Equinox Minerals and Citadel Resource Group have announced an agreement whereby Equinox would acquire Citadel for cash and Equinox shares valued at about $A1.25 billion. Citadel is an Australian company, headquartered in Melbourne. Its flagship asset is its Jabal Sayid copper-gold project in Saudi Arabia, which has measured, indicated, and inferred resources of 37.5 million mt, grading 2.2% copper, 0.3 g/mt gold and 1 g/mt silver. Citadel is in the process of completing a transaction to acquire 100% ownership of Jabal Sayid from its local Saudi Arabian partners.
The Jabal Sayid project is located 350 km northeast of the Red Sea port of Jeddah, and initial development assumes production of about 57,000 mt/y of copper contained in concentrate from underground operations over a mine life of 10 years. Construction is in progress at the project, following completion of a definitive feasibility study in December 2009 and receipt of a mining license in May 2010. First production is expected in late 2011 or early 2012.
Capital cost to develop the Jabal Sayid project is estimated at $305 million, and cash operating costs are estimated at $0.91/lb of copper produced. The deposit remains open at depth and is considered to have significant potential for resource expansion. A scoping study has been completed for possible development of an open-pit that would provide additional feed to the currently planned plant and would extend the project life by about one year.
Citadel’s board unanimously recommended Citadel’s shareholders accept Equinox’s offer, which is subject to a minimum of 90% acceptance by Citadel shareholders. Assuming completion of the transaction, Citadel shareholders would own about 19% of the combined company.