Canadian Equinox Minerals Limited (TSX and ASX: EQN) (Equinox) has announced that it has completed an agreement Australia's Resource Group Limited (ASX:CGG) (Citadel), under which Equinox proposes to acquire all of the issued and outstanding shares of Citadel by way of a recommended takeover offer. The Board of Citadel has recommended unanimously that Citadel shareholders accept the Offer, in the absence of a superior proposal.

The Offer comprises 1 Equinox share for every 14.3 Citadel shares, plus A$0.105 per Citadel share in cash. The total value of the Offer is approximately A$1.25 billion. After completion of the transaction, Equinox shareholders will own approximately 81% of the combined group and Citadel shareholders will own 19%.

All Board directors of Citadel who hold Citadel shares as well as certain key Citadel shareholders, in aggregate representing 19.9% of Citadel's outstanding shares, have entered into pre-bid acceptance agreements with Equinox under which they have agreed to accept the Offer in the absence of a superior proposal that is not matched by Equinox.

Equinox President and Chief Executive, Craig Williams, said "This transaction is a perfect fit with Equinox's strategy of delivering value accretive growth to shareholders through M&A as well as the execution of our organic growth projects. The acquisition of Citadel will achieve our stated goal of securing a significant near-term development project in a mining friendly jurisdiction. It also expands our pipeline of exploration projects and complements the long-term growth ambitions of the group."

HIGHLIGHTS OF THE TRANSACTION

The combined group will be a leading independent copper producer with a portfolio of high-quality assets in Zambia, including the long-life Lumwana copper mine, and in Saudi Arabia, where Citadel is developing the Jabal Sayid copper-gold project.

Citadel shareholders will have the opportunity to realise an attractive premium and to share in the benefits of the combined group, including a growth pipeline with the potential to deliver in excess of 260,000tpa of copper production within four years, a strong balance sheet and an exceptional portfolio of exploration projects.

The Offer:

  • Delivers on Equinox's strategy of building a major global copper group with a diversified portfolio of high-quality long-life copper projects;
  • Will be accretive for Equinox on an earnings and cashflow basis once Jabal Sayid is in production;
  • Cements Equinox's market position as a leading independent pure-play copper producer;
  • Enhances Equinox's growth pipeline, with an updated production target of more than 200,000tpa of copper once Jabal Sayid commences production and an objective of over 260,000tpa if the expansion of Lumwana (currently subject to a feasibility study) is implemented;
  • Facilitates expansion and diversification into the highly prospective and underexplored Arabian Shield minerals province where Citadel's assets are located;
  • Adds an advanced development project to Equinox's portfolio, with attractive capital costs;
  • Lowers Equinox's average cash cost;
  • Allows Equinox to leverage its financial strength and project development expertise in order to de-risk and maximise the value of Jabal Sayid; and
  • Allows Equinox to expedite near-mine exploration activities at the Jabal Sayid mine, as well as Citadel's extensive portfolio of exploration projects.

Equinox Chairman, Peter Tomsett, said: "This transaction is an important step for Equinox in its evolution into a leading global copper producer. We believe Saudi Arabia is a very prospective minerals province and Citadel's assets are an excellent addition to Equinox's portfolio."

Equinox President and Chief Executive, Craig Williams, said: "Equinox has been following Citadel's progress in Saudi Arabia for some time, with the Jabal Sayid project now positioned to become a significant copper mine. Citadel also holds an exciting portfolio of exploration properties in Saudi Arabia, having established itself as a "first mover" in this under-explored region. Citadel's assets are a natural fit with our existing operations and Equinox's financial strength and technical expertise will allow us to optimise the exploration and development of these projects. This is a combination that will create value for shareholders of both companies."