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 has a 48 percent interest in Petaquilla, which is seen producing 4.4 million tonnes of copper over 23 years.
RISING PRICE TAG
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 ended talks to take over Anglo-Swiss Xstrata in a deal the some have speculated could have been worth as much as $90 billion.
Shares of Teck -- whose dual stock structure would make for a difficult takeover deal -- have risen about 10 percent since Tuesday, the day the Vale-Xstrata talks fell through.
Teck shares were up 68 Canadian cents, or 1.6 percent, at C$42.58 on Thursday on the Toronto Stock Exchange. Inmet shares were up 6 Canadian cents, or 0.1 percent, at C$77.13.
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.
Kerry Smith, an analyst at Haywood Securities, said: "Teck's bought itself more time at the table to see how this project develops and see what they can do to refine the capital cost estimates."
Inmet expects to have financing in place, and completed detailed engineering and the environmental assessment at Petaquilla by September 2009, Tilk said.
Inmet and Teck unveiled their complicated Petaquilla agreement late on Wednesday. In another possible scenario, Toronto-based Petaquilla Copper could decide to retain a 35 percent stake in the project if Teck backs out.
($1=$1.02 Canadian)
(Reporting by Jonathan Spicer; Editing by Rob Wilson)
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