Inmet Mining Corp., which last month rejected a $4.9-billion takeover bid from a Canadian rival, has announced a 27-per-cent increase in reserves at its massive Cobre Panama copper project in Central America.
The Toronto-based miner said late Thursday it has raised copper reserves at Cobre Panama to some 26 billion pounds. It also said it boosted gold reserves by 41 per cent, to some 7.3 million ounces.
It extended the estimated mine life at the project in Panama to 40 years from 31 years, significantly changing the metrics around an asset that has already been lauded as one of the world's largest copper projects in development.
The new reserve estimates might help explain why Inmet rebuffed takeover approaches from First Quantum Minerals Ltd. two weeks ago with little explanation.
"The announcement highlights the scale of the deposit to possible acquirers and confirms Cobre Panama as one of the largest undeveloped copper resources in the world," BMO Nesbitt Burns analyst Stephen Bonnyman said in a research note.
Inmet surprised investors at the end of November when it announced it had received and rejected a takeover bid valuing the company at $70 a share, or 33 per cent more than where it was trading before the announcement.
Inmet also said the offer was the second from First Quantum in a month, underscoring global miners' convictions that copper demand will remain strong into the future even if growth has slowed in China and other major markets.
Inmet shares closed trading on the Toronto Stock Exchange at $66.70 a share Thursday, before the new reserves were announced. The shares have been climbing toward the First Quantum bid price as investors bet on the possibility of a sweetened takeover bid emerging, either from First Quantum or another rival.
Copper has been in high demand over the past decade, driven by breakneck development in China as that country built power grids and entire cities in its urbanization drive.
Cobre Panama will be one of the few large-scale copper projects to be developed in coming years. It will produce some 300,000 tonnes of copper per year, worth about $1.1-billion (U.S) at current prices and putting it on a scale with giant mines in Chile and Peru. The project has had its challenges, among them sharply rising costs and concerns about how its owners will foot a development bill of $6.2-billion.
The new reserve estimates were based on a copper price of $2.25 a pound, compared with spot prices on today's markets of nearly $3.70 a pound.
Inmet had at one point considered selling a part of the Panama project to defray costs, but it solved many of those problems in August with a $1-billion deal to sell future gold and silver production from the project to royalty company Franco-Nevada Corp.
Cobre Panama is a large open-pit copper development project, 120 kilometres west of Panama City.