Equinox Minerals (ASX/TSX:EQN) is focused on the development of its 100% owned Lumwana Copper Project in Zambia. The Lumwana Copper Mine will produce an average of 172,000 tonnes per year of copper metal contained in concentrates for the first 6 years of its 37 year mine life. With construction largely complete, remediation of works following the transformer fire incident underway and commissioning continuing, the mine is expected to commence production by the end of 2008. Full production will be reached in 2009 at which time Lumwana will be Africa's largest copper mine.
Equinox Minerals launches C$4.8 billion hostile bid for Lundin Mining
Copper producer Equinox Minerals (ASX: EQN, TSE: EQN) has launched a C$4.8 billion hostile takeover bid for Lundin Mining (TSE: LUN), threatening the previously agreed merger between Lundin and Inmet Mining (TSE: IMN) announced in January.
The new offer, valued at C$8.10 per share, comes days before the scheduled shareholder meeting to vote on the Inmet deal, to take place on March 14. The new price for Lundin represents a 26% premium to the company's C$6.45 closing price on Friday.
"This offer is clearly superior to the nil-premium merger proposed between Lundin and Inmet," said Equinox president and CEO Craig Williams.
Lundin, based in Vancouver, produces copper, nickel, lead and zinc and holds expansion projects at its Zinkgruvan mine in Sweden and Neves Corvo project in Portugal, along with its stake in the Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo.
Equinox, with offices in Toronto and Perth, Australia, is said to be particularly interested in Lundin's 24% holding in the DRC property.
"We also believe that our Offer presents an attractive option for Lundin shareholders to elect to receive cash or retain exposure to what we believe would be one of the strongest and lowest risk production and growth profiles in the copper sector today," Williams added.
Under the terms of the Equinox offer, Lundin shareholders will receive either $8.10 in cash or 1.2903 Equinox shares plus one cent for each Lundin share.
Equinox said it will shell out a maximum of C$2.4 billion in cash, and issue as much as 380 million shares.
The company plans to finance the acquisition through a US$3.2 billion bridge facility, led by Goldman Sachs and Credit Suisse.
In comparison, the friendly merger between Lundin and Inmet promises to create a new force in the copper industry to be known as Symterra Corporation, in which each Inmet shareholder will receive 3.4918 shares and each Lundin shareholder will receive 0.3333 shares.
The exchange ratio represented no premium to either party based on the 30-day volume-weighted average price of both Inmet and Lundin to January 11, 2011, the last business day before the deal was announced.
Lundin shares have fallen roughly 17% since the deal was made public to markets.
As mineral prices reach all-time highs, especially copper, consolidation has become an ever-increasing trend in the industry as companies scramble to attain new mineral properties.
The fight for Lundin, which could stretch into a lengthy battle, is just the latest in a series of similar takeover stories. Inmet has yet to make a statement on the competing offer.
Equinox said that the acquisition of Lundin will create a company with a targeted 23% compound annual growth rate in production over the next six years, culminating in planned output of roughly 500,000 tonnes of copper per year by 2016.
The company also said that growth would be achieved entirely through lower-risk expansions of existing operations, and from the Jabal Sayid project in Saudi Arabia, which is currently under construction.
The combination of Equinox and Lundin would consist of five producing operations by mid 2012, including
Equinox’s Lumwana mine in Zambia.
Lundin issued a statement today in response to Equinox’s offer, stating that it is in “the process of reviewing and evaluating the announcement with its financial and legal advisors and will communicate a recommendation to Lundin Mining shareholders as soon as possible”.
The company asked that its shareholders defer making any decisions until the board has had an opportunity to review the merits of the offer.
The proposed deal with Inmet includes a $120 million break fee, as well as a right for Inmet to match any competing offers.
Lundin rallied more than 19% on the TSX today, to trade at $7.7 as of 2:18pm EST - below the new offer price.
