Article on miningnews.net:FIRST Quantum's acquisition of a...

Article on miningnews.net:


FIRST Quantum's acquisition of a 17.27% interest in emerging copper play Equinox Minerals could spark further takeover interest in the stock, according to analysts at Goldman Sachs JBWere, especially given the scale of Equinox's flagship Lumwana project in Zambia.


However, analysts at the bank said it would be surprising if Canadian miner First Quantum were to launch a full takeover bid for Equinox Minerals before the Australian company's Lumwana copper project was commissioned and reached full production.

First Quantum's main asset is the Kansanshi openpit copper-gold mine in Zambia, which contributed significantly to the company's production 183,000 tonnes of copper last year, and GSJBW said the Canadian company had a strong earnings outlook for the next three years and beyond.

Kananshi has a 30-year mine life with production targeted at 165,000t copper per year.

Lumwana, which is 65km from Kananshi, has a 37-year mine life target with a planned production rate of 169,000t copper per annum.

Lumwana's size, minelife and capacity to expand would make it a prime asset for a takeover, GSJBW said, and given the similarities between Kananshi and Lumwana a First Quantum takeover play for Equinox was logical.

"The addition of Lumwana would enhance [First Quantum's] earnings profile significantly once in production," the bank added.

"Lumwana is a big enough project that it would make a difference to the large resource company, and hence [Equinox] is seen as a prime target for corporate activity."

First Quantum also had a copper cathode production facility which could be used to treat Lumwana's production.

The Canadian miner could also have taken the stake to deter any other potential takeover bids or at least "be at the table" in any takeover offer for Equinox.

The bank retained its Buy recommendation for Equinox, with a 12-month share price target of $A8.50.

The company is listed on the Toronto and Sydney stock exchanges, and in Australia, its shares were last at $6.43, up 35c or almost 6% this morning.