Battle for Inmet Mining turns hostile – by Pav Jordan (Globe and Mail – December 17, 2012)

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First Quantum Minerals Ltd. has made a hostile, $5.1-billion takeover offer for Inmet Mining Corp., taking the bid directly to shareholders after two earlier offers were snubbed by the owner of one of the world’s largest undeveloped copper assets.

First Quantum, Canada’s largest pure-play copper producer, is offering $72 a share to Inmet, compared with an earlier approach of $70 a share, or $4.9-billion, which Inmet rejected on the grounds that it was “highly conditional” and not in shareholders’ interests. First Quantum’s initial offer, made in late November, was $62.50 a share.

The cash-and-stock offer comes a few days after Inmet raised its copper reserves estimate on its flagship copper project in Central America, Cobre Panama, by 27 per cent and extended the expected mine life by nine years.

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 a year, worth about $1.1-billion (U.S) at current prices and putting it on a similar scale to 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 $6.2-billion.

First Quantum said a combination with Toronto-based Inmet would create one of the world’s leading and fastest-growing copper producers, with output of 1.3 million tonnes a year by 2018, ranking it as a Top Five producer.

First Quantum president Clive Newall said by telephone from London on Sunday that the company decided to make the bid hostile after repeated attempts to engage Inmet in discussions.

“After several weeks of endeavouring to engage Inmet on a friendly basis, we are making a formal offer to the shareholders,” Mr. Newall said. “We’ve been contacted by a fairly large proportion of the Inmet shareholder base.”

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