TORONTO (miningweekly.com) – TSX-listed Inmet Mining has had discussions with a number of potential customers for its Cobre Panama copper project, with a view to signing concentrate offtake agreements in exchange for help with financing the project, CEO Jochen Tilk said on Monday.
The firm announced last month that it has agreed to sell as much as 30% of the project - previously known as the Petaquilla project - to Korea's LS-Nikko, and is now looking at ways to fund the other 70% of the capital cost of building the mine.
“We've had a number of discussions with other offtakers,” Tilk said at a mining conference.
“We've spoken to companies in Europe, in Sweden and in Germany; we've spoken to companies in Japan,” he said..
“They would be very interested to take on concentrate and, in turn for these concentrate contracts, we would receive finance from the respective development banks.”
The most recent estimate put the cost of the project at C$3,5-billion, although Inmet is scheduled to release more current data and studies in the first quarter of next year.
Tilk said that, after the LS-Nikko agreement, Inmet is becoming increasingly comfortable with the idea of retaining and financing the full 70% stake.
However, the possibility remains that another 20% or so could be sold off, as the firm is adamant it will not jeopardise its balance sheet to fund Cobre Panama.
Inmet announced last month that it had signed an option agreement with Korea's LS-Nikko, which will buy 20% of the project, and could increase the stake to 30% before January 31, 2010.
Although it still has to be made official, Tilk indicated that he expects the 30% outcome is most likely.
During the option period, KPMC and Inmet will fund their respective proportionate shares of project development costs to a maximum of $150-million, and Inmet will fund costs beyond that.
When a decision is made to go ahead with the project, the Korean firm will reimburse Inmet for its share of all the money spent up to the point of signing the agreement, and will continue to fund its 20% or 30% of construction costs going forward.
Inmet expects to make a final decision on the project in the second quarter of 2011, Tilk said.
Inmet took over sole ownership of the copper/gold/molybdenum asset last year, after it bought Petaquilla Copper and a third partner, Teck Resources, sold its 26% holding to Inmet for about $30-million.
The company expects to have the final social and environmental impact study ready and to finalise the front-end engineering and design for the project during February. It will also publish an NI 43-101 reserve and resource statement around the same time.
“That will be a big milestone for people as they watch how this project unfolds,” Tilk said.
In its planning, Inmet is aiming for a minimum 30-year mine life at 150 000-t/d throughput rate. Over first ten years, annual production is expected to be 275 000 t/y of copper and 110 000 oz/y of gold.
The company has also signed a joint development agreement with Suez Energy, to develop a coal-fired power plant in parallel with the development of the Cobre Panama mine.
Elsewhere, the company is busy ramping up production at its new Las Cruces mine in Spain.
After some teething problems, commercial production is targeted before year-end and the mine is expected to be running at full production by February 2010.
The mine will produce 72 000 t/y of cathode copper over a 15-year mine life.
Inmet has base metals and gold mines in Spain, Turkey, Finland and Canada, as well as a stake in the Ok Tedi mine, in Papua New Guinea.
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