Inmet Mining Corporation which last month rejected USD 4.9 billion takeover bid from a Canadian rival has announced 27% increase in reserves at its massive Cobre Panama copper project in Central America.
The Toronto based miner said that it has raised copper reserves at Cobre Panama to some 26 billion pounds. It boosted gold reserves by 41% to some 7.3 million ounces.
It extended the estimated mine life at the project in Panama to 40 years from 31 years significantly changing the metrics around an asset that has already been lauded as one of the world’s largest copper projects in development.
The new reserve estimates might help explain why Inmet rebuffed takeover approaches from First Quantum Minerals Limited two weeks ago with little explanation.
Mr Stephen Bonnyman analyst of BMO Nesbitt Burns said that “The announcement highlights the scale of the deposit to possible acquirers and confirms Cobre Panama as one of the largest undeveloped copper resources in the world.”
Inmet surprised investors at the end of November when it announced it had received and rejected a takeover bid valuing the company at USD 70 per share or 33% more than where it was trading before the announcement.
The offer was the second from First Quantum in a month, underscoring global miners’ convictions that copper demand will remain strong into the future even if growth has slowed in China and other major markets.
Inmet shares closed trading on the Toronto Stock Exchange at USD 66.70 a share before the new reserves were announced. The shares have been climbing toward the First Quantum bid price as investors bet on the possibility of a sweetened takeover bid emerging, either from First Quantum or another rival.
Copper has been in high demand over the past decade driven by breakneck development in China as that country built power grids and entire cities in its urbanization drive.
Cobre Panama will be one of the few large-scale copper projects to be developed in coming years. It will produce some 300,000 tonnes of copper per year, worth about USD 1.1 billion at current prices and putting it on a scale with giant mines in Chile and Peru. The project has had its challenges, among them sharply rising costs and concerns about how its owners will foot a development bill of USD 6.2 billion.
