UPDATE 1-Equinox to defer Zambia uranium plant

Wed Jan 7, 2009 7:39pm GMT

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TORONTO Jan 7 (Reuters) - Equinox Minerals EQN.TO is delaying construction of a uranium processing plant at its Lumwana copper-uranium mine in Zambia, due to low uranium prices and difficulty raising financing, the Canadian company said on Wednesday.

Equinox began copper production at Lumwana -- considered Africa's largest open-pit copper mine -- in December, and plans to eventually produce uranium to use as a cost offset.

The company said it expects to produce 170,000 tonnes of copper concentrate at a cost of $1.15 a pound in 2009, which is in line with past estimates. But it said it will have to wait to move ahead on the uranium plant, which had been expected to start operations in 2010.

"Due to current difficulty in international project financing as well as current market prices for uranium oxide, the company believes it prudent to defer the implementation of this uranium project until such conditions improve sufficiently to deliver appropriate shareholder value," Equinox said in a statement.

Equinox has said the plant should cost about $230 million.

The company's stock was down 9 percent at C$1.82 on the Toronto Stock Exchange on Wednesday, falling in line with other mid-cap base metals producers. Its shares are up 33 percent so far this year, due largely to stronger copper prices.

The company, seen by many as a takeover target for its main shareholder, First Quantum Minerals (FM.TO), will stockpile uranium ore at the mine in the meantime.

Uranium prices charged ahead from as low as $7 a pound in 2000 to nearly $140 a pound last June. Since then, the price has eased, and was most recently at $53 a pound.

Copper prices MCU0 have also fallen hard of late and were at $1.54 a pound on Wednesday. Copper production up to the end of December totaled just over 20,000 tonnes of concentrate grading 40 percent copper, Equinox said.

Final capital spending for the mine should total $814 million, it said.

($1=$1.19 Canadian) (Reporting by Cameron French; editing by Rob Wilson)

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