Equinox, in which African copper and gold miner First Quantum holds close to 20%, has announced an effective cut of USD 45m in its 2009 debt repayments, from USD 183m to USD 138m, following a rescheduling agreed with lenders. Equinox also stated that it remains on target to produce at Lumwana in Zambia around 170,000 tonnes (about 375m pounds) of copper metal-in-concentrates during 2009 at a cash (so-called C1) operating cost of USD 1.15/lb.Market prices for copper moved from multi year lows of USD 1.28/lb in December 2008 to more than USD 1.80/lb, but have retraced recently to around USD 1.74/lb. According to a number of analysts familiar with Equinox's metrics at Lumwana, Equinox should not need an equity top up so long as copper stays anywhere above USD 1.50/lb.Equinox has a hedge book worth some USD 137m as of 26 March 2009, based on a copper price of USD 1.78/lb. On 31 December 2008, Equinox had cash resources of USD 51.3m, an undrawn contingent funding facility of USD 45m and an undrawn Nederlandse Financierings-Maatskappij voor Ontwikkelingslanden N.V. financing facility of USD 25m.On the liabilities side, Equinox has project and fleet debt facilities outstanding of USD 639.7m, equal to close on two-thirds of its market value. Equinox, however, has agreed to pay an additional 50 basis points margin from 1 April 2009 on its outstanding senior debt facilities. Equinox is known to some specialist investors as the most levered copper equity, given the ratio between its net debt and market value. However, Equinox's market value iss substantial, at just shy of USD 1bn, providing it with the leeway to possibly raise funds by a rights issue, without excessive dilution to existing shareholders.On 26 March Equinox reached agreement with its debt financiers to restructure its debt repayment schedule. Given its growing production profile, Equinox would have found it a relative song to have dealt with its debt at higher copper prices, which hit all time records in mid-2008 around USD 4.08/lb. Unit production costs at Lumwana are anticipated by Equinox to be higher in the early part of 2009 until steady state production activities are reached, which is expected by mid-2009. According to Equinox, considering the un-drawn facilities available, the company expects to generate positive cash flow in the next 12 months sufficient to fund ongoing operations, including discharging the company's current obligations in the normal course of business.First Quantum may, logically, at some point make a scrip offer for the 80% of Equinox its does not yet own; perhaps, as a London sales-trader speculates, a more bullish copper price outlook could trigger that transaction. Just last week First Quantum announced a bought deal, where it is raising the equivalent of around USD 240m. First Quantum remains among the best performing established copper producers, though Asian names such as Jiangxi Copper and Yunnan Copper have performed remarkably well in the past while.For Equinox, also on the potential upside is that the Lumwana uranium feasibility study is out, with a finding that a treatment facility for the uranium ore stockpile that will result from the selective mining of the discrete, high grade uranium zones within the Lumwana copper orebodies could become a reality. The facility would cost about USD 200m and could recover around 2m pounds of uranium oxide and 12,800 tonnes of copper concentrate a year. The decision to proceed with development of the Lumwana uranium project will depend, subject to board approval, on a number of factors including improvements in the international project financing climate, as well as market prices for uranium oxide.Selected copper stocks

 

Stock

From

From

Value

price

high*

low*

USD bn

Freeport-McMoRan

USD 42.12

-66.9%

168.3%

17.339

Southern Copper

USD 18.61

-55.6%

104.1%

15.890

Antofagasta

GBP 5.00

-40.1%

105.1%

6.959

KGHM Polska Miedź

PLN 43.80

-61.4%

118.1%

2.448

Jiangxi Copper

CNY 23.44

-35.7%

183.4%

5.607

Yunnan Copper

CNY 21.65

-39.8%

217.9%

3.980

Tongling

CNY 13.45

-25.2%

146.3%

2.546

First Quantum

CAD 37.00

-61.2%

190.2%

2.034

Equinox

CAD 2.08

-59.6%

173.7%

0.993

Philex

PHP 5.80

-25.6%

50.6%

0.464

Camec

GBP 0.051

-91.8%

168.4%

0.202

Katanga Mining

CAD 0.38

-97.6%

70.5%

0.062

Quadra

CAD 6.04

-77.6%

206.6%

0.319

Pan Australian

AUD 0.30

-76.0%

265.9%

0.359

Metorex

ZAR 1.70

-93.1%

47.8%

0.130

Palamin

ZAR 49.00

-69.8%

22.5%

0.244

Mercator

CAD 0.60

-95.4%

106.9%

0.052

Anvil

CAD 1.19

-91.9%

164.4%

0.068

Northern Dynasty

CAD 8.60

-18.9%

347.9%

0.636

Taseko

CAD 1.55

-73.5%

134.8%

0.190

Aditya Birla

AUD 0.14

-95.3%

45.8%

0.030

Corriente

CAD 6.24

-4.3%

149.6%

0.376

Fronteer

CAD 3.13

-47.3%

101.9%

0.284

CuDeco

AUD 1.95

-58.4%

108.6%

0.156

Chariot

CAD 0.25

-77.5%

308.3%

0.064

Straits Resources

AUD 1.26

-84.5%

102.4%

0.199

Centenario

CAD 1.63

-73.9%

262.2%

0.067

Globestar Mining

CAD 0.61

-71.4%

110.3%

0.051

Frontera

CAD 0.74

-87.1%

236.4%

0.048

Amerigo

CAD 0.31

-87.0%

34.8%

0.033

Stingray Copper

CAD 0.26

-68.3%

100.0%

0.010

Tiger Resources

AUD 0.09

-83.3%

31.4%

0.016

Candente

CAD 0.37

-81.3%

184.6%

0.024

African Copper

GBP 0.02

-96.2%

167.9%

0.004

Monterrico

GBP 0.77

-70.2%

218.8%

0.028

Inca Pacific

CAD 0.32

-85.5%

166.7%

0.014

Exco Resources

AUD 0.10

-77.2%

54.0%

0.017

Coro

CAD 0.15

-92.8%

114.3%

0.010

Discovery Metals

AUD 0.21

-67.7%

100.0%

0.023

Africo

CAD 0.70

-74.1%

75.0%

0.041

Prairie Downs

AUD 0.09

-92.3%

102.4%

0.004

Red Dragon

CAD 0.13

-69.0%

160.0%

0.007

Polymet Mining

CAD 0.98

-78.2%

63.3%

0.108

African Eagle

GBP 0.03

-66.7%

155.6%

0.009

El Nino Ventures

CAD 0.08

-81.4%

128.6%

0.003

Simberi

CAD 0.01

-90.9%

0.0%

0.001

Augusta Resources

USD 1.35

-80.6%

246.2%

0.120

Rambler Metals

GBP 0.12

-78.6%

88.0%

0.010

Norsemont Mining

CAD 1.64

-62.8%

53.3%

0.071

Nevada Copper

CAD 0.31

-89.0%

87.9%

0.010

Capstone Mining

CAD 1.65

-63.1%

153.8%

0.217

Imperial Metals

CAD 3.40

-67.6%

265.6%

0.087

Pacific Booker

CAD 6.30

-36.2%

146.1%

0.051

Nevada Copper

CAD 0.31

-89.0%

87.9%

0.010

Avanco Resources

AUD 0.04

-87.4%

0.0%

0.002

Palabora

ZAR 49.00

-69.8%

22.5%

0.244

Kagara

AUD 0.42

-92.9%

40.7%

0.072

Stingray Copper

CAD 0.26

-68.3%

100.0%

0.010

Benguet

PHP 6.20

-69.8%

27.8%

0.012

Con't Mines

CAD 0.60

-57.1%

100.0%

0.062

Redbank Mines

AUD 0.01

-88.5%

0.0%

0.004

IMA Exploration

USD 0.22

-53.2%

37.5%

0.011

Cornerstone Capital

CAD 0.06

-85.9%

83.3%

0.003

Thundermin

CAD 0.10

-79.6%

66.7%

0.006

Western Copper

CAD 0.42

-73.8%

104.9%

0.024

Averages/total

-46.3%

67.5%

63.174

Weighted averages

-60.0%

137.7%

 

Diversifieds with copper

Stock

From

From

Value

price

high*

low*

USD bn

BHP Billiton

GBP 13.32

-39.6%

82.1%

115.596

Vale

USD 14.08

-68.1%

60.0%

68.992

Rio Tinto

GBP 23.89

-66.7%

140.1%

48.703

Anglo American

GBP 11.22

-69.5%

23.8%

21.272

Xstrata

GBP 4.41

-82.4%

52.7%

18.261

Norilsk

USD 5.99

-81.1%

70.7%

11.419

Teck

USD 6.32

-88.2%

143.1%

3.018

Vedanta

GBP 6.55

-76.5%

82.4%

2.578

Sterlite

USD 7.14

-69.0%

128.8%

5.058

Lundin

CAD 1.95

-78.7%

182.6%

0.760

Kazakhmys

GBP 3.57

-81.9%

109.0%

2.696

Ivanhoe

CAD 7.31

-42.0%

254.9%

2.210

Inmet

CAD 33.92

-65.9%

179.2%

1.309

Northgate

CAD 1.73

-50.4%

158.2%

0.354

Oz Minerals

AUD 0.56

-85.2%

38.8%

1.174

Polymet

CAD 0.98

-78.2%

63.3%

0.108

Mwana Africa

GBP 0.04

-93.1%

60.0%

0.022

EMED Mining

GBP 0.05

-84.6%

44.4%

0.016

Boliden

CAD 6.70

-48.5%

235.0%

1.465

Averages/total

 

-71.0%

111.0%

305.011

Weighted averages

 

-65.3%

77.6%

* 12-month

 

Source: market data; table compiled by Barry Sergeant