More on that gradual climbdown from the Zambian state... Reuters seem to be acting as a mouthpiece for more and more assertive companies. They report that Equinox Minerals expects its existing agreement with the Zambian government will shield it from higher taxes being implemented in the country.
Speaking to analysts and investors in Toronto, CEO Craig Williams said that Equinox's 2005 development agreement, which includes lower taxes, has so far been respected and he expects that will continue. "There's no guarantees here, but we do believe our development agreement has strength," he said, but added: "There might be some room for compromise on both sides."
Blackmont Capital analyst George Topping said Lumwana is still a strong asset, even if Equinox ends up being taxed to the full extent of the new laws. "I think they will have to pay more tax. Whether they'll have to pay the full extent, I'm not sure," he said.
Williams also said he does not expect next month's presidential election in Zambia will be an issue for the mine.
Lumwana is now expected to start production in December, after a fire at the site's processing plant delayed its original startup date of August.
Full production should be reached in May or June 2009 at an average 172,000 tonnes of copper a year for the first six years of the mine's 37-year life.
Equinox also expects to eventually produce uranium from the mine and use it as a cost offset. It envisions building its own treatment facility, which could be running in six years, and would save the cost of transporting metal to other smelters.
The company has often been rumored as a takeover target, with likely suitors including First Quantum Minerals (FM.TO: Quote, Profile, Research, Stock Buzz), which holds just over 16 percent of Equinox.
Blackmont's Topping said he still sees it as a target, adding that any buyer would likely wait until after next month's presidential election and the finalization of the new tax regime.
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