Canadian mid-tier copper miner Nevsun Resources to buy Reservoir Minerals

Nevsun Resources Ltd, a Canadian mid-tier copper miner, today struck a deal to buy gold and copper miner Reservoir Minerals Inc in a $365 million cash and stock deal.

Under the deal, Nevsun will pay two shares of Nevsun and $0.001 in cash for each Reservoir share, a 35-per cent premium to Nevsun's Friday closing price.

The total deal values Reservoir shares at C$9.401 each.

Nevsun will also provide $135 million in financing to Reservoir by purchasing about 12.2 million of Reservoir shares at C$9.40 per share for a total of $90.3 million and also provide an unsecured cash loan of $44.7 million to Reservoir.

Post closing, Nevsun shareholders will own approximately 67 per cent of the combined company and current Reservoir shareholders will own the remaining 33 per cent.

Vancouver-based Reservoir's flagship project is the Timok copper and gold project in Serbia, which it owns in a joint venture with US-based miner Freeport McMoRan Inc.

Through the $135 million in financing provided by Nevsun, Reservoir will now buy Freeport McMoRan's stake in the Timok project, making the merged company 100 per cent owner and operator of the Timok project's upper zone and 60.4 per cent of the lower zone.

Nevsun is 60-per cent owner of the high grade Bisha Mine in Eritrea, which has over 9 years of reserve life, generating revenue from both copper and zinc concentrates containing gold and silver by-products.

The Vancouver-based company has over $400 million in cash and has no debt.