producing that much. Pogo is located 145 km southeast of Fairbanks. Underground production be- gan in 2006 and ore is processed through a 1-million-mt/y capacity plant. Producing 300,000 oz/y, the Pogo mine in Alaska is a Tier 1 asset in a Tier 1 mining jurisdiction. (Continued on p. 26)

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