Barrick announces agreement to acquire Equinox

Barrick gained the Zaldívar copper mine in Chile after acquiring Eqionox. (Image courtesy of Antofagasta PLC.)

Barrick Gold Corporation (NYSE:ABX)(TSX:ABX) (“Barrick” or “the Company”) announced today that it has entered into a support agreement with Equinox Minerals Limited (TSX:EQN)(ASX:EQN)(“Equinox”) for Barrick to acquire, through an all-cash offer, all of the issued and outstanding common shares of Equinox (including the shares represented by Equinox’s CHESS Depositary Interests) by way of a friendly take-over offer (the “Offer”). The Offer is for C$8.15 per Equinox share in cash, or a total of approximately C$7.3 billion. The Offer represents a 30% premium based on Equinox’s closing share price on the Toronto Stock Exchange on February 25, 2011 (the last trading day before Equinox announced its intention to make a take-over bid for the common shares of Lundin Mining Corporation). The Offer also represents a 16% premium over the per share price under the offer for Equinox proposed by Minmetals Resources Ltd. on April 3, 2011 (which offer has not yet commenced).

Aaron Regent, President and CEO of Barrick said: “The acquisition of Equinox would add a high-quality, long-life asset to our portfolio and is consistent with our strategy of increasing gold and copper reserves through exploration and acquisitions. The transaction is expected to be immediately accretive to cash flow and earnings on a per share basis. It does not dilute our shareholders’ gold exposure per share, and it enhances copper exposure and leverage per share in a strong copper price environment. Combined with our Zaldivar mine and Cerro Casale project in Chile, this acquisition would position Barrick with significant production growth potential in two of the most prolific copper-producing regions of the world. This will be in addition to our targeted growth in annual gold production to 9 million ounces within the next five years.”

The Board of Directors of Equinox, after consultation with its financial and legal advisors, has unanimously approved entering into the support agreement and recommends that Equinox shareholders tender to the Offer. Each of CIBC World Markets Inc., Goldman Sachs & Co., and TD Securities Inc., the financial advisors to Equinox, has provided a verbal opinion to the effect that, as of the date of such opinions and subject to the assumptions, limitations, and qualifications stated in such opinions, the consideration proposed to be paid to the holders of Equinox common shares (other than Barrick and its affiliates) pursuant to the Offer is fair from a financial point of view to such holders.

Craig Williams, President and CEO of Equinox said: “We are very pleased to support this Offer. The Offer 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 support agreement between Barrick and Equinox provides for, among other things, a non-solicitation covenant on the part of Equinox subject to customary “fiduciary out” provisions, a right in favor of Barrick to match any superior proposal and a payment to Barrick of a termination fee of C$250 million in certain circumstances, including if Equinox accepts a superior proposal.

The Offer is not subject to a financing condition. Barrick has sufficient cash resources and committed financing to fund this acquisition. The $5.0 billion financing is comprised of a bridge loan and a revolving credit facility underwritten by RBC Capital Markets and Morgan Stanley Senior Funding and is in addition to Barrick’s existing credit facility of $1.5 billion and cash balance of about $4.0 billion as at December 31, 2010.

The Offer, which will be made through a subsidiary of Barrick, is expected to commence on April 26, 2011 and a take-over bid circular and related documents will be mailed to shareholders in accordance with applicable laws (all subject to the terms and conditions of the support agreement). The Offer will be open for acceptance for a period of not less than 35 days from its commencement and will be conditional upon, among other things, valid acceptances of the Offer in respect of shares representing (together with shares owned by Barrick) not less than 66 2/3% of the Equinox shares on a fully diluted basis. In addition, the Offer will be subject to certain customary conditions, including receipt of relevant regulatory approvals and the absence of a material adverse change with respect to Equinox. Once the 66 2/3% acceptance level is met, Barrick intends to take steps available to it under applicable law to acquire any outstanding Equinox shares. The Company currently owns 18.2 million shares of Equinox, representing about 2% of its shares on a fully diluted basis.

Morgan Stanley & Co. Incorporated and RBC Capital Markets are acting as financial advisors to Barrick and Ogilvy Renault LLP, Sullivan & Cromwell LLP and Clayton Utz are providing legal advice. CIBC World Markets Inc., Goldman Sachs & Co., and TD Securities Inc. are acting as financial advisors to Equinox and Osler, Hoskin & Harcourt LLP is providing legal advice.

Read the full press release here.

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