equinox sitting pretty in zambia

SMH Tuesday 24th July 2007
Equinox sitting pretty in Zambia
Jamie Freed
July 24, 2007

EQUINOX Minerals has placed itself in a prime position to benefit from rising long-term copper price forecasts and growing interest in the Zambian copper belt from major miners.

Citigroup yesterday raised its 2008 copper price forecast to $US3.50 ($4) a pound and doubled its 2009 and 2010 forecast to $US3 a pound.

But during that time BHP Billiton, Rio Tinto and Xstrata will lack the scope for internal growth in the commodity.

Credit Suisse recently said it was "only a matter of time" before the world's five largest mining companies became involved in Zambia and the Democratic Republic of Congo.

"The companies should go for mergers and acquisitions to take advantage of the current bull run in copper," Credit Suisse analysts said.

'We believe that these diversified miners will continue to target the pure plays and the junior players."

Last month Xstrata Copper's chief executive, Charlie Sartain, said his company wanted to acquire projects with the capacity to produce 150,000 tonnes to 300,000 tonnes a year.

Xstrata is rumoured to be considering a regional consolidation strategy in central Africa.

Although Xstrata does not own any copper mines in Africa, its major shareholder Glencore owns mines and a smelter in Zambia.

Zambia carries less political risk than the neighbouring Congo.

Zambezi Resources, which recently floated in Australia, has some exploration joint ventures with Glencore in Zambia.

"Under the contracts we have [Glencore] can assign things to Xstrata," said Zambezi's managing director, Julian Ford.

Perth's Equinox expects its $US715 million Lumwana project under construction in Zambia to enter production in the middle of next year at a rate of 170,000 tonnes a year with a 37-year mine life.

Equinox has signed offtake agreements for its copper concentrate with Glencore and a Chinese-owned smelter, and is studying an expansion into uranium.

Although Equinox has a low profile in Australia, its dual listing in Canada has proven a hit with investors.

Other central African miners have also recently attracted a lot of interest.

First Quantum Minerals, listed in Canada but headed by a Perth-based chief executive, Philip Pascall, was recently listed as a prime takeover target by Desjardins Securities. And London-listed Central African Mining & Exploration recently made a $US1.9 billion scrip bid for Katanga Mining.

Equinox's chief executive, Craig Williams, said his company had received various takeover approaches over the past few years but none were very serious.

"We're certainly not trying to solicit approaches," he said. "We've got our focus on building the project. But at the end of the day, if someone wants to have a run at us, there's not much we can do to stop them."

Equinox shares closed 3c higher at $4.65 yesterday, having more than tripled in the last year.

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