Equinox to buy Citadel for $1.18bn, acquires Saudi project

Equinox Minerals has said it will pay A$1.2bn ($1.18bn) in cash and shares for Citadel Resource Group, the company developing Saudi Arabia’s biggest copper deposit, in a bid to expand its operations into the Middle East.

Melbourne-based Citadel's main asset is the $305m Jabal Sayid copper and gold mining venture in Saudi Arabia. The purchase has already been approved by Australia’s Foreign Investment Review Board, Equinox said in a statement.

The acquisition will place Equinox, whose main asset is the $841m Lumwana mine in Zambia, among the world’s top 20 largest copper producers.

First production from the Jabal Sayid mine is expected by early 2012, with average copper production of 57,000 metric tons a year for 10 years.

"The acquisition of Citadel will achieve our stated goal of securing a significant near-term development project in a mining-friendly jurisdiction," said Equinox chief executive Craig Williams in a statement.

After the deal closes, Equinox shareholders will own about 81 percent of the combined company and Citadel shareholders will own 19 percent. Citadel’s board recommended the offer, the company said in a separate statement.

The agreement will have Equinox swap one share for every 14.3 Citadel shares, and pay 10.5 Australian cents cash for each Citadel share. The offer is worth A$1.2bn based on Equinox’s closing price on October 22.

It’s worth about A$1.25bn based on the 10-day volume-weighted average price of A$5.96 a share as at 22 October 2010, Citadel said.

Citadel moved to full ownership of Jabal Sayid in September when it agreed to pay $112.5m for the 30 percent stake it didn’t already own. Construction is underway, with plant commissioning targeted for the fourth quarter of 2011.

Copper for delivery in three months in London touched a low of $6,101 a metric ton on June 7. It closed trading on October 22 at $8,334 a ton.