Inmet, Teck rework Petaquilla deal
Sunday, March 30 2008 @ 12:37 AM UTC
Contributed by: Don Winner
The deal gives Teck more time to decide whether it wants to proceed with the potential mine.
Teck chief executive officer Don Lindsay said in a statement that the arrangement will allow the project to be developed "expeditiously" while giving Teck the flexibility to progress its pipeline of other copper projects in Chile.
If Teck decides to back out, Inmet will purchase the 26-per-cent stake and will assume the responsibility of those costs. It will also have to fund the 26-per-cent interest of fellow partner Petaquilla Copper Ltd. if the junior elects not to fund its own portion of the costs, meaning it could be on the hook for 100 per cent of the financing. Petaquilla Copper currently owns 52 per cent of the project.
"This agreement allows Inmet Mining to advance Petaquilla to the next level and gives us the opportunity to realize the full value of the project," Inmet chairman and CEO Richard Ross said.
TD Newcrest analyst Greg Barnes said the new arrangement will likely delay production at the project by two years until 2014 or 2015. While Inmet is taking on a much more significant role, "we believe Inmet is keeping all of its options open with respect to one of the largest undeveloped copper projects in the world," Mr. Barnes said in a report.
Citing supply risks, UBS sharply raised its forecasts for the price of copper yesterday, forecasting an average copper price of $3.50 a pound in 2008, $4 in 2009, $4.50 in 2010, representing respective increases of 17, 18 and 45 per cent.
Inmet Mining Corp. (INM)
Close: $77.24, up 17˘
Teck Cominco Ltd. (TCK.B)
Close: $42.42, up 52˘
Petaquilla Copper Ltd. (PTC) Close: $1.80, up 10˘