First Quantum Sweetens Bid to Create World’s Leading Copper Producer

on Dec 17, 2012

Canada’s First Quantum Minerals Ltd (TSE:FM, LON:FQM) has sweetened its takeover offer for smaller rival Inmet Mining Corp (TSE:IMN), as it continues its push towards creating a combined entity which could potentially become one of the world’s leading copper producers, Reuters reported on 16 December 2012.

**First Quantum Further Increases Takeover Bid as Inmet Rejects Two Initial Offers**
In October, First Quantum made its initial bid of C$62.50 per share for the takeover of Inmet. After being rejected, the Canadian copper miner raised its offer to C$70 per share, which was also turned down by the smaller rival. Now, First Quantum is floating a sweetened bid which values the Toronto-based company at C$72 per share, or C$5.1 billion (£3.19 billion). Through this new proposal, First Quantum is offering up to C$2.5 billion ($1.5 billion) in cash and would issue a maximum of 115.9 million shares.

The new proposal represents a premium of 33 per cent over Inmet’s closing share price of C$54.05 on November 23 and provides Inmet shareholders the opportunity to elect to receive either C$72 per share in cash, or 3.2962 First Quantum shares plus 1 Canadian cent, or a combination of C$36 in cash plus 1.6484 shares, subject to a maximum consideration mix of half in shares and half in cash.

Following the sweetened offer, on Friday, Inmet’s shares on the Toronto Stock Exchange were up 4.7 per cent, closing at C$69.83. Meanwhile, First Quantum’s stock climbed only 0.72 per cent to close at C$20.95.
**First Quantum Seeks Control Over Panama Copper Project**
Commenting on the company’s latest offer, First Quantum’s chairman and chief executive Philip Pascall said in a statement: “We believe strongly in the prospects of a combination for our two companies, which are uniquely complementary. The enlarged group will draw on the best physical and human resources of both First Quantum and Inmet, to create a premier, widely-held base metals company with leading growth in copper production and cash flow generation.”

!m[Canadian Miner Launches Increased C$5.1bn Attempt to Buy Rival Inmet and Take Control of Panama Project](/uploads/story/1044/thumbs/pic1_inline.png)Mr Pascall’s statement, as well as the increased takeover offer, comes just two days after Inmet lifted its estimate of copper reserves at its flagship Cobre Panama project by 27 per cent and extended the projected mine life by nine years. The Panama project will be one of the biggest copper mines to come on line in the next several years as well as the biggest mining project ever undertaken in Central America. According to data compiled by Bloomberg, Cobre Panama is also the second-largest undeveloped copper deposit. The mine is expected to produce 300,000 tonnes of copper per annum worth around $1.1 billion (£679 million) at current prices, which have more than quadrupled in the past 10 years as demand at times outpaced supply.

According to Inmet’s development plans, Cobre Panama will enter production in 2016 despite environmental and cost concerns. The Toronto-based company has estimated that the entire project will cost $6.2 billion (£3.8 billion), but First Quantum is confident that it can develop the copper deposit for much less. The miner has declared that it may only need to shell out approximately £3 billion (£1.8 billion) based on the costs needed to build its Sentinel mine in Zambia which is of a similar scale to Cobre Panama.


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