In the Washington Post Today:
First Quantum to Keep Inmet Mines After Bid Gets Support
Firat KayakiranMar 22, 2013 4:18 pm ET
(Updates with Inmet recommendation in sixth paragraph.)
March 22 (Bloomberg) -- First Quantum Minerals Ltd. plans to hold on to all of Inmet Mining Corp.’s operating assets and most of its employees after getting shareholder support for a C$5 billion ($4.9 billion) hostile takeover.
First Quantum said today in a statement that it has support from holders representing 86 percent of Inmet’s stock, allowing the deal to proceed. Vancouver-based First Quantum took its cash-and-stock bid straight to investors in January after two earlier proposals were rejected by the Inmet board. It’s seeking to add Inmet’s Cobre Panama copper project to help it become the world’s fifth-largest producer of the metal.
Inmet also mines copper in Spain and operates two pits in Turkey and Finland that produce the metal as well as zinc. They “are all very good assets, operating at very low cost,” First Quantum President Clive Newall said in a March 20 interview.
“Fortunately those assets are extremely well-run, they have good guys operating them so we don’t have to focus on them in the short run,” he said. “Our focus will be mainly on Cobre Panama immediately.”
The Inmet deal is the largest bid for a mining company to be announced since Tinkler Group Pty Ltd.’s bid for Australia’s Whitehaven Coal Ltd. in July, according to data compiled by Bloomberg. The Inmet takeover will reduce risk and increase geographic diversification for First Quantum, Newall said.
Inmet Recommendation
Inmet recommends its shareholders tender to First Quantum’s offer before the bid deadline of April 1, “to facilitate prompt receipt of the offer consideration,” the Toronto-based company said today in a statement. Inmet’s directors have resigned and a new four-person board led by First Quantum Chief Executive Officer Philip Pascall has been appointed, the company said.
Cobre Panama will cost about $6.2 billion to develop and produce an average of 266,000 metric tons of copper annually, according to Toronto-based Inmet’s website. The project is 80 percent owned by Inmet. Korea Panama Mining Corp., a venture between LS-Nikko Copper Inc. and Korea Resources Corp., owns the rest. First Quantum plans to lower construction costs by using its own staff instead of contractors.
“Synergies are what we are reviewing right now,” Newall said. “For the exact extent of savings, we need three to six months on the ground to review the whole project.”
First Quantum is targeting annual copper output of 1.3 million tons by 2017, following the startup of Cobre Panama at the end of 2016, Newall said. That goal doesn’t include output from First Quantum’s Haquira project in Peru, which will come “a bit later,” he said.
First Quantum doesn’t have a headcount target for the combined company and will review jobs in the first few weeks after the takeover, Newall said.
“There will be areas we’ll have to review,” he said.
--With assistance from Liezel Hill in Toronto. Editors: Simon Casey, Steven Frank
