On Nov. 15, Lundin Mining (OTCPK:LUNMF) announced that it not only waived its right of first offer to acquire Freeport-McMoRan's (NYSE:FCX) indirect interest in the Congolese Tenke Fungurume copper mine, but also decided to sell its own 24.8% interest to a Chinese company for $1.136 billion in cash and a contingent consideration of up to $51.4 million. According to Paul Conibear, CEO of Lundin Mining:

The sale will enable Lundin Mining to advance its strategy to incrementally grow the company with projects and operations we control, while maintaining a strong balance sheet.

In Q3 2016, the Tenke production attributable to Lundin Mining equaled 13,522 tonnes (29.81 million lb) of copper cathode and 980 tonnes (2.16 million lb) of cobalt hydroxide. It equates to approximately 120 million lbs of copper and 8.6 million lbs of cobalt per year. According to 2016 production guidance, Tenke Fungurume is responsible for more than 20% of Lundin Mining's copper production. The sale of Tenke will result into a notable decline in copper and cobalt production. Given the statement of Lundin Mining's CEO, we can expect that the company will try to replace Tenke Fungurume sooner rather than later. This is where Nevsun Resources (NYSEMKT:NSU) comes into play.

Why Nevsun Resources?

The main reason why Nevsun Resources is a logical acquisition target for Lundin Mining is the Timok project in Serbia. The Timok project consists of a high-grade Upper zone and a low-grade but very large Lower zone. It was being developed by Freeport-McMoRan and Reservoir Minerals. Back in early March, Lundin Mining announced an agreement to buy 100% of Freeport-McMoRan's stake in the Upper zone and 28% of its stake in the Lower zone for $262.5 million.