Petaquilla’s position was that Teck Cominco had failed to satisfy preconditions for making a final commitment to the project and that its interest was terminated. As of mid-May, Teck Cominco had not released a statement regarding Petaquilla’s action; however, on April 29, Reuters quoted Teck Cominco spokesperson Doug Horswill as saying, “we believe that the allegations made by Petaquilla Copper are without merit and that we acted in accordance with our rights and responsibilities in the agreement. We will vigorously defend ourselves and our position.”

Inmet Mining sided with Teck Cominco, releasing a statement on April 30 stating that it, Inmet, was “extremely disappointed” by Petaquilla’s action, which was inconsistent with Petaquilla’s past actions concerning the project and shareholder arrangements. Inmet also said it strongly believed that Petaquilla’s claim under its request for arbitration was completely without merit and that Inmet would either join in the arbitration proceedings or pursue other legal means available to refute Petaquilla’s claim.

In a puzzling statement released May 14, Petaquilla said it welcomed Inmet as manager of the Petaquilla project. The statement said, in part, “The arbitration proceedings have inevitably introduced an element of uncertainty with respect to Inmet’s proposed work plan for the project. The company [Petaquilla] realized that this would be an unavoidable consequence of making the decision to arbitrate, but the board determined that the potential benefits to the company’s shareholders of regaining a 52% interest in the project far outweighed the possibility of a temporary scaling down of development operations. The company intends to approach Inmet with a strategy that will mitigate the risk to Inmet during the currency of the arbitration proceedings, and thus allow the development work to continue. The ultimate decision on the scale of Inmet’s proposed work plan, however, is currently out of the company’s control.”

Inmet did not immediately acknowledge Petaquilla’s statement.

In early February 2008, the three companies jointly reported interim results of a front-end engineering and design study being conducted by AMEC Americas on the Petaquilla project. Anticipated capital costs for the project were up substantially to $3.5 billion, including $500 million for construction of an oil-fired power plant and $280 million for port facilities.

Petaquilla mill throughput currently is planned at 120,000 mt/d, producing concentrates containing an average of about 223,000 mt/y of copper, 87,000 oz/y of gold, and 2,680 mt/y of molybdenum over the first 10 years of a projected 23-year mine life. Cash costs, including operating and realization costs and net of by-product credits, in years one to 10 are estimated to average $0.85/lb of copper produced. Construction is expected to take approximately 44 months from issuance of construction permits. Permitting would follow the submission of a social and environmental impact assessment, tentatively slated for the fourth quarter of 2008.