Inmet investors bet on a higher bid – by Pav Jordan – (Globe and Mail – December 18, 2012)

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Inmet Mining Corp. shares rose more than 4 per cent Monday as investors in the Toronto miner bet that an ardent suitor has not played its last card with its $5.1-billion hostile takeover bid.

First Quantum Minerals Ltd. offered Inmet shareholders $72 a share over the weekend, sweetening for the second time its offer for the owner of a large copper asset in Panama. A first, informal approach on Oct. 28 valued the company at $62.50 a share and a Nov. 28 offer was for $70 a share, or $4.9-billion.

“We’re happy but, you know, not a lot has really changed,” said Terry Thib, a portfolio manager with Norrep Funds in Toronto that holds Inmet shares. “You could say it’s below where it should go out, given they are not working with a full set of data.”

Investors point out that the way the stock-and-cash offer is structured, it is worth about the same today as it was a few weeks ago because First Quantum shares have lost some of their value in the interim, including a 4-per-cent drop on Monday.

Inmet shares closed at $72.85 after trading even higher for most of Monday, suggesting shareholders expect a higher bid from First Quantum or a rival. Of 16 analysts following the company, only three have price targets below the First Quantum offer. Analyst Raymond Goldie of Salman Partners has a target price of $121 per share, according to Bloomberg data.

“I think the chance of a deal getting done at the current offer is relatively low,” said Orest Wowkodaw, an analyst at Canaccord Genuity who raised his target price on Inmet to $82 a share from $69. “I think something close to $80 would be a convincing price for Inmet shareholders.”

The hostile approach from First Quantum may drive Inmet to seek a white knight.

Many copper miners are familiar with the project after visits when Inmet was shopping around a stake in Cobre Panama to help shoulder development costs. First Quantum did not visit the site at the time because it is only interested in being a controlling partner.

First Quantum is a major builder of copper mines and Canada’s largest pure-play copper producer.

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