Equinox copper a good fit for Rio

AFRICAN copper outfit Equinox Minerals has been labelled a "good fit" for mining giant Rio Tinto, as it tries to expand its presence in the sought-after commodity.

RBS analyst Lyndon Fagan said Equinox, which has acquired Saudi copper play Citadel, was one of the few pure copper plays left.

"Equinox offers a potential acquirer the opportunity to gain exposure to Zambia through its Lumwana mine, along with a significant land position to undertake further exploration," he said in a client note.

"The company remains one of the few pure copper plays out there that we believe would be a logical fit within Rio's small

to medium-sized acquisition criteria."

Equinox, which is targeting 300,000 tonnes of copper output by 2016, has previously been mooted as a possible target for the global mining giant.

Copper for three-month delivery on the London Metal Exchange increased 0.3 per cent to a record $US10,190 a tonne yesterday.

Start of sidebar. Skip to end of sidebar.

.End of sidebar. Return to start of sidebar.

Rio Tinto last week reported it had almost tripled its full-year net profit to a record $US14.32 billion as a result of an increase in iron ore and copper prices.

Investors have been slightly concerned about Rio's exposure to iron ore, which made up more than 70 per cent of its annual earnings, and copper is high on the miner's expansion wishlist.

Equinox, which has market capitalisation of about $5.7bn, also fits Rio's acquisition target budget of $1bn-$10bn.

Mr Fagan said grade decline across Rio's existing operations suggested the miner needed additional projects if it was to maintain production.

"With large tier-one copper assets hard to come by, small yet high-margin copper projects may now be part of Rio's strategy to grow its copper business," Mr Fagan said.

The mining giant's $US3.9bn bid for Mozambique-focused Riversdale Mining illustrates that the company is prepared to grow further in Africa.

Mr Fagan said Zambia was a lower-risk region than Mozambique, which could mean a bid for Equinox may be easier for Rio to get over the line from a geopolitical risk point of view.

（Source from；The Austrlian）