By Jonathan Spicer
TORONTO (Reuters) - Inmet Mining Corp
Teck, meanwhile, pointed to its involvement in the
$3.5-billion project as evidence it has no plans to put itself
on the auction block -- despite renewed speculation that mining
giants Vale
Under its deal with Teck, Inmet will fund development of Petaquilla until the end of September 2009, when Teck has the option to take a 26 percent stake in the project in return for providing 52 percent of the funding.
If Teck backs out, Inmet would purchase Teck's 26-percent stake, giving it about three-quarters of the project.
"From our balance sheet, we certainly feel more than ever that ... we're in a very strong position to move this forward (alone)," Jochen Tilk, Inmet's president and chief operating officer, told Reuters from China.
He said the deal with Teck puts Inmet "in the driver's seat" by allowing the Toronto-based firm to manage the project while keeping Vancouver-based Teck as a partner.
Teck has the option to acquire its stake from Petaquilla
Copper Ltd
Inmet now holds a 48 percent interest in Petaquilla, which is seen producing 4.4 million tonnes of copper over 23 years.
The mine's development costs have more than doubled in the past year due to enhanced erosion control and water management as well as rising equipment and construction costs.
"It's not a matter of overlooking (the rising price tag), it's that we have a sense that over the next 20 years metal prices are going to ... have rising real prices," Doug Horswill, Teck's senior vice president of environment and corporate affairs, said in an interview.
Horswill said the agreement with Inmet shows the miner is not looking to put itself on the auction block. Many mining stocks have risen this week on speculation that they could be takeover targets after Brazil's Vale and London-listed Xstrata parted ways on what would have been a $90-billion merger.
Shares of Teck -- whose dual stock structure would make for a difficult takeover deal -- have risen more than 10 percent since Tuesday, the day the Vale-Xstrata talks fell through.
The shares were up 90 Canadian cents, or 2.15 percent, at C$42.80 on Thursday on the Toronto Stock Exchange. Inmet's shares were up 11 Canadian cents, or 0.1 percent, at C$77.18.
Teck's agreement with Inmet lets the major producer of zinc, copper and coal stay engaged in Petaquilla, while allowing it to focus on developing other projects, such as the Quebrada Blanca property in northern Chile, Horswill said.
Inmet's Tilk said the company expects to have completed detailed engineering and the environmental assessment at Petaquilla and have financing in place by September 2009.
Inmet and Teck unveiled their complicated Petaquilla agreement late on Wednesday. In another scenario, Toronto-based Petaquilla Copper could decide to retain a 35-percent stake in the project if Teck backs out.
($1=$1.01 Canadian)
(Reporting by Jonathan Spicer; Editing by Peter Galloway)
© Reuters Limited. All Rights Reserved.
Reproduction or redistribution of Reuters content, including framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
