Inmet Says Sale of Panama Mine Stake Is Among ‘Many’ Options

(Updates with closing share prices in sixth paragraph.)

Jan. 23 (Bloomberg) -- Inmet Mining Corp. said the sale of a stake in its Panamanian copper mine is among “many” options being considered as it seeks to fend off a C$5.1 billion ($5.1 billion) hostile bid from First Quantum Minerals Ltd.

Inmet said in July it was looking at the possibility of selling as much as 20 percent of the project, which it says is the world’s largest copper mine under construction.

“That’s been very consistent and that activity is just rolled into all our options,” Chief Executive Officer Jochen Tilk said yesterday in an interview.

Inmet is in talks with some of the third parties it approached about alternative transactions involving itself or its assets, the company said yesterday in a statement. It also recommended shareholders reject First Quantum’s C$72-a-share offer, saying it undervalues the company.

No potential deals or other options have been ruled out, Tilk said. He declined to comment on who Inmet is in talks with or how many parties are involved.

Inmet dropped 0.7 percent to C$70.77 at the close in Toronto. First Quantum declined 1.7 percent to C$20.56.

The Cobre Panama project will cost about $6.2 billion to develop and produce an average of 266,000 metric tons of copper annually. It’s 80 percent-owned by Inmet and the rest by Korea Panama Mining Corp., a venture between LS-Nikko Copper Inc. and Korea Resources Corp.

‘Inappropriate’ Sale

Canada’s Franco-Nevada Corp. in August agreed to pledge $1 billion of funds for Cobre Panama’s construction in return for a stream of revenue from the gold and silver to be mined as byproducts.

The sale of a stake in the mine may threaten the completion of First Quantum’s planned takeover and would be “inappropriate in the circumstances and constitute an improper short-term defensive tactic in response to our long-term strategic proposal,” First Quantum CEO Philip Pascall said Jan. 12. Brian Cattell, a First Quantum spokesman, declined to comment today.

First Quantum took its cash-and-stock bid directly to Inmet investors Jan. 9 after Inmet’s board snubbed two earlier offers. Vancouver-based First Quantum is seeking control of Cobre Panama to create one of the world’s five largest copper producers.

Inmet rejected the bid even after its biggest investor, Leucadia National Corp., said Jan. 10 it would tender its 16 percent stake in support of the offer “in the absence of changed circumstances or new information.”

Goldman Sachs Group Inc., Jefferies Group Inc. and Royal Bank of Canada are advising First Quantum.

Canadian Imperial Bank of Commerce and law firm Torys LLP are advising Inmet. Scotiabank is financial adviser to the special committee of the Inmet board and Osler, Hoskin & Harcourt LLP is its legal counsel.

--With assistance from Firat Kayakiran in London. Editors: Simon Casey, Charles Siler