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Handout photo of Cobre Panama mine site, courtesy of Inmet.

Inmet

First Quantum Minerals Ltd. is sticking to its guns on Cobre Panama, saying it will bring the giant new copper mine on line faster and more cheaply than its previous owner could.

The Vancouver-based miner acquired the property on Friday after holders of 85.5 per cent of Inmet Mining Corp. shares tendered to its hostile takeover bid and Inmet recommended the deal, ending a six-month battle for the Toronto company.

Inmet mines in Turkey, Spain and Finland, but Cobre Panama, meaning Panama Copper, is the crown jewel that could be one of the world's largest copper mines when it opens in 2016.

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But it will also cost an eye-popping $6.2-billion (U.S.) to build – in addition to the $5.1-billion (Canadian) acquisition price – and is a daring bet at a time when the industry shies from takeovers and puts the brakes on new developments.

During the Inmet takeover fight, First Quantum claimed it could shave up to $1-billion (U.S.) from costs in Panama, although in an interview at Inmet's Toronto offices on Friday, company president Clive Newall would not commit to a hard number.

"We had a week of due diligence and during that week the huge potential of the project was very clear and hasn't changed," he said from a boardroom strewn with the suitcases and winter coats of a management team parachuted in to complete the takeover of Inmet this week.

He said it will be three to six months before First Quantum can say how much it can save at Cobre Panama, which will contribute 300,000 tonnes per year to global copper output.

Management goes to Panama on Saturday to view the takeover prize and figure out how to slash costs in the most inflationary period seen by the industry in decades.

First Quantum has a knack for delivering projects more quickly and for less than competitors and its similarly-sized Sentinel copper mine in Zambia will cost just $2-billion to build. In Panama it will be limited in what it can do because $4-billion of the work has already been contracted out.

Mr. Newall said indirect costs, like the cost of erecting structural steel, will be the easiest to cut in Panama.

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At Sentinel the company erected 2,800 tonnes of structural steel at average costs of between 10 and 14 man-hours per tonne, compared to industry averages of 30 to 50 man-hours. A potential increase to mill throughput might shave tens of millions of dollars from costs, he said.

Challenges in Panama include year-round rainfall, and staffing such a large mine in a country with no mining tradition.

Cobre Panama will contribute as much to national GDP as the Panama Canal, producing copper worth some $2.3-billion in annual revenue at today's prices of $3.46 a pound, and Mr. Newall predicts that figure could rise to as much as $5 per pound as supply is constrained over the next four or five years amid a lack of new projects.

"In our view and obviously Inmet's as well, this is the time to be developing projects," said Mr. Newall, who intends to turn his company into the next global copper major when new production from several mines come on stream by 2018. "I mean, the majors just seem to be creating a massive bubble as far as I can see, pulling right back on development."

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