TIM KILADZE
RTGAM



The war of words between Equinox Minerals Ltd. and Lundin Mining Corp. has escalated, with Lundin taking the latest swing.

The copper miner has bad-mouthed Equinox for claiming that the per-share premium that Chinese-controlled Minmetals Resources Ltd. is offering Equinox shareholders to buy the company is much too low.

Lundin itself is attempting to rebuff a hostile takeover bid from Equinox.

"This response by Equinox [to Minmetals] seems very hypocritical, seeing that they are urging Lundin Mining shareholders to accept an offer that is significantly worse than what has been offered to Equinox's shareholders by [Minmetals]," Phil Wright, Lundin's chief executive officer, said in a statement.

Equinox's offer for Lundin was at a 16-per-cent premium to what was then Lundin's 20-day volume-weighted average stock price, a standard measure for premiums in mergers and acquisitions. Minmetals offered a 33-per-cent premium for Equinox.

Late last week, Equinox's board rejected Minmetals' bid, calling it "clearly opportunistic." The board added that "such a low premium is a fraction of premiums paid in recent acquisitions of base metal mining companies." Equinox stated that the premium offered was only 9 per cent - not 33 per cent - but that assessment is based on the stock price before Equinox's bid for Lundin. That offer sent Equinox's shares lower.

Lundin has gone so far as to force Equinox to retract its estimate for copper reserves in its prized Lumwana mine in Zambia. In early February, Equinox had announced an expansion strategy that assumed an extended mine life and boosted production estimates. Following that announcement, Equinox's shares shot 10.3 per cent higher, giving the company more financial flexibility to bid for Lundin.

Equinox has since admitted the figures were simply a "conceptual estimate." Although estimates like these can be released, Canadian law does not allow them to be used for economic analysis, such as mine life estimates.

Although Lundin has spent more time defending its failed merger with Inmet Mining, the company has always taken issue with Equinox's bid. From the beginning, Lundin slammed Equinox for tacking on $3.2-billion in debt to make the deal work. Lundin has warned that such a big debt load would give the lenders a great deal of influence over a combined Equinox-Lundin.

Now that the tables have turned on Equinox, forcing the company into the roles of both buyer and target simultaneously, Lundin is doing all it can to promote Minmetals' bid. As part of that deal, Minmetals stipulated that it would only buy Equinox if not a single share of Lundin was taken up, which means Lundin would be able to escape.

Because so much has happened in the past few days, Equinox has pushed back the deadline for its bid, which is now set to expire at the end of April.