First Quantum takeover of Inmet crosses finish line Pav Jordan (Globe and Mail – March 13, 2013)

The Globe and Mail is Canada’s national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada’s political and business elite.

First Quantum Minerals Ltd. has gained control of Inmet Mining Corp. after a drawn-out hostile bid, charting a course to the major leagues of copper mining as it takes on the massive Cobre Panama project.

Vancouver-based First Quantum said on Tuesday that holders of just over 61 per cent of Inmet stock had tendered to the $5.1-billion cash-and-stock bid. First Quantum also lowered the minimum threshold for acceptance to 50 per cent and extended the deadline another 10 days.

In winning Inmet, First Quantum will get Cobre Panama, one of the world’s largest undeveloped copper projects. When it is up and running some time in 2016, the project will add around 300,000 tonnes a year of copper production for the next 40 years.

The First Quantum deal could in theory still be scuppered by a surprise white knight bidder, but that is seen as increasingly unlikely at a time when the mining world is facing some of its grimmest times since the financial crisis of 2008. The anticlimactic outcome of the deal, with no higher offer made by First Quantum, reflects the sombre state of the mining industry, which is coping with lower prices, uncertain demand and a string of recent writedowns due to overpriced deals done in the industry’s high-flying days a few years ago.

Today’s mining industry is not highly conducive to bidding wars. Chief executives are gun-shy, the copper price outlook has worsened and financing alternatives have all but dried up.

“This is a period when balance sheets are being cleared up, not added to,” said John Hughes, an analyst with Desjardins Securities in Toronto.

“Obviously, in particular the large companies, the BHPs, the Rio Tintos and Anglos of the world who are literally downsizing their balance sheets by writing off large project investments … it’s very difficult for these players to come in and start acquiring new assets,” Hughes said.

In the past year alone, some of world’s largest mining companies have announced multibillion-dollar writedowns on assets bought just a few years ago, when metals prices were were on a steep upward trend with no end in sight.

For the rest of this article, please go to the Globe and Mail website: