Govt cannot stop Equinox acquisition, says Mwale

Govt cannot stop Equinox acquisition, says Mwale
By Chiwoyu Sinyangwe
Mon 23 May 2011, 22:30 CAT

MINES minister Maxwell Mwale says Zambia is a liberalised economy that cannot stop Barrick Gold Corporation’s agreed 100 per cent acquisition of Equinox Minerals, owner of Lumwana Mining Company.

On April 25, 2011, Equinox announced an agreement with Barrick Gold Corporation pursuant to which Barrick has agreed, subject to the terms of a support agreement, to make an offer to purchase all outstanding common shares of Equinox by way of negotiated take-over bid.

Barrick, subsequently, commenced its offer to acquire the Equinox common shares on April 26, 2011.

The Equinox board of directors has unanimously recommended that Equinox shareholders “accept” the Barrick offer, and “deposit” their shares under the offer. Competition and Consumer Protection Commission (CCPC) announced last week that Barrick Gold had applied to it seeking approval for its US $7.7 billion takeover of Equinox Minerals which built its prime asset, Lumwana Mining Company at US $1 billion.

CCPC director for consumer and public relations Brian Lingela said the commission had received and was considering an application for the proposed acquisition, the biggest transaction in the country’s mining history.

But Mwale said the government will continue to allow “market forces to continue dictating the economic development of all sectors including mining”. “There will always be some forces at play just like you are free to bid for any company you like,” Mwale said.

According to Lingela, in its investigations, CCPC was carrying out a number of assessment tests to ascertain whether the transaction was likely to result in negative effects in the mining sector, to the consumer, fair trade and the economy in general.

Barrick is a Canadian-based company globally leading in gold mining in terms of production, reserves and market capitalisation and operates gold and copper mines in Canada, United States of America, Peru, and Chile among other areas.

Meanwhile, a latest Equinox technical report has been updated to reflect and support the proposed expansion of the processing plant at Lumwana to a processing capacity of 45 million tonnes per year. The revised technical report also contains an exploration target developed based on 2010 drilling results, previously been disclosed by Equinox last February.

Equinox used the exploration target for pit optimisation studies at a long term copper price of US $2.50 per pound which indicates that a mineral inventory of 1.0 to 1.5 billion tonnes at 0.6 per cent copper could be realised when further drilling is completed.