miningnews article

Found this article on miningnews this afternoon. Good luck to all fellow EQN holders. Cheers John.

Red-letter day promise



Tuesday, October 04, 2005
FOR those with a speculative bent, there's a copper miner emerging in Africa that at least one independent analyst believes has strong potential to be trading at multiples to its current level. MiningNews.net Premium reports …

The company is Equinox Minerals, and the unnamed analyst – who incidentally also holds shares in the budding miner – backing the ASX-TSX listed-junior is from AspectHuntley.

Equinox is developing its Lumwana copper project in Zambia, with the potential 125,000 tonnes of copper per annum producer at the financing stage.

A feasibility study completed two years ago put capital costs and operating costs at $US330 million and US56c per pound respectively.

The mining industry has experienced significant cost pressures in the period since the feasibility was completed two years ago, and AspectHuntley has increased those two critical numbers to $US400 million and US65c/lb.

Even so, and taking into account a 15% discount rate, a long term copper price of $US1.25/lb and an exchange rate of $A1=$US0.76, the NPV of $A335 million (or $A1.99/share) is a long way north of the value currently being put on Equinox – capitalised earlier this month at $A193 million at a share price of $A1.15.

As a comparison, AspectHuntley notes the market experience of TSX-listed African copper miner First Quantum, a company that often gets kudos from analysts for its operational performance and which already has an operating copper mine in Zambia of a similar size to that planned by Equinox – as well as other significant assets in Africa including in the Democratic Republic of Congo.

"Its share price was languishing around $4 in late 2002. Signing of the debt finance term sheet was the beginning of a more than five fold increase in the share price in less than three years," AspectHuntley notes.

"Equinox is exactly at that stage of development, potentially on the cusp of a similar rise."

Positives that are seen as being in favour of Equinox achieving its aims include a regulatory regime in Zambia that allows capital and dividends to be freely repatriated and a "New South Wales style mining law".

AspectHuntley flags Equinox's experienced management team, including chairman Sir Sam Jonah, Mark Arnesen (former treasurer of Billiton), Harry Michael (former CEO of Geita Gold) and Brian Penny (former CFO of Kinross Gold).

In addition, the mining lease has been granted and "a development agreement is set to freeze the 0.6% royalty and 25% corporate tax rates for the majority of the project life".

The key risk is costs.

Warning: This is not investment advice and should not be relied upon.
http://www.miningnews.net/StoryView.asp?StoryID=47257