Inmet Mining snubs $4.9-billion takeover bid by First Quantum – by Pav Jordan and Tim Kiladze (Globe and Mail – November 29, 2012)

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First Quantum Minerals Ltd. offered $4.9-billion to acquire Inmet Mining Corp., a bold declaration from one of Canada’s largest copper miners that the commodities supercycle has room to run.

Inmet rejected the bid, describing it as “highly conditional” and not in shareholders’ interests, but analysts said First Quantum could return with a higher offer for one of the world’s largest copper projects in development.

Toronto-based Inmet is developing the $6.2-billion (U.S.) Cobre Panama project that will produce some 300,000 tonnes of copper a year for 30 years, putting it on a scale with major mines in Chile and Peru, the world’s largest producers of the metal.

Inmet revealed that it was the second offer from First Quantum in a month, underscoring global miners’ convictions that copper demand will remain strong into the future, despite slowing growth in China and other major markets. Copper has been one of the most in-demand commodities of the past decade, driven by breakneck development in China as it built power grids and entire cities in its urbanization drive.

First Quantum’s overture for Inmet amounts to a bet that the so-called super-cycle for commodities, particularly copper, will persist even if the pace has cooled.

It also signals that the world’s copper miners have not given up on the race to source new production as aging mines around the world reach the end of their useful life.

“Cobre Panama is in the running to be one of the few large-scale copper projects to be developed over the next five to seven years,” said John Hughes, an analyst with Desjardins Securities Inc. in Toronto.

First Quantum’s latest cash and stock offer valued Inmet at about $70 (Canadian) a share, a 33 per cent premium to its trading price on Wednesday on the Toronto Stock Exchange of $52.70 a share, Inmet said. The earlier offer was at $62.50 a share.

If Vancouver-based First Quantum wants to win Inmet, the bidding will likely go higher.

“I don’t know what number they say yes at. I would suggest a potential hostile bid … generally would look at somewhere around 10 per cent” higher, Mr. Hughes said.

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