Victory wants in on Rio Narcea

The break fee on the takeover of Rio Narcea Gold Mines (RNG-T, RNO-X) by Lundin Mining (LUN-T, LMC-X) is preventing another bidder from stepping in, says Victory Nickel (NI-T).

Victory said it has been trying to finance a competing bid for Rio Narcea, which Lundin has proposed to take over for $5.50 per share and $1.04 per outstanding warrant. The deal, which values Rio Narcea at $945 million, has a break fee of $25 million, which Victory says is too great an impediment to an offer. Lundin also has a right to match a competing offer.

Victory’s plan would be to create an all-nickel company by acquiring Rio Narcea and then spinning off Rio Narcea’s gold assets. A combined company would be an intermediate-size nickel producer.

The Lundin offer closes on July 16; at the end of June, Lundin had lock-up agreements for about 31% of Rio Narcea shares, and a further 12% had been tendered to the offer.