Aerial view of terrain near the Cobre Panama copper project shows a string of worker camps along the mine-to-port road.
The project was the centerpiece of an acquisition battle waged by First Quantum Minerals against Inmet Mining,
which has been developing the $6.2-billion mine. First Quantum won the takeover bid, collecting more than 85%
of Inmet’s shares in response to its C$5.1 billion offer. (Photo courtesy of Inmet Mining)

Inmet’s board of directors repeated-ly advised the company’s shareholders to reject the First Quantum offer but to no avail. Conceding defeat, on March 22, Inmet recommended that all of its shareholders tender their shares to the First Quantum offer by a deadline that had been set at April 1. Inmet also announced the resignation of eight members of its board of directors and the appointment of four First Quantum nominees to serve on a new board.

Inmet’s 80%-owned Cobre Panama project in the Donoso district of Panama was the centerpiece of the takeover battle. Inmet has been devel-oping the open-pit mine to produce an average of 266,000 mt/y of copper in concentrates over a mine life of at least 31 years. Capital expenditure to devel-op the project has been estimated at $6.2 billion.

First Quantum’s March 21 announce-ment stated that, “At Cobre Panama, the company will build upon what has already been achieved by bringing First Quantum’s technical expertise and proven ability to deliver projects effi-ciently. The combination of the two pro-ject development teams and the compa-ny’s enhanced financial capability will substantially de-risk Cobre Panama and drive further value creation.”

First Quantum also said it has a strategic plan to produce more than 1.3 million mt/y of copper by 2018. Com-bined 2012 copper production from First Quantum and Inmet mines totaled 418,815 mt—307,115 mt from First Quantum and 111,700 mt from Inmet.

In addition to new production from Cobre Panama, First Quantum is pursu-ing a multi-stage expansion project at its Kansanshi mine in Zambia, with a target of 400,000 mt/y by 2015. The mine produced 261,351 mt of copper in 2012.

First Quantum also operates the Guelb Moghrein copper-gold mine in Mauritania and the Ravensthorpe nick-el mine in Australia.

First Quantum is forecasting a com-pany-wide compound annual growth in copper production of more than 20% for at least the next decade.

First Quantum said its immediate focus is to integrate the operations and people of the two companies to maximize the best elements of both. Over the near term, the company plans to conduct a detailed review of Cobre Panama to determine how the project can be com-pleted as efficiently as possible.

First Quantum also stated that Inmet’s mines at Las Cruces in Spain, Çayeli in Turkey and Pyhäsalmi in Finland are valuable additions to its operating-asset base.

First Quantum Chairman and CEO Philip Pascall said, “We are delighted to have successfully completed our offer for Inmet and are grateful for the overwhelming support that Inmet share-holders have shown for our vision of a new global leader in copper. This trans-action is a substantial advancement in our long-stated objective of geographi-cal diversification.

“We are now focused on turning the vision into reality by putting together the great strengths of both compa-nies—their high-quality mining assets and their equally high-quality human resources—to create a new global leader in copper with a far broader and more geographically diversified and dynamic portfolio of operating and development assets than either compa-ny on a standalone basis.”

Inmet/Petaquilla Commercial Agree-ment:In late February, Inmet and Peta-quilla Minerals signed a term sheet for a commercial agreement covering their adjacent mining projects in Panama. The agreement included purchase of up to $100 million (a minimum of $75 million) in aggregates by Inmet sub-sidiary Minera Panama over a three-year period from Petaquilla’s infrastructure division for use in construction of the Cobre Panama project.

Minera Panama also agreed to lease from Petaquilla’s mining division for an annual rental of $1.3 million lands to be used for temporary and permanent camp space for the Cobre Pana-ma project.

Petaquilla has applied for mineral exploration concessions, which, if grant-ed, could entitle it to mineral exploration rights on land where Cobre Panama pro-ject infrastructure will be built. If and when such concessions are granted, cer-tain areas on which Cobre Panama infra-structure will be located will be formally assigned to Minera Panama.

The remaining value of the agree-ment is comprised of forgiveness of roy-alties and release of certain monetary claims by Inmet and Minera Panama. The total value of the agreement was placed at up to $150 million.