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First Quantum to acquire Antares Minerals for $460m

Published: 21:01 18 Oct 2010 BST

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First Quantum Minerals (TSX:FM)(LSE:FQM) has agreed to acquire Antares Minerals (TSX-V:ANM), whose principal asset is the Haquira project in southern Peru, in a C$460 million cash and share deal.

Antares' 100% owned Haquira property is located adjacent to Xstrata Copper's Las Bambas project, and is a major undeveloped copper deposit, with potential for the development of a large scale copper mine, the two companies said. Junior explorer Antares has been developing Haquira with the goal of eventually sparking the interest of a larger mining company, to eventually bring the mine into commercial production.

First Quantum said that the acquisition of Antares, and through it Haquira, will expand the company geographically, as well as increase its copper production profile. Haquira currently has reported measured and indicated resources of 3.7 million tonnes of contained copper equivalent, and inferred resources of 2.4 million tonnes.

Under the terms of the deal expected to close in December, each common share of Antares will be exchanged for 0.07619 of a common share of First Quantum or a cash payment in the amount of C$6.35, subject to a maximum cash consideration of C$250 million. The price represents a 41% premium to the closing price of Antares on Friday October 15, 2010.

As part of the transaction, Antares' 50% interest in the Rio Grande project in Salta Province, northwestern Argentina, will be spun out into a new exploration company called Spinco, together with C$5 million in cash.

After the deal closes, existing Antares shareholders will receive their pro-rata share of Spinco, which will be owned 90.1% by Antares, with First Quantum holding the remainder.

"As we have stated before, the Haquira deposit represents one of the most attractive undeveloped copper projects in the world owned 100% by a junior explorer. We believe that First Quantum has the experience, track record and financial capacity to develop Haquira into a world-class mine," said Antares president and CEO John Black.

Antares' board has already approved the deal, and shareholders representing 42% of Antares have agreed to vote in favour of the transaction, including Farallon Capital Institutional Partners. The acquisition is still subject to regulatory and court approvals as well as other closing conditions.

Should the deal not complete, Antares has agreed to pay First Quantum a break fee of C$13.5 million. First Quantum intends to fund the acquisition through existing cash resources, it said.

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