Profitable year for Equinox

IT was a productive 2010 for acquisition-hungry Equinox Minerals, which has reported a $US269.1 million ($A266 million) after-tax profit, beating analysts' forecasts for the year.

Profitable year for Equinox

The dual-listed company’s net profit after tax for 2010 compared to a $US183.1 million loss in the 2009 calendar year, while operating profit for the period was $529 million, a 170% jump year-on-year from $196 million.

Equinox also achieved earnings before interest, tax, depreciation and amortisation of $551.9 million, 6.6% above a consensus average estimate of $517.8 million from the 19 analysts which cover the stock.

Revenue for the year totalled $1.05 billion, up from $531.9 million in 2009.

In the December quarter, Equinox reported NPAT of $92 million, up from a loss of $24.5 million in the previous corresponding period, while revenue for the quarter jumped almost 40% from $233.4 million to $325.5 million.

At the end of 2010, Equinox had cash resources of $320 million, up 193% from $109 million in cash at the end of 2009.

Equinox produced 146,690 tonnes of copper in 2010, a 34% increase year-on-year from 109,413t, at an average operating cost of $1.38 per pound copper, a 7% fall on the $1.49/lb cash cost for 2009.

Ore milled increased 42% from 13.1 million tonnes to 18.6Mt and exceeded the design rate of 20Mt per annum over the second half of the year.

Copper recoveries improved to 91% from 85% in 2009 with a lower level of transitional ore being treated throughout 2010.

Mine head grade fell from 0.95% to 0.86% copper in 2010 as mining moved away from the central high-grade core over the second half of the year.


Equinox has forecast 2011 production from Lumwana will come in at 145,000t copper in concentrate with a target cash operating cost of $1.45/lb, up 5% on the 2010 average operating cost.

The company said a plant debottlenecking and optimisation program had begun and was expected to ramp up to 25Mtpa by the end of the year.

“Key operational trends for 2011 include increased material movements in the mine and increased throughput in the plant,” Equinox said.

“Average grades for 2011 are expected to remain around similar grades achieved in the fourth quarter of 2010 as mining operations move along strike away from the higher grade Starter Pit at Malundwe.”

Equinox expects recoveries to remain around 90% in 2011.

Lundin bid

Earlier this week, Equinox formally launched its hostile cash and scrip takeover bid for Lundin Mining Corporation in a deal valued at around $C4.8 billion ($A4.9 billion).

Lundin has already announced a proposed friendly tie-up with fellow Canadian Inmet Mining. However, Lundin and Inmet advised earlier this week that they have pushed back the proposed date for their shareholder votes to March 28 from March 14.

During a teleconference, Equinox chief executive Crag Williams said the acquisition of Lundin provided a compelling transaction for both Equinox and Lundin shareholders.

“A 26 per cent premium to Lundin’s last closing price constitutes a far superior offer to Lundin shareholders than the nil-premium merger with Inmet,” he said.

“The transaction will be immediately accretive to earnings and cash flow per share. The combination will be one of the highest quality asset portfolios in the copper industry.

“The combined group [will be] one of the world’s largest pure copper producers with a production target of 500,000 tonnes of copper per year by 2016.”

Williams also said the company would have a strong growth pipeline of organic growth projects.

“We will primarily buy lower risk expansions of existing operations and the completion of the Jabal Sayid mine,” he said.

“The Lundin acquisition is consistent with Equinox’s strategy of building a leading pure copper growth company with superior leverage to the near-term copper price cycle.”

Williams also noted that if its bid was successful, Equinox might look at the sale of Lundin Mining’s non-core, non-copper assets in a move to reduce debt.

He pointed to Lundin’s Zinkgruvan zinc mine in Sweden as a possible asset it might look to sell.

Equinox’s offer for Lundin will remain open until April 14, unless withdrawn or extended.

Shares in Equinox have slipped A20c to $5.17 in morning trade.


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