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UPDATE 1-Canada's Reservoir Minerals says receives unsolicited financing proposal

Published 2016-06-07, 07:53 p/m
© Reuters. UPDATE 1-Canada's Reservoir Minerals says receives unsolicited financing proposal
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(Adds details on financing proposal, background)
June 7 (Reuters) - Reservoir Minerals RMC.V , a small
mining company that is the target of a friendly takeover, said
on Tuesday it has received an unsolicited $130 million financing
proposal from Shandong Xiangguang Group, a China-based
shareholder.
Reservoir said it has also been made aware that another
China-based shareholder, Jing Bao, has publicly criticized its
planned takeover by fellow Canadian miner Nevsun Resources Ltd
NSU.TO .
Reservoir's board "unanimously agreed that the arrangement
with Nevsun was the preferred alternative", Reservoir said in a
statement on Tuesday.
In an agreed takeover, Nevsun on April 24 said it would buy
Reservoir Minerals for about $365 million in cash and stock.
Nevsun would also provide about $135 million in financing to
Reservoir.
Reservoir last November contacted around 25 groups to
consider potential strategic partners for its Timok project, a
high-grade copper deposit in Serbia. Included in that group were
financing proposals from Jing Bao and Shandong Xiangguang.
The financing proposal from Shandong Xiangguang requires
Reservoir to make an $80 million private placement of shares
with the Chinese group, as well as borrow $50 million from it
secured against Reservoir's stake in the Timok project.
If Reservoir should default on repaying or servicing the
loan, which it could as the company has no current operations,
Reservoir's stake in the Timok project could revert to Shandong
Xiangguang, it said.
Reservoir and Nevsun shareholders are due to vote on their
takeover deal next Friday.

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