Canadian miner Nevsun calls Lundin's new offer undervalued

(Reuters) - Nevsun Resources Ltd (Toronto:NSU.TO - News) said on Tuesday rival Lundin Mining Corp's (LUN.To) latest buyout proposal undervalues the base metals miner and its assets.

Nevsun's shares soared 14.2 percent on the Toronto Stock Exchange to C$4.80, above Lundin's per share offer of C$4.75.

"This latest announcement from Lundin continues to ignore the fundamental value of Nevsun and its assets," Nevsun's Chief Executive Officer Peter Kukielski said in a statement.

Nevsun said it had not yet received a formal offer but would engage with Lundin.

Cash-rich Lundin, which has been eyeing Nevsun's large high-grade Timok copper project in Serbia and its Bisha copper and zinc mine in Eritrea, said on Monday it planned to buy Nevsun for about C$1.4 billion.

Lundin's new all-cash bid is about C$100 million lower than the cash-and-stock offer made in May, in partnership with Euro Sun Mining Inc (Toronto:ESM.TO - News).

"(Monday's) all-cash offer by Lundin actually represents a premium to the previous bid," Shane Nagle, an analyst with National Bank Financial said.

Given the pullback in Lundin and Euro Sun shares, that offer would be valued at less than C$4.60 per share, he said, adding that the current offer seemed fair.

Nagle also said "no one from the Canadian mid-tier space is likely going to compete with Lundin's offer", but highlighted that Timok is a fairly high quality development opportunity and may draw some attention from large-scale global diversified companies like Rio Tinto (LSE:RIO.L - News) (ASX:RIO.AX - News).

Lundin said it might pull the offer if Nevsun implemented or attempted to implement any defensive tactics.

Through Monday's close, Nevsun's shares had gained 10.7 percent since May 6, when Lundin made its first offer.

(Reporting by Karan Nagarkatti in Bengaluru; Editing by Sriraj Kalluvila)