mmr wants to talk

Minmetals reaches out to Equinox for talks

ANDY HOFFMAN - The Globe and Mail

Minmetals Resources Ltd. wants to enter discussions with Equinox Minerals Ltd. regarding its $6.3-billion hostile takeover bid, a senior executive with the Chinese company says.

So far, however, Toronto-based Equinox and Hong Kong-headquartered Minmetals (MMR) havent discussed a possible friendly deal, said Martin McFarlane, president of MMR Canadian subsidiary.

We would like to see a conversation with Equinox Mr. McFarlane said in a telephone interview Tuesday from Singapore, where MMR is making shareholder presentations.

That hasnt happened yet, he added.

Backed by its Beijing-based parent state-owned enterprise China Minmetals Corp.MMR surprise move for Equinox marks a coming of age for Chinese mining firms. If successful, the expected $6.3-billion all-cash bid would represent the largest takeover of a foreign company ever by a Chinese miner.

Equinox shares continued to trade above MMR proposed $7-per-share offer Tuesday, closing at $7.56 on the Toronto Stock Exchange. The company is expected to dismiss the proposed bid as insufficient. Mining analysts believe MMR will have to increase its bid if it hopes to win over Equinox shareholders, but Mr. McFarlane gave no indication that MMR is considering that.

Although MMR own market value is less than $2.5-billion and well short of Equinox $6.5-billion market capitalization, he noted that the Hong Kong-based company has a financing advantage over any potential rivals.

We will be sourcing some of the funding from Chinese banks We have access to Chinese banks and most others dont, he said.

It is unclear, however, if MMR currently has financing in place for a bid. An actual offer for Equinox will be made in the next three weeks, MMR has said, and it hopes to close a takeover in mid-2011.

MMR has been eyeing Equinox for nearly two years, Mr. McFarlane said. It quietly acquired a 4.2-per-cent stake in the company last year.

Equinox flagship asset is the Lumwana copper mine in Zambia, one of the world largest copper deposits developed in the last decade. It owns another copper project in Saudi Arabia. With the world fastest growing major economy, China is the largest consumer of copper on the planet as the metal is a key component in housing and infrastructure.

Listed on both the Toronto and Australian stock exchanges, Equinoxs key senior management, including chief executive officer Craig Williams, are based in Perth, Australia.

Mr. McFarlane said that while MMR offer will require regulatory approval in Australia and in Canada under the Investment Canada Act, the company is confident it will win clearance in both countries. Zambia and Saudi Arabia do not need to sign off on the proposed takeover but Mr. McFarlane said MMR would not want to proceed without their support

MMR bid will be conditional on Equinox dropping its own $4.8-billion hostile takeover offer for Vancouver Lundin Mining Corp., which owns a 25-per-cent stake in a massive copper project in the Democratic Republic of Congo called Tenke Fungurume.

Equinox launched its bid after Lundin unveiled plans for a merger of equals with Toronto Inmet Mining; that merger has now been cancelled.

Equinox has postponed a meeting for its shareholders to vote on the Lundin bid. Originally slated for April 11, Equinox has rescheduled the vote and meeting until April 26.

Equinox officials declined to comment on MMR hopes to begin talks. The board of directors of Equinox is expected to respond to MMR planned offer later this week.

Sources close to the situation have said that Lundin has been approached by Chinese mining companies other than Minmetals hoping to discuss a potential deal with the Vancouver-based company. Mr. McFarlane dismissed any conspiracy theoryuggestions that MMR was working in tandem with other Chinese companies to pave the way for a bid for Lundin.

I havent heard anything about that. I thought you were going to ask me if Elvis was involved in this transaction Mr. McFarlane said.