Equinox Minerals Acquire Australia Citadel Resource for 1.25B USD

Equinox Minerals Ltd has entered into a friendly $1.25-billion deal to acquire Australia?s Citadel Resource Group Ltd., an emerging base metals and gold company with development and exploration assets in Saudi Arabia.

The cash and share offer will give Equinox control of Citadel?s flagship Jabal Sayid copper-gold project located 350 kilometres north-east of the Red Sea port city of Jeddah. It is forecast to produce about 57,000 tonnes of copper in concentrate annually for ten years beginning in 2012.

?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,? Equinox CEO Craig Williams said in a statement.

Citadel directors and key shareholders who own a combined 19.9% stake in the company have agreed to accept the offer, unless a superior bid emerges that Equinox does not match. Every 14.3 Citadel shares will be exchanged for one Equinox share, in addition to A10.5? in cash per Citadel share.

Equinox shares have risen 25% in the past six months on the back of rising copper prices, while Citadel shares are up more than 40%.

?The acquisition of Citadel will achieve our stated goal of securing a significant near-term development project in a mining friendly jurisdiction,? Mr. Williams said. ?It also expands our pipeline of exploration projects and complements the long-term growth ambitions of the group.?

Earlier this month, Citadel CEO Ines Scotland said the company was in advance talked with six mining majors on a joint development deal.

??If we could form a joint venture on good terms, which is very difficult with the majors, then we would look to do so,? she told The Sydney Morning Herald.

As part of a regional effort to create strong and stable economies, Saudi Arabia has been gradually cutting corporate taxes. Currently at 20%, this rate coupled with a lack of royalties, makes the country an attractive destination for businesses and miners in particular.