YDNEY (Dow Jones)--Australia-based Equinox Minerals Ltd....

YDNEY (Dow Jones)--Australia-based Equinox Minerals Ltd. (EQN.AU) said Thursday mining

contracts for its Lumwana copper mine in Zambia are up for renegotiation as the

government seeks to raise taxes and royalties to take advantage of high metal prices.

Zambia's government has announced it wants to raise royalties to 3%, in line with

international rates, and the corporate tax rate to around 35% to carve out higher

revenues from the resources boom.

This will require renegotiation of the 0.6% royalty rate and 25% company taxes offered

to investors in the 1990s that have revived the country's battered copper sector,

helping it to become the world's fourth largest producer.

"We will argue to keep the 0.6% royalty but there is scope for some renegotiation

despite our ten year contract clause," Equinox Managing Director Craig Williams told

Dow Jones Newswires in an interview.

The company has tax stability clause with the government that locks in current tax and

royalty rates for ten years.

On Tuesday the government appointed a panel of experts to review existing contracts

with negotiations due to start in two weeks.

"The government sent all companies a letter several months ago, stating that it

acknowledges the binding nature of development agreements, so it's not seeking

unilateral change. But the government has also requested to consider what could be a

reasonable outcome for both sides," said Williams.

"So potentially there will be a different outcome for each company," he said.



Equinox's Lumwana mine is slated to start production from mid-2008 with an average

annual copper output of 170,000 metric tons.

Copper, used in electrical wiring and tubes, traded below $3,000/ton for much of the

1990s, dropping as low as $1,400 in 2001. But copper prices have quadrupled over the past

four years to trade above $8,000/ton, serving up windfall profits for Zambia's

copper investors.

Other companies active in Zambia include India-based Vedanta Resources Ltd. (VED.LN),

First Quantum Minerals Ltd. (FM.T) and Switzerland's Glencore International AG.



Zambia Government Not Like Bolivia, Venezuela



"The drive for a 3% mining royalty is well founded and it has to be stressed that

the government has behaved in a reasonable manner," said Williams, with

Zambia's steps to ensure greater participation in copper's price bonanza

bearing no resemblance to the nationalistic approach taken by other resource-rich nations

such as Bolivia and Venezuela.

Williams pointed out that the government already had a contractual clause for price

participation in copper price rises with Equinox.

After repayment of debt, the government is entitled to up to US$100 million depending

on the copper price and operating margins.

The Lumwana mine is one of few sizable copper projects approaching production and has

been touted as a takeover target for miners such as Zinifex Ltd., which stated it is on

the lookout for copper acquisitions no smaller than 100,000 tons of annual output.

"We haven't been approached recently but we're also not encouraging a

takeover. Given our (share) pricing we are vulnerable," said Williams.

Equinox is also in the middle of a feasibility study for uranium mining at Lumwana,

with promising results so far. The rise in uranium prices has made mining and processing

attractive, Williams said.

He expects to receive permits for processing by mid-2008, to start production by 2010.

At 05480 GMT, Equinox shares were up 0.6% at A$5.33.



-By Elisabeth Behrmann, Dow Jones Newswires;

61-2-8235-2965; [email protected]