Equinox Minerals Ltd., owner of Africa’s biggest copper deposit, halted its shares from trading in Sydney after Canada’s Lundin Mining Corp. said it may get a takeover offer from the Australian company.
Equinox will make a statement on a corporate transaction, the Perth-based company said today in a statement, without giving details. Lundin, which agreed last month to a takeover offer from Inmet Mining Corp., said yesterday it has been advised by Equinox of an unsolicited takeover bid.
Buying Lundin, which has a market value of C$3.7 billion ($3.8 billion), will give Equinox four mines in Europe and a stake in a copper and cobalt operation in the Democratic Republic of Congo. A lack of new projects is forcing copper and gold producers to expand through acquisitions, BlackRock Inc., owner of the world’s largest mining fund, said last year.
“Anything that’s got a market capitalization of A$5 billion ($5.1 billion) or less, with good quality mine life, in the right strategic place, then there’s every chance you’re going to see further consolidation,” Chris Weston, an institutional dealer at IG Markets in Melbourne, said by phone.
Lundin fell 1 cent to C$6.45 on Feb. 25 in Toronto Stock Exchange trading. The shares are down 11 percent this year. Equinox, which bought Saudi Arabia’s biggest copper deposit last month, rose 1.8 percent to C$6.27 in Toronto and has gained 2.6 percent so far this year.
Equinox intends to make the bid for Lundin before the start of markets today, Toronto-based Lundin said.
“Lundin is not aware of the terms of the bid,” Phil Wright, chief executive officer of the Toronto-based company, said in the statement. “Until Lundin Mining completes its review of the bid, it will not comment on the proposal.”
There have been $24 billion of mining mergers and acquisitions so far this quarter, set for the best start to the year since 2008. Metal prices in London have almost doubled in the past two years as the global economy rebounded.
Equinox, with a market value of C$5.3 billion, last month completed the purchase of Citadel Resource Group Ltd. for $1.2 billion, its first acquisition in six years. Citadel is the owner of the $305 million Jabal Sayid copper and gold project in Saudi Arabia. Equinox’s $841 million Lumwana project in Zambia is the nation’s biggest foreign investment.
The average copper price will climb 22 percent this year, driven by robust fundamentals and strong investor demand, Standard Bank Plc said last month.
Inmet, with operations in Turkey, Spain, Finland and Papua New Guinea, is developing the Cobre Panama copper mine in the Central American country. Canadian companies were involved in $16.4 billion in announced mergers and acquisitions in January, second only to the $21.2 billion recorded in the same month in 2007, according to data compiled by Bloomberg.
Inmet is paying 8.59 earnings before interest, tax, depreciation and amortization for Lundin in a share transaction, giving it about 53 percent of a new company to be called Symterra Corp. That compares with a median of 9.33 times of 10 industry deals compiled by Bloomberg data. The deal has an announced value of C$4.1 billion and is currently valued at C$3.6 billion.