Toronto-based Barrick Gold, the world’s largest gold miner, is building up its copper portfolio with an agreement to acquire copper producer Equinox Minerals.
Equinox has two primary assets, the Lumwana mine in Zambia (100 per cent owned) and the Jabal Sayid development project in Saudi Arabia (70 per cent owned, but Equinox is in the process of acquiring the remaining 30 per cent).
The Lumwana mine began production in 2008. It hosts copper reserves of 4.5 billion pounds and inferred copper resources of 5.5 billion pounds. Lumwana produced 323 million pounds of copper in 2010 has potential to expand production.
A feasibility study on the Jabal Sayid project was completed in 2009. The project has copper reserves of 1.2 billion pounds, and average life of mine annual production is expected to be over 100 million pounds of copper.
Barrick’s cash offer of C$8.15 per share values Equinox at approximately C$7.3 billion, a 30 per cent premium on Equinox's closing share price on the Toronto Stock Exchange on 25 February, 2011 (the last trading day before Equinox announced its intention to make a take-over bid for Lundin Mining Corporation, which it will now withdraw).
It also represents a 16 per cent premium over the offer proposed on 3 April 2011 by Chinese company Minmetals Resources, so the Equinox board has unanimously approved the support agreement and recommends the offer to shareholders.
"The acquisition of Equinox would add a high-quality, long-life asset to our portfolio and is consistent with our strategy of increasing gold and copper reserves through exploration and acquisitions,” said Aaron Regent, President and CEO of Barrick.
“Combined with our Zaldivar mine and Cerro Casale project in Chile, this acquisition would position Barrick with significant production growth potential in two of the most prolific copper-producing regions of the world. This will be in addition to our targeted growth in annual gold production to 9 million ounces within the next five years."
Craig Williams, President and CEO of Equinox said: "We are very pleased to support this offer. The offer allows our shareholders to realize immediate value and also positions our operations and employees as part of a world class mining company. We believe this offer is superior to the public proposal made by Minmetals in terms of certainty and value. Given the immediate value creation opportunity, we are recommending our shareholders tender to the Barrick offer."
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For a recent account of operations at Jabal Sayid, see the article published in the March/April 2011 issue of Business Excellence EMEA, based on an exclusive interview with Robert Rigo, vice president of project development.
http://www.bus-ex.com/article/equinox-mineralsbariq-mining-jabal-sayid
