Kowloon, Hong Kong — MININGREVIEW.COM — 28 April 2011 – Hong-Kong-listed Minmetals Resources “’ a Chinese company principally engaged in development, production and trading of metals and minerals “’ has bowed out of the battle for Australian-based copper miner Equinox Minerals, saying Canadian company Barrick Gold Corporation’s US$7.6 billion bid was too rich.
Quoting Reuters, Miningmx confirms that Barrick, the world’s largest gold miner, announced its agreed offer for Equinox on Monday, seeking to tap surging demand for copper from China and other developing economies that has pushed prices up more than sevenfold in the past eight years.
Minmetals, a unit of China’s largest metals trader, said it could not justify paying so much and would seek other opportunities. “Competing with Barrick at these prices would, in our view, be value destructive for our shareholders,” Minmetals chief executive Andrew Michelmore said in a statement.
Investors punished Minmetals’ cautious approach, sending its shares plunging 12% in Hong Kong.
Barrick’s offer is at a rich valuation of more than 14 times Equinox’s 2010 earnings before interest, tax, depreciation and amortisation of US$523 million.
Equinox “’ a global miner listed in Canada and Australia “’ owns the Lumwana mine in Africa’s rich Zambian copper belt, as well as most of the Jabal Sayid project in Saudi Arabia.
A weaker-than-expected capital raising by Minmetals in Hong Kong last week prompted speculation it might not have the funding in place to formally launch the unsolicited US$6.5billion offer it announced earlier this month.
Minmetals, which said it had a 4.2% stake in Equinox, is majority controlled by state-owned China Minmetals Non-Ferrous Metals Company Limited, so could potentially have tapped Beijing for funding. Traditionally, however, state-owned Chinese firms do not get drawn into bidding wars.