Skip to main content
Canada’s most-awarded newsroom for a reason
Enjoy unlimited digital access
$1.99
per week
for 24 weeks
Canada’s most-awarded newsroom for a reason
$1.99
per week
for 24 weeks
// //

Cobre Panama is a large open-pit copper development project in Panama, 120 kilometres west of Panama City.

Shares of Petaquilla Minerals Ltd. climbed more than 50 per cent Thursday after Inmet Mining Corp. made a $112-million takeover offer in a bid to consolidate the area around its Cobre Panama project.

Petaquilla's Molejon project neighbours Inmet's $6.2-billion (U.S.) Cobre Panama copper-gold porphyry project, Panama's largest-ever mine development.

Inmet president and chief executive Jochen Tilk said the company will reach out to Petaquilla shareholders over the coming weeks.

Story continues below advertisement

"We are neighbours in Panama and this is our offer to make our neighbour a stronger company financially and reputationally," Mr. Tilk told a conference call Thursday.

Petaquilla urged its shareholders to take no action while it reviewed the announcement.

"Petaquilla cautions its shareholders that Inmet has not made a formal offer and no action is required by Petaquilla shareholders at this time," the company said in a brief statement.

Petaquilla shares were up 29 cents at 54 cents at midday on the Toronto Stock Exchange, trading well above Inmet's offer. Volume was extremely heavy at more than 15 million shares, by far the most on Toronto's main board.

Inmet stock was up 95 cents, or 2.15 per cent, at $45.12 on below average volume of some 53,000 shares.

After the close of markets Wednesday, Inmet announced an offer of 48 cents per share in cash – or 0.0109 of an Inmet share for each Petaquilla share.

Inmet said it would also allow Petaquilla to proceed with a spin-out of Petaquilla's assets in Spain to Petaquilla shareholders.

Story continues below advertisement

RBC Capital Markets analyst Fraser Phillips called the deal a "a reasonable transaction" for Inmet.

"The cost is not material relative to its financial resources and the potential value of Cobre Panama," Mr. Phillips wrote in a note to clients.

"It will allow Inmet to control and operate the neighbouring Molejon gold mine to its advantage, eliminating any extraordinary environmental and government and community relations risks that might exist and helping to ensure the success of Cobre Panama."

However, BMO Capital Markets analyst Stephen Bonnyman noted that while the deal may not appear expensive and may be of strategic value, "the timing and use of funds will likely not sit well with investors, given the large existing capex commitment to Cobre Panama."

Questions were raised early in 2011 about the future of the Cobre Panama project when Lundin Mining Corp. walked away from a planned merger with Inmet.

The project has since received government approval for an environmental and social impact assessment required for the building of a mine, port facility and coal-fired power plant.

Story continues below advertisement

However, environmental groups continue to oppose the project, contending it will destroy 5,700 hectares of forest and affect local wildlife, including a large number of protected animal species.

In January, Korea Panama Mining Corp. decided to exercise its option to take a 20-per-cent interest in Cobre Panama copper mine, leaving Inmet with an 80-per-cent stake in the development-stage project. It will fund 20 per cent of development costs.

In addition to Cobre Panama, Inmet produces copper and zinc at its operations in Turkey, Spain and Finland.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies