Inmet Board Recommends That Shareholders Reject First Quantum's
Hostile Takeover Bid
- Investment Community Conference Call and Webcast Scheduled for
Tuesday, January 22, 2013 at 8:30am ET -
TORONTO, ONTARIO -- (Marketwire) -- 01/22/13 -- Inmet Mining
Corporation ("Inmet") (TSX:IMN) announced today that its Board of
Directors, on the recommendation of its Special Committee of
independent directors and with input from its and the Special
Committee's financial and legal advisors, recommends that Inmet
shareholders reject the unsolicited offer by First Quantum Minerals
Ltd. (the "First Quantum Offer" or the "Offer") to acquire Inmet for
consideration of (a) cash, (b) First Quantum shares, or (c) a
combination of cash and shares, and not tender their shares to the
First Quantum Offer.
The basis for the Inmet Board's recommendation with respect to the
First Quantum Offer is contained in a Directors' Circular filed today
with Canadian securities regulators. A copy of the Directors'
Circular is available online at www.inmetmining.com and
www.sedar.com. The Directors' Circular will also be mailed to Inmet
David R. Beatty, O.B.E., Chairman of the Inmet Board, said, "The
Inmet Board has concluded that the First Quantum Offer fails to
adequately compensate shareholders for Inmet's low risk asset base
and its strong prospects for growth and value creation at Cobre
Panama, which has the potential to become one of the world's largest
copper mines. Cobre Panama is expected to drive a 176% increase in
Inmet's copper production by 2018 and, as it moves closer to
production, we believe our shareholders will benefit substantially
from the commensurate increase in the company's valuation. The First
Quantum Offer is timed to deprive them of that opportunity without
fair compensation, all while adding considerable execution, financing
and geopolitical risk to the proposed combined company. We believe
our shareholders can do significantly better and we urge them to
reject First Quantum's offer."
"The Board is engaged in a thorough and rigorous process aimed at
investigating all potential strategic alternatives to maximize
shareholder value," added Mr. Beatty.
Reasons to Reject the First Quantum Offer
The Inmet Board concluded that the First Quantum Offer is financially
inadequate, significantly undervalues Inmet, is subject to
significant risks and is not in the best interests of Inmet and its
shareholders. The Board cited a number of reasons for its
recommendation to reject the First Quantum Offer, including, but not
limited to, the following:
-- The First Quantum Offer significantly undervalues Inmet's low risk asset
base and its world-class Cobre Panama project. Inmet has an attractive
portfolio of mature low-cost operations in politically stable
jurisdictions that underpin the significant growth and upside potential
of its world-class Cobre Panama deposit.
-- The timing of the First Quantum Offer deprives Inmet shareholders of the
full value of bringing Cobre Panama into production. The First Quantum
Offer is trying to deprive shareholders of the full value of Inmet's
world-class Cobre Panama project, which has not yet been fully reflected
in Inmet's share price. Cobre Panama is expected to drive a 176%
increase in Inmet's copper production by 2018.
-- The First Quantum Offer is below precedent transactions and does not
reflect an adequate premium for control of Inmet. The Board of Directors
believes, based on a review of comparable transactions and advice from
its financial advisors, that the First Quantum Offer represents a
significant discount to the price / NAV ratio and total acquisition cost
paid in other recent mining transactions.
-- First Quantum has no experience developing projects the size of Cobre
Panama and no relevant experience in Latin America.
-- First Quantum has a track record of repeatedly underestimating
development costs and overestimating production expectations.
-- The First Quantum Offer does not compensate Inmet shareholders for the
inherent risks in First Quantum shares. Inmet shareholders will be
exposed to increased geopolitical risk and development risk from First
Quantum's development projects as well as increased cash costs and
reduced copper exposure.
-- Inmet continues to evaluate alternatives to maximize shareholder value.
Tendering to the First Quantum Offer before the Inmet Board and its
advisors have had the opportunity to fully explore all available
alternatives to maximize shareholder value may preclude the emergence of
a financially superior alternative transaction.
The full reasons for the Inmet Board's recommendation that
shareholders reject the First Quantum Offer are detailed in the
Directors' Circular. The Board's recommendation is supported by
inadequacy opinions received from CIBC World Markets and Scotia
Capital. Inmet encourages shareholders to read the Directors'
Circular in its entirety, to join our open conference call and
webcast (details below) and to reject the First Quantum Offer by not
tendering their shares to the First Quantum Offer.
Additional Details: First Quantum's Track Record and Lack of Relevant
As part of its evaluation of the First Quantum Offer, the Inmet
Board, the Special Committee and its advisors performed a thorough
analysis of First Quantum's development and production track record
and noted that, among other things, First Quantum has repeatedly
underestimated capital costs of its larger projects. For example,
capital expenditures at First Quantum's Ravensthorpe project in
Western Australia and its Kevitsa project in Finland exceeded
estimates by 109% and 18%, respectively. First Quantum has also
overestimated its anticipated copper production: the company's 2011
production targets for 2013 and 2014 were revised downwards in
December 2012 by 27% and 52%, respectively.
Additionally, the Inmet Board noted that the average size of First
Quantum's past projects has been significantly smaller, with the
majority having a capital cost of less than US$500 million and a
material difference in scale and complexity compared to Cobre Panama.
First Quantum's only project in Latin America, Haquira, is
experiencing permitting delays and First Quantum has not been able to
advance the project as it intended when it acquired it in 2010.
The existing capital cost estimates for Cobre Panama have been
developed with the assistance of leading global engineering firms who
conducted substantial due diligence during an exclusive and
competitive procurement process. Sophisticated industry participants
and investors, including Franco-Nevada, KORES (a consortium member in
KPMC) and LS-Nikko (a consortium member in KPMC), have committed to
invest approximately US$2.4 billion into the project on the basis of
their respective due diligence and confidence in the quality of the
development plan and the resulting cost estimates.
In all, this track record represents unnecessary risk to the
development of Cobre Panama and undermines any claims on First
Quantum's part of being able to deliver substantial cost savings at
Jochen Tilk, President and CEO of Inmet, said, "First Quantum says
its track record speaks for itself, but the reality is that its track
record raises more questions than it answers. Despite its claims of
unrivalled engineering expertise, it has never developed a project of
the scale, complexity or capital intensity of Cobre Panama, nor has
it operated in Panama or earned the social license to operate there.
First Quantum's opportunistic offer introduces additional risk
without adequate compensation while depriving our shareholders of the
value they would receive by retaining their control over this
Exploration of Strategic Alternatives
The Board of Directors, through its Special Committee and with the
assistance of their respective financial and legal advisors, together
with Inmet's management, is actively engaged in evaluating a range of
additional strategic alternatives aimed at enhancing shareholder
value. Inmet has approached a number of third parties who have
expressed an interest in considering alternative transactions
involving Inmet or its assets. Inmet has entered into confidentiality
and standstill agreements with a number of interested parties,
several of which are examining confidential financial, operating and
other relevant information. Discussions are ongoing with several of
these third parties and others in order to generate value-enhancing
Tendering Inmet Shares into the First Quantum Offer before the Board
of Directors and its advisors have had the opportunity to fully
explore all available alternatives to maximize shareholder value may
preclude the emergence of a financially superior alternative
The First Quantum Offer is scheduled to expire at 5:00 pm ET on
February 14, 2013 and is subject to a number of conditions that have
yet to be satisfied. The Board of Directors recommends that Inmet
shareholders not take any action until closer to the expiry date to
ensure that Inmet shareholders are able to consider all of the
options available to them.
Conference Call and Webcast Information
Inmet will host a conference call and live audio webcast for the
investment community to discuss the Directors' Circular today,
Tuesday, January 22, 2013, at 8:30am ET. Jochen Tilk, Inmet's
President and Chief Executive Officer, will host the conference
Dial-in information for the conference call is as follows. Please
note that a passcode is required for the live conference call.
+1 416 340 2217 (local/international)
+1 866 696 5910 (North American toll free)
The audio webcast is available at
http://events.digitalmedia.telus.com/inmet/012213/index.php and at
A conference call replay will be available beginning on January 22,
2013 at 10:30am ET and will be available for ten days. The dial-in
numbers for the replay are as follows:
+1 905 694 9451 (local/international)
+1 800 408 3053 (North American toll free)
How to Withdraw Inmet Shares From the Inadequate First Quantum Offer
Shareholders with questions about the Directors' Circular or who may
have already tendered their shares to the First Quantum Offer and
wish to withdraw them are asked to contact Inmet's information agent,
Laurel Hill Advisory Group, at +1 877 452 7184.
About Inmet Mining Corporation
Inmet is a Canadian-based global mining company that produces copper
and zinc. We have three wholly-owned mining operations: Cayeli
(Turkey), Las Cruces (Spain) and Pyhasalmi (Finland). We have an 80
percent interest in Cobre Panama, a development property in Panama,
currently in construction.
Forward Looking Information
Securities regulators encourage companies to disclose forward-looking
information to help investors understand a company's future
prospects. This press release contains forward-looking information.
These are "forward-looking" because we have used what we know and
expect today to make a statement about the future. These statements
involve known and unknown risks and uncertainties, including those
associated with current global economic and financial conditions,
metal prices, Inmet's share price, the cost and availability of key
development and production inputs, labour shortages or disruptions,
environmental and health and safety risks, reserve and production
estimates, exploration and development of new and existing mines,
political and country risks, additional funding requirements,
financial leverage, the outcome of the First Quantum Offer and the
strategic alternatives process that Inmet is currently undertaking,
and other factors which may cause the actual results, performance or
achievements of Inmet to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements usually
include words such as may, expect, anticipate, and believe or other
similar words. However, actual events and results could be
substantially different because of the risks and uncertainties
associated with our respective business or events that happen after
the date of this press release. You should not place undue reliance
on forward-looking statements.
Inmet Shareholder Contact:
Inmet Mining Corporation
Director, Investor Relations
+1 416 361 4808
Laurel Hill Advisory Group
North American Toll Free: +1 877 452 7184
Banks and Brokers and collect calls outside North America:
+1 416 304 0211
Inmet Media Contact:
Longview Communications Inc.
+1 416 649 8007
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