TORONTO (AP) -- Mining company Barrick Gold Corp. said Monday it has agreed to buy Equinox Minerals Ltd. for about $7.7 billion (7.3 billion Canadian dollars) in cash, topping a rival's offer earlier this month.
The purchase price is $8.57 (8.15 Canadian dollars) per share. That's a 9 percent premium to Equinox Minerals' last trade last week. It's also 16 percent higher than China's Minmetals Resources Ltd. offered earlier this month.
Barrick Gold, already the world's biggest gold miner, said the deal will put it in position for significant copper production growth in Chile, a country with some of the world's most promising copper-producing regions.
Equinox's flagship asset is the Lumwana copper mine in Zambia, one of the largest new copper mines to be developed globally over the last few years. It is also developing another copper mine in the Middle East.
Barrick CEO Aaron Regent described the takeover bid as an opportunity to gain access to the rich Zambian copper belt at a time when copper prices are seen rising further from already record levels.
"I'd say there is scarcity in opportunities like this," Regent said during a conference call to explain his company's rationale for the deal. "These types of assets rarely become available on the market."
The deal was unanimously supported by the Equinox board. Both Barrick Gold and Equinox are based in Toronto.
Equinox has agreed to pay a termination fee of about $263 million (250 million Canadian dollars) if it backs out of the deal.
Equinox has agreed to withdraw its takeover offer to buy Canada's Lundin Mining Corp., which it just extended last week. Equinox had been repeatedly criticized for the amount of money it needed to borrow to make the previous offer, which would have consisted of a maximum of $2.5 billion (2.4 billion Canadian dollars) in cash and 380 million in shares.
Equinox has also agreed not to solicit other offers, but is entitled to consider any acquisition proposals made by third parties.
Equinox shares rose 87 Canadian cents, more than 11 percent, to 8.37 Canadian dollars in morning trading Monday on the Toronto Stock Exchange. Barrick stock was down 2.71 Canadian dollars, or 5 percent, at 52.36 Canadian dollars.
The deal for Equinox is expected to immediately boost Barrick's earnings and double the gold miner's current copper production to around 600 million pounds this year and to more 700 million pounds by the end of 2012.
"As a built and producing asset, we avoid the challenges and risks of constructing new mines. In addition, we expect a sizable resource base to grow significantly, which would extend the life of the mine and support the expansion of this operation," said Regent.
Prices for the industrial metal have risen more than sevenfold in the past eight years as supplies lag the growing needs of China and other developing economies.
"Directionally, I would say that most of the long-term copper price assumptions that are being used right now are understating what's going to happen," Regent said, declining to reveal his company's copper price forecast.
Barrick currently owns about 2 percent, or 18.2 million, or Equinox's outstanding shares.
Equinox president and CEO Craig Williams said in a release that the Barrick bid "allows our shareholders to realize immediate value and also positions our operations and employees as part of a world class mining company."
"We believe this offer is superior to the public proposal made by Minmetals in terms of certainty and value. Given the immediate value creation opportunity, we are recommending our shareholders tender to the Barrick offer."
The offer is expected to officially begin Tuesday and requires two-thirds of shares be tendered in favor of the deal. The offer will be open for acceptance for a period of not less than 35 days.
The company said the offer is not subject to a financing conditions since it has sufficient cash and committed financing to fund the acquisition.
Equinox is listed on the Toronto and Australian stock exchange and has corporate offices in both countries.