Australia’s Equinox offers A$1.25 billion for Citadel

MELBOURNE/SYDNEY (BestGrowthStock) – Canadian-Australian copper miner Equinox Minerals (EQN.AX: ) unveiled an agreed A$1.25 billion ($1.23 billion) takeover of smaller Australian-listed peer Citadel Resource Group (CGG.AX: ) on Monday.

The acquisition would potentially give Equinox the same copper output as BHP Billiton’s (BHP.AX: ) (BLT.L: ) Olympic Dam mine, the world’s fourth-largest deposit.

Equinox (EQN.TO: ), is offering one of its shares for every 14.3 Citadel shares plus A$0.105 in cash for each share in Citadel, which is developing a copper mine in Saudi Arabia.

Based on Equinox’s volume-weighted share price of A$4.95 over the 10 days to October 22, the value of the offer is 52.2 Australian cents per Citadel share, compared with Citadel’s closing price on Friday of 42.5 cents, Equinox said in a statement.

Copper prices have zoomed on strong industrial output in Asia, with the benchmark London Metal Exchange copper contract hitting a 27-month peak last week, driving miners to find more of the metal. Total world production of copper is forecast at around 19 million metric tones this year.

Equinox’s main project is the Lumwana copper mine in Zambia, which it commissioned in 2009 and this year is forecast to yield 140,000 metric tones of copper.

Citadel owns 70 percent of the Jabal Sayid copper mining project in Saudi Arabia, with rights to acquire 100 percent.

Forecasts call for annual production of around 60,000 metric tones of copper over the first three years of the mine’s estimated 10-year operating life starting in 2012.

Equinox Chief Executive Craig Williams said Citadel was a perfect fit, in line his company’s strategy of growing its presence in copper mining.

“The acquisition of Citadel will achieve our stated goal of securing a significant near-term development project in a mining friendly jurisdiction,” Williams said in a statement.

Each Citadel director and a number of Citadel shareholders, including its joint venture partners in Jabal Sayid, collectively representing 19.9 percent of Citadel’s share register, have already struck separate pre-bid acceptance agreements with Equinox for all their Citadel shares, according to Equinox.

(Reporting by Sonali Paul and James Regan; Editing by Mark Bendeich)

Australia’s Equinox offers A$1.25 billion for Citadel