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Report: Lundin teamed up with Euro Sun in Nevsun takeover bid to avoid Eritrea

Lundin Mining Corp.'s decision to bring in Euro Sun Mining Inc. as its partner for the proposed acquisition of Nevsun Resources Ltd. was motivated by a refusal from Lundin's board to invest in Eritrea due to the country's weak human rights record, Reuters reported May 18, citing sources familiar with the matter.

Previously, Lundin Mining and Euro Sun submitted a joint proposal on April 30 to acquire Nevsun for about C$1.5 billion in a cash-and-shares deal, but the offer was rejected by Nevsun on May 7.

Under the proposal, Lundin would own Nevsun's Timok copper project in Serbia, with Euro Sun having to pick up the Bisha zinc mine in Eritrea.

According to the report, a 2014 lawsuit filed by Eritreans alleged they were forced to work in Nevsun's Bisha mine from 2008 to 2012. Nevsun filed an appeal to Canada's Supreme Court in January, saying its investment in the country brings social and economic benefits.

Nevsun CEO Peter Kukielski said the company has attracted interest from potential buyers other than Lundin Mining, despite the company not being formally offered up for sale.

However, M&G Investment Management, Nevsun's second-largest shareholder, owning 9.5%, said the company should engage more fully with Lundin Mining, adding that the offer seems to be "pretty fair."