Inmet urges shareholders to reject First Quantum bid – by Pav Jordan (Globe and Mail – January 22, 2013)

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Inmet Mining Corp. has recommended that shareholders reject a hostile takeover bid from First Quantum Minerals, saying the $5.1-billion cash-and-stock offer fails to reflect the value of its massive Cobre Panama project.

Citing the conclusions of a special committee of independent directors as well as input from financial and legal advisers, the Inmet board says the offer is below precedent for recent deals in the mining sector. It says it has approached a number of third parties who have expressed interest in considering strategic alternatives to the First Quantum bid, going so far as to sign confidentiality and standstill agreements with “a number” of those.

Cobre Panama will be one of the world’s largest new copper mines when construction is complete in 2016. The mine will cost some $6.2-billion to build and will produce about 300,000 tonnes of the vital industrial metal annually and is a bet that copper prices will continue to rise as demand strengthens further in China and the economies of Europe and the United States recover.

“The Inmet Board has concluded that the First Quantum Offer fails to adequately compensate shareholders for Inmet’s low risk asset base and its strong prospects for growth and value creation at Cobre Panama, which has the potential to become one of the world’s largest copper mines,” Inmet board chairman David Beatty said in a statement that marks Inmet’s first official response to the First Quantum bid since it was made in mid-December.

“The First Quantum offer is timed to deprive them of that opportunity without fair compensation, all while adding considerable execution, financing and geopolitical risk to the proposed combined company. We believe our shareholders can do significantly better and we urge them to reject First Quantum’s offer.”

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