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Acquisition of Inmet Mining Corporation
On March 22, 2013, the Company acquired 85.5% of the diluted shares of Inmet for total cash and share consideration totalling $4.3 billion. Subsequent to the end of the period, a further 7.2% of the outstanding shares were acquired by the Company on April 2, 2013, and the remaining 7.3% on April 30, 2013.
As a result of the transaction, shares in First Quantum immediately following the initial acquisition are owned approximately 83% by previous First Quantum shareholders, and approximately 17% by previous Inmet shareholders. Share options, performance share units, long-term incentive plan units and deferred share units in Inmet have been extinguished and not replaced.
The acquisition was funded through a $2.5 billion new debt facility. On March 20, 2013, a wholly owned subsidiary of the Company entered into a syndicated debt facility arrangement for $2.5 billion incurring interest at LIBOR plus 2.75%.
Through the acquisition, First Quantum has acquired 100% ownership of three operating mines and 80% ownership in a development project. The Las Cruces mine in Spain is an open pit mine producing copper cathode, the Çayeli mine in Turkey and the Pyhäsalmi mine in Finland are underground mines producing copper and zinc concentrates. The Cobre Panama development project is located in Panama and on successful commissioning will produce copper and molybdenum concentrates. Following the acquisition, operating guidance has been updated to include production results from Çayeli, Las Cruces, Pyhäsalmi, as well as expected capital expenditures at these sites for March 22 to December 31, 2013.
The financial position of Inmet as at March 31, 2013 has been consolidated with the results of the Company. The financial performance of Inmet for the 10-day period ending March 31, 2013 has been included with the results of the Company for the three months ended March 31, 2013.
Cobre Panama, Panama
Following the successful acquisition of Inmet, the Company has commenced a detailed review of the Cobre Panama project. The objective is to re-establish the project on a more 'self-perform' basis to maximize the benefit of the Company's core project development skills. To this end a number of key contracts, including the main engineering, procurement and construction management contract, have been modified or cancelled and a rationalization of the work force is currently under way.
This review is expected to take between two and four months before a revised capital cost estimate and project timetable will be available.
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