Under the existing MPSA shareholders agreement between Teck Cominco, Inmet Mining and Petaquilla Copper in connection with the Petaquilla project, Teck Cominco may acquire from Petaquilla Copper a 26% interest in MPSA by committing to participate in work plans and budgets and to fund up to 52% of development costs for the project through to commercial production. Teck Cominco would receive 52% of project cash flow until it has recouped its entire investment plus interest on amounts advanced on behalf of Petaquilla Copper. In lieu of receiving funding from Teck Cominco, Petaquilla Copper may elect, within 30 days of Teck Cominco’s commitment, to finance all or part of its 26% share of development costs.

According to the agreement, on an interim basis Inmet Mining will provide additional personnel to an affiliate of Teck Cominco that will act as operator of the project, and will fund project expenditures instead of Teck Cominco. Teck Cominco has been funding 100% of front-end engineering and design costs to date. At the end of the interim period Teck Cominco may elect either to continue participating in the project and resume funding or to sell its interest.

Don Lindsay, president and CEO of Teck Cominco, said “We have a high regard for the enormous potential of the Petaquilla project. This arrangement with Inmet Mining allows the Petaquilla project to proceed expeditiously, while preserving Teck Cominco’s flexibility to progress other projects in our growth pipeline such as the Quebrada Blanca hypogene project, the Andacollo hypogene project, and several other growth projects in oil sands and gold.”

Earlier this year Inmet Mining, Petaquilla Copper and Teck Cominco announced the results of an interim report on the Front End Engineering and Design (FEED) study being conducted by AMEC Americas (AMEC) on Petaquilla. The interim report estimates that the capital cost required to develop the Petaquilla project would be $3.5 billion (including a contingency of $515 million but not including working capital and escalation). The capital cost estimate includes approximately $500 million for the construction of an oilfired power plant and approximately $280 million for port facilities. Cash costs, including operating and realization costs and net of by-product credits, in years one to 10 of the project are estimated to average $0.85/lb of copper produced. The study is based on a mine plan developed in 1998, which contemplates a 23-year mine life. The project includes a concentrator capable of processing 120,000 mt/d of ore. Construction is expected to take approximately 44 months from issuance of construction permits.

The report’s figures, said the project partners, represented a substantial increase in capital costs over previously published estimates as a result of scope changes, including enhancements in erosion control, water management and other environmental protection measures, as well as increases in equipment and construction costs that have been affecting projects worldwide.