UPDATE: Equinox Minerals Announces C$4.8 Billion Takeover For Lundin Mining Corp

Equinox Minerals Ltd. (EQN.AU) said Monday it will offer 4.8 billion Canadian dollars (US$4.9 billion) in cash and shares to take over Lundin Mining Corp. (LUN.T) in a hostile bid that could derail Lundin's planned C$9 billion merger with Inmet Mining Corp. (IMN.T).

Equinox, which produces around 110,000 tons a year of copper concentrates from its Lumwana mine in the southern African country of Zambia, said that the offer represented a 26% premium to the closing price of Lundin's shares in Toronto on Friday.

"It's pretty simple: we're a 26% premium, the merger is a zero premium," Craig Williams, Equinox Chief Executive, told Dow Jones Newswires. "Together this company will have one of the best profiles in the copper business."

He said that the takeover could raise the copper production of the combined group to 500,000 metric tons a year by 2016, enough to overtake the current production of major miners of the commodity including Antofagasta PLC (ANTO.LN) and Teck Resources Ltd. (TCK).

Driven by record-breaking copper prices, Equinox has been on the hunt for acquisitions in recent months. Last month the company completed a A$1.25 billion offer for Citadel Resource Group Ltd., a copper-gold developer focused on projects in Saudi Arabia.

However, Williams said that lead and zinc mines in Europe that currently make up the bulk of Lundin's reserve base were of little interest, signalling a possible sale of the assets.

"Our priority is very much copper and we will remain a pure copper play," he said. "That's our focus and that will remain so. We are getting some zinc assets but that isn't a high priority for us."

The company said that Lundin shareholders could either take C$8.10 in cash for each of their own shares, or 1.2903 Equinox shares and US$0.01 in cash.

Cash for the deal would be financed through a US$3.2 billion bridge facility from Goldman Sachs and Credit Suisse, and the company said cash flow from the combined operations would allow it to return to net cash within four years.

Three-month copper futures on the London Metal Exchange hit an all-time record of US$10,190/ton on Feb. 15 before slipping to US$9,790/ton at their last trade. Prices have risen by more than a third over the past 12 months on fears that demand for the commodity, which is used in a range of household manufactured goods from electronic circuitry to plumbing pipes, could be outstripping supplies.

Zinc, by contrast, is up only 13.7%, and warehouses have around 200 days' worth of supply amidst slack demand.

Lundin's main copper asset is a 24.75% shares in the Tenke Fungurume mine in the Democratic Republic of Congo's southern Katanga province, across the border from Equinox's Lumwana mine.

The mine is majority-owned by the world's largest independent copper miner, Freeport-McMoRan Copper & Gold Inc. (FCX), with Congo's state mining company Gecamines holding a smaller stake.

Williams said there would be no direct synergies between the two sites, but added that there were similarities in the geology and exploration opportunities between the sites.

-By David Fickling, Dow Jones Newswires; [phone]; [e-mail]