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First Quantum Minerals Ltd. (OTCPK:FQVLF) has spent the last few months fortifying its balance sheet with a big equity offering and a convertible debt deal. Raymond James analyst Tom Meyer calculated that the copper miner has about $730-million in cash, and access to an undrawn $250-million credit facility.

That gives First Quantum plenty of flexibility to make an acquisition, and Mr. Meyer wrote that adding another major project or two could provide the "quantum leap" to the next production level for the company.

So could a deal be around the corner? He thinks so.

He wrote in a note to clients:

Low valuations, the pick-up in commodity prices, and the recent fortification of [First Quantum's] balance sheet suggest to us a move on the M&A front could be, or is, afoot.

The most rumoured target for First Quantum is Equinox Minerals Ltd. (OTC:EQXMF), and for good reason — First Quantum owns more than 16% of Equinox already, and Equinox's Lumwana mine in Zambia is just down the road from First Quantum's own Kansanshi mine.

But Mr. Meyer wrote that there is little justification for a hostile bid for Equinox, noting that Equinox has done a good job developing Lumwana and First Quantum may not have much more to contribute to the project.

Mr. Meyer wrote:

The strength in the First Quantum team lies in the ability to take on those projects that may require a novel approach or may suffer from technical and/or financial challenges which others may have difficulty overcoming.

With this perspective, it is difficult for us to believe Equinox is number one First Quantum's list of 'things to do.' It could be number two or number three.

He figures that First Quantum would be more inclined to add an asset that would lower its cost of capital and improve its trading multiple. That could give it a better chance of success if it decides to go after Equinox in the future.

Mr. Meyer has a "strong buy" rating on First Quantum and a target of C$80.00 a share.

Source: First Quantum: An Acquisition Is Around the Corner - Raymond James