China's Minmetals Resources withdrew its offer to buy Equinox Minerals Ltd. after it was bested by a $7.7 billion (7.3 billion Canadian dollar) bid by mining company Barrick Gold Corp.
Toronto-based Barrick Gold, already the world's biggest gold miner, announced its bid for Equinox on Monday. The board of Equinox, which has shares traded in Toronto and Australia and has corporate offices in both countries, recommended its shareholders accept the offer.
"While we still consider the Equinox assets provide a good fit with MMR's strategy, the price offered by Barrick is above our most optimistic assessment of value," Andrew Michelmore, CEO of the Hong Kong unit of China's largest metals trader, said in a statement Tuesday to the Hong Kong Stock Exchange.
The prize asset held by Equinox is the Lumwana copper mine in Zambia. China has been seeking to expand its access to such strategic resources in Africa and elsewhere overseas.
The purchase price is $8.57 (8.15 Canadian dollars) per share. That's a 9 percent premium to Equinox Minerals' share price last week. It's also 16 percent higher than China's Minmetals Resources Ltd. offer earlier this month.
Minmetals had said it would only buy Equinox, in which it holds a 4.2 percent stake, if the company gave up a costly takeover offer to buy Canada's Lundin Mining Corp.
Prices for copper have surged more than sevenfold in the past eight years as supplies lagged soaring demand.
But even for China there are limits, Michelmore said.
"Competing with Barrick at these prices would, in our view, be value destructive for MMR's shareholders," he said. Minmetals intends to turn its attention to other opportunities, he added.
Minmetals shares in Hong Kong dropped 9.1 percent to 5.19 Hong Kong dollars on Tuesday.