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MELBOURNE (Reuters) – Minmetals Resources (1208.HK), China's large metals trading firm, on weekday offered $6.5 1000000000 to acquire Equinox Minerals (EQN.AX)(EQN.TO), chasing the direct company's conductor assets in Zambia and Arabian Arabia.

China, which accounts for 40 proportionality of the world's obligation for copper, is on a mining acquisition spree as prices for the flushed metal waver near achievement highs.

Minmetals, which owns mining dealings in state and Asia, said it would substance C$7 per share for Equinox, a 23 proportionality payment to Equinox's near in Toronto terminal Friday of C$5.71. It would be China's fourth-biggest outbound M&A deal, according to composer Reuters data.

Equinox's inhabitant shares surged 29 proportionality to a achievement A$7.35, superior the continuance of the Minmetals' substance on expectations a competition effort haw emerge.

"It's game on now," said Ausbil Dexia Chief Executive Paul Xiradis, a shareholder in Equinox. "They'll be hunting to defend their greensward and it haw stimulate another party to become in as well, hunting for quality assets such as those held by Equinox."

Minmetals' shares rose 2.4 proportionality to HK$6.72.

Chief Executive saint Michelmore told Reuters the Equinox substance was Minmetals' best price, adding he was not considering increasing it.

"It fits into a strategy of building a directive planetary heterogeneous base metals upstream business," he after told a media conference in Hong Kong.

"It sure fits in with the strategy in outlay of growing the base metal size, particularly in outlay of copper," said Michelmore, adding Minmetals would be the world's 14th maximal conductor shaper after the deal, from its underway rank of 30th.

The substance is conditional on Equinox dropping its C$4.7 1000000000 effort for Canada's Lundin Mining (LUN.TO), which has been the subject of a separate takeover tussle between Equinox and Inmet Mining (IMN.TO).

NOT A KNOCKOUT

Investors said it was possible competition bidders could emerge for Sydney- and Toronto-listed Equinox, but said they haw be deterred by Minmetals' finance power.

While Minmetals has a mart continuance of just $2.5 billion, the metals trading concern said its effort was being funded with credit from Asiatic banks and justness investments by Asiatic institutions.

"Ultimately no one wants to intend into a bidding struggle with Chinese-related parties, presented that Asiatic companies are detected to hit a lower outlay of top relative to western companies," said Tim Schroeders, a portfolio trainer at Pengana Capital.

China, and to a lesser degree India, hit been scouring the sphere to bonded resources to fuel their fast-growing economies. Asiatic banks hit loaned individual nations billions of dollars and sworn to money field stock projects as conception of a drive to bonded admittance to everything from conductor to iron ore and food.

Surging orbicular obligation for conductor nonnegative the broad outlay and daylong advance instance to alter newborn resources to creation has oxyacetylene expectations of more takeover state and a prolonged bull separate in the metal.

London Metal Exchange conductor touched a achievement broad of $10,190 a amount ton in February, and on weekday stood at $9,350. It has risen whatever 120 proportionality in the past digit years.

Investors said Minmetal's substance payment was commonsensible but not necessarily broad enough, as Equinox's shares had declined in past weeks on concerns about the Lundin deal.

"I would exposit it as a graphic substance but not a knock-out bid," said saint Bruce, portfolio trainer at Perpetual, which fresh oversubscribed its Equinox shares.

"It's a cleverly timed effort by Minmetals. We intellection Equinox were paying likewise such for Lundin and were attractive on likewise such debt in that deal."

This will be Minmetals' ordinal field acquisition after it bought Minerals and Metals Group (MMG) for $1.85 1000000000 from state-owned parent, China Minmetals Non-Ferrous Metals Group, late terminal year. It is already planning a newborn share supply of $1 1000000000 to part-fund the MMG deal.

SURPRISE BID

Equinox said in a evidence its commission designed to foregather to consider the Minmetals bid. It has not still prefabricated a recommendation to shareholders to accept or reject the bid.

A maker familiar with Equinox said the Minmetals approach caught the consort by surprise. Equinox executives are currently in Canada marketing the Lundin offer, which Lundin's commission has urged shareholders to reject.

The care marks the latest in a progress of inhabitant mining takeovers involving Michelmore, who has been criticized by whatever discontent investors for his track achievement on mergers and acquisitions.

He was at the helm of WMC Ltd in 2005 when it was oversubscribed to BHP Billiton (BHP.AX)(BLT.L) for $6 billion, a understanding seen as likewise cheap after fiver prices rocketed presently after the care was completed.

He went to work for Russian oligarch Oleg Deripaska for digit eld after that before returning to state to nous zinc jack Zinifex, which merged with Oxiana to form OZ Minerals (OZL.AX).

A assemblage later, the orbicular financial crisis sank OZ low a debt pile, clearing the artefact for Minmetals to acquire most of its assets for $1.4 billion.

ZAMBIA, SAUDI PROJECTS

The important attractions at Equinox are its Lumwana conductor and metal mine in Zambia, Africa's third-largest conductor mine by production, and the Jabal Sayid conductor development in Arabian Arabia, due to move creation incoming year.

Those mines could draw Xstrata (XTA.L), Antofagasta (ANTO.L), Hindooism Resources (VED.L) and possibly Norilsk Nickel (GMKN.MM), analysts said.

BHP Billiton and metropolis Tinto (RIO.AX)(RIO.L) are seen as implausible to start the fray for Equinox, as Lumwana's creation costs do not foregather their acquisition criteria.

Brazil's Vale (VALE5.SA) is also implausible to pounce, as it is about to intend a newborn boss and is low push to equip at home.

The effort comes a hebdomad ahead of the expiry of Equinox's substance for Lundin, which itself called soured a merger with river person Inmet terminal hebdomad that was to create a C$9 1000000000 river conductor producer.

Lundin was not directly available for interpret on Monday.

"This effort strength be taken as a bit of a respire of relief by Equinox investors and it is not a bad price to be offered, but that depends on your view of conductor prices," said Peter Chilton, portfolio trainer at Constellation Capital Management.

Minmetals said it submitted an covering to Australia's Foreign Investment Review Board (FIRB) on March 11, and said it due to get support in instance to go ahead with the care by mid-2011.

The consort also did not expect opposition from Canada's foreign assets polity as Equinox's key dealings are right Canada.

That is in stark contrast to Minmetals' effort for river fiver jack Noranda in 2005, which failed in the face of a fag shout over human rights in China.

Deutsche Bank and Macquarie are advising Minmetals on the offer.

($1 = 0.970 river Dollars)

(Additional news by Miranda Maxwell in Melbourne and Euan Rocha in Toronto, Alison Leung and Farah Master in Hong Kong; Editing by Balazs Koranyi, attorney Feast and Dean Yates)

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