On Monday, Equinox revealed that First Quantum continued to buy up its stock in recent months, boosting its stake in Equinox from 17.27% (which it reported last year) to 19.25%. Anything above 20% and First Quantum would have to make a bid for the whole company.
TD Newcrest analyst Greg Barnes wrote in a note that he is not surprised by First Quantum's ongoing interest in Equinox.
We have long believed that a combination of Equinox and First Quantum could create a significant, African-based copper producer with annual production approaching 500,000 tonnes per annum. At that level of annual production, the combined company would be the 7th largest copper producer in the world.
However, he does not believe that First Quantum is positioned to make a cash offer right now, and management may be reluctant to issue equity at current share prices.
Equinox's massive Lumwana mine in Zambia is just starting up, and Mr. Barnes figures that First Quantum is watching the commissioning process closely, "with any sign of problems being the catalyst that could draw it out into the open."
Equinox and First Quantum are not on friendly terms (to put it mildly) and Equinox has stated that First Quantum's investment is unwelcome.