TIM KILADZE
RTGAM



For a Canadian company, Equinox Minerals Ltd. appears very Australian.

The business boasts that its global headquarters is based in Canada, but its small Toronto office is tucked into a corner of downtown's Royal Bank Plaza and has no receptionist. Most corporate decisions are made in Perth, Australia, where the chief executive, financial and operating officers reside.

Despite appearances, however, the company is wholly Canadian. Equinox incorporated here in 2004 when copper prices were on the rebound from a global rut, and the firm went public on the Toronto Stock Exchange the same year.

At the time the company - which already had an ASX listing - said it relocated from Australia because North America had "a larger, more receptive capital market environment" which would make it easier to raise both debt and equity.

That decision could pay big dividends now that Equinox has launched a $4.8-billion hostile bid for Lundin Mining Corp. , a bid that has the potential to derail Lundin's proposed merger with Inmet Mining Corp. Because Equinox is incorporated in Canada, the company's legal advisers believe it will not fall under the Investment Canada Act, which automatically triggers a review by Industry Canada of any bid from a foreign investor worth $300-million or more.

However, incorporation isn't the deciding factor under the Act. The residences of corporate managers and directors also play a role. But, although the company's most powerful executives live in Australia, five of its six directors are Canadian, and the majority of managers and directors live in Canada. Plus, neither Equinox nor Lundin have Canadian assets, so there would not be much of a "net loss" to Canada.

Equinox's latest bid comes on the heels of a successful takeover of Citadel Resources Group, a Saudi Arabia-based copper producer. It appears Equinox believes now is the time to strike, with copper prices hovering around $4.50 (U.S.) per pound, surpassing even pre-crisis levels. The company had not previously disclosed any intentions to expand its mineral base through acquisitions.

While the Citadel transaction was widely praised for allowing the company to pick up the Jabal Sayid copper mine, which is slated to begin production in late 2011 or early 2012, initial reactions to the latest offer are mixed.

"Equinox's proposed bid for Lundin is one that looks typical of top-of-the-cycle merger mania where the focus is on the size, rather than the quality of a [company's] assets," Citigroup analyst Craig Sainsbury wrote in a note to clients.

There have also been worries about the amount of debt Equinox would need to take on. The cash component of the takeover would be financed with a $3.2-billion (U.S.) debt facility - a lot to borrow, considering Equinox has only once posted an annual profit since starting up in 1993. However, the company is poised to post its second annual profit this year, and the takeover bid suggests it's expecting more of the same.

Now boasting a market capitalization around $4.4-billion, Equinox was incorporated in Canada in January, 2004, as a holding company for Equinox Resources Ltd., which had traded on the ASX since 1994. Equinox's principal asset is its wholly owned Lumwana Copper in Zambia. At the moment the company mines solely copper, but acquiring Lundin would dilute that to 87 per cent, because Lundin's production includes zinc and other minerals.

Equinox's projected 2011 copper production was just ahead of Lundin's prior to the proposed merger with Inmet. If that merger is successful, the new company, Symterra, will leapfrog Equinox.

Equinox rival First Quantum Minerals Ltd. sold its 16-per-cent equity stake in the company for $653-million in November. The proceeds were used to develop some of First Quantum's own assets.