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Lukas Lundin, chairman of Lundin Mining Corp.Fred Lum/The Globe and Mail

Lundin Mining Corp. is calling on its shareholders to reject a $4.8-billion hostile takeover bid by Equinox Minerals Ltd. warning of the "dangerous" debt load needed to complete the deal.

In officially rejecting Equinox's $8.10 cash-and-share offer on Sunday, Lundin also said the bid price is too low and cautioned that a combination of the two companies would mean increased geopolitical risk across places such as Africa and Saudi Arabia. It also said Toronto-based Equinox, with one operating mine in Zambia, doesn't have the management experience to run a larger company.

Instead, Lundin said it will continue to pursue its proposed friendly merger with Toronto-based Inmet Mining Corp. to create a Canadian-based copper powerhouse in a time of near-record prices for the widely used industrial metal.

"Inmet is better because … we will have a company with very strong cash and two world-class projects," Lundin chairman Lukas Lundin said in an interview Sunday.

Selling to Equinox would mean significant risk for investors if there was a drop in the current record-setting commodities cycle, Mr. Lundin said. Equinox plans to finance the deal with $3.2-billion (U.S.) in debt and pay that off in four years, based on copper price forecasts for the period.

"This is very, very dangerous … if we had any downturn like 2008," Mr. Lundin said. "I still believe in the super cycle, but as we have seen we get hiccups as we go along … If the markets thinks we have a hiccup, the shorts will jump on your stock and just destroy you. It happened to us, it happened to Teck [Resources Ltd.] it happened to Rio Tinto. The destruction of value is just immense."

Teck and Rio Tinto made debt-heavy acquisitions before the late-2008 global credit crisis and were forced to sell assets and refinance debt to help pay off what they owed. Lundin also suffered from the steep drop in commodity prices, which in part led to the failed merger deal between it and HudBay Minerals Ltd.

"Even if the amount of the offer was not so financially inadequate, the board would not recommend that shareholders accept the offer because we have no confidence that it would ever close," Mr. Lundin said in a statement Sunday.

While Lundin was expected to reject the Equinox offer, the official decision intensifies the battle for the copper-focused company as producers scramble to seize what's left of the world's shrinking resources. The Equinox bid, which threatens to break up the Lundin-Inmet merger, potentially puts all three companies in play. Companies said to be interested in beefing up their copper assets include Freeport-McMoRan Copper & Gold Inc., as well as state-owned entities in China, the world's largest consumer of the metal used in everything from construction to power.

Lundin's board also expressed reservations about Equinox's management experience because it only has one operating mine in Zambia.

"They don't have any depth of management around this. It's a big company to run," Mr. Lundin said.

Lundin has copper, nickel and zinc assets in Europe and a 24.75-per-cent stake in the promising Tenke Fungurume copper and cobalt project in the Democratic Republic of Congo. Apart from its Zambian copper mine, Equinox is nearing production at a project in Saudi Arabia picked up in its recent $1.26-billion purchase of Citadel Resource Group Ltd.

Equinox officials could not be reached for comment on Sunday. Equinox has criticized the Lundin-Inmet merger, in particular Inmet's flagship Cobre Panama project in Panama which faces both financing and political risk.

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