TORONTO (miningweekly.com) – Toronto-based Inmet could reduce its holding in the large Cobre Panama copper project to around 50% to 60%, CEO Jochen Tilk told Mining Weekly Online on Tuesday.

Inmet has already sold an option to buy 20% of the project to Korea-owned LS-Nikko, and announced the results of a positive front-end engineering study for the asset last month.

Speaking after the company's annual shareholders meeting, Tilk said that, even with Inmet's strong balance sheet, the project's $5-billion price tag means that retaining the company's 80% holding would be “pushing the envelope”.

“There is no question that our intention is to reduce our stake to what we think is more reasonable from a risk perspective,” he said.

A range of 50% to 60% is probably a “reasonable expectation” at the moment.

Inmet has held discussions in the past with potential partners, including from Asia, and will now look at reviving those talks, Tilk said.

The Cobre Panama project (previously know as the Petaquilla copper project) is expected to produce an average of 255 000 t/y of copper, 90 000 oz of gold, 1,5-million ounces of silver and 3 200 t of molybdenum over a 30-year mine life, according to the Feed study.

The average cash costs for the mine are forecast at $0,90/lb.

Tilk said in a presentation at the shareholders meeting that he expects the mine life will increase well beyond the 30-year estimate, based on the size of the resource.

The mine's operating life “could span over more than one generation,” he commented.

Inmet took sole control of the Cobre Panama project in 2008 by acquiring Petaquilla Copper and buying Teck Resources' 30% stake in the asset.

If all goes to plan, the company expects to produce the first concentrate in 2015, with the first shipments forecast for 2016.

LAS CRUCES

Besides Cobre Panama, Inmet also owns base-metals and gold mines in Spain, Turkey, Finland and Canada and a stake in the Ok Tedi mine, in Papua New Guinea.

Between planned production from Cobre de Panama, and with the company's new Las Cruces mine in Spain ramping up operations, Inmet could more than triple its copper production by 2017, Tilk said.

The company had some trouble meeting its ramp-up targets at Las Cruces in 2009, and decided on an extended and intensive maintenance shutdown in the first quarter of this year.

The most significant element of the maintenance effort was the refurbishment of the leach thickener with permanent corrosion-resistant components.

The shutdown ended on March 30, but heavy rains kept the firm from restarting mining operations in the pit. The firm processed low-quality stockpiles in the interim and was able to start hauling ore from the pit last week, Tilk said.

It will likely take about a month to get a good picture of how effective the improvements from the shut down have been, he said.

M&A POTENTIAL

Inmet is prepared to consider merger and acquisition opportunities, especially to contribute copper production growth in between the ramp-up of Las Cruces and start-up at Cobre Panama.

But Tilk said he does not see much likelihood of finding advanced copper assets for a reasonable price.

“The real challenge is that...producing copper mines are hard to come by and the likelihood of a quality operating mine becoming available for acquisition is, in our opinion, extremely low,” he said.

The company would be prepared to consider a merger with a rival, as long as there was clear value creation from the deal, Tilk told Mining Weekly Online.

“Conceptually, it is sensible,” he commented.

“Like with the acquisition of producing assets, it is opportunity driven. And if such an opportunity were to arise and it seemed to be accretive on both sides, we would certainly contemplate it.”

The probability of such a deal is low though, simply because there are a limited number of players in the industry, he added.

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