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Inmet Mining CEO Jochen Tilk© Mark Blinch / Reuters/Reuters

First Quantum Minerals Ltd. offered $4.9-billion to acquire Inmet Mining Corp., a bold declaration from one of Canada's largest copper miners that the commodities supercycle has room to run.

Inmet rejected the bid, describing it as "highly conditional" and not in shareholders' interests, but analysts said First Quantum could return with a higher offer for one of the world's largest copper projects in development.

Toronto-based Inmet is developing the $6.2-billion (U.S.) Cobre Panama project that will produce some 300,000 tonnes of copper a year for 30 years, putting it on a scale with major mines in Chile and Peru, the world's largest producers of the metal.

Inmet revealed that it was the second offer from First Quantum in a month, underscoring global miners' convictions that copper demand will remain strong into the future, despite slowing growth in China and other major markets. Copper has been one of the most in-demand commodities of the past decade, driven by breakneck development in China as it built power grids and entire cities in its urbanization drive.

First Quantum's overture for Inmet amounts to a bet that the so-called super-cycle for commodities, particularly copper, will persist even if the pace has cooled.

It also signals that the world's copper miners have not given up on the race to source new production as aging mines around the world reach the end of their useful life.

"Cobre Panama is in the running to be one of the few large-scale copper projects to be developed over the next five to seven years," said John Hughes, an analyst with Desjardins Securities Inc. in Toronto.

First Quantum's latest cash and stock offer valued Inmet at about $70 (Canadian) a share, a 33 per cent premium to its trading price on Wednesday on the Toronto Stock Exchange of $52.70 a share, Inmet said. The earlier offer was at $62.50 a share.

If Vancouver-based First Quantum wants to win Inmet, the bidding will likely go higher.

"I don't know what number they say yes at. I would suggest a potential hostile bid ... generally would look at somewhere around 10 per cent" higher, Mr. Hughes said.

Mr. Hughes, however, pointed out that First Quantum, while fond of early stage projects, is not known to overpay for assets. First Quantum and Inmet have not held official talks, according to sources familiar with the situation.

First Quantum currently produces about 300,000 tonnes of copper, an excellent conductor of heat and electricity that is used in everything from electrical wires to roofing and plumbing and industrial machinery. Organic growth from projects in Zambia, Peru and Finland could make it a million-ton-a-year producer.

Copper is trading at about $3.52 (U.S.) a pound on global markets, below record levels of around $4.50 a pound, but still seven times higher than a decade ago. The Cobre Panama project, by contrast, has estimated cash costs of $0.72 a pound.

The project has had its challenges, among them sharply rising costs and financing concerns.

The company 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.

The Franco-Nevada deal meant it had financing in place for $4.2-billion of costs. Inmet owns 80 per cent of the project, meaning its share of the development costs for Cobre Panama is $4.8-billion.

"They are obviously trying to do it on their own because they want to keep control," Jurgen Beier, Deloitte Canada's national mining leader, said after Inmet rejected First Quantum's bid.

First Quantum could not be reached for comment.

The latest offer was made on Nov. 25 and includes a cash component for half the amount, some $2.461-billion, and shares for the other half, according to Inmet.

"After reviewing the proposal with its financial and legal advisers, Inmet's Board of Directors has today notified First Quantum that it has declined to pursue the proposal as it is not in the best interests of Inmet shareholders," the company said, adding that it also adopted a poison pill to protect against hostile takeovers.