The senior unsecured notes will mature in 2020, the Toronto-based company said in a statement dated yesterday. Inmet owns 80 percent of the mine and the balance is held by Korea Panama Mining Corp., a venture between LS-Nikko Copper Inc. and Korea Resources Corp.
Inmet Chief Executive Officer Jochen Tilk said in March 2011 the company would reduce its equity stake in the project as it sought financing alternatives. Since then, the risk of building the mine, which is 120 kilometers (75 miles) west of Panama City, has decreased and Inmet’s capability to fund it has increased significantly, the company said in the statement.
“Cobre Panama is a massive project that will take four years to build and could face capex, regulatory and environmental challenges over that time,” Greg Barnes, a Toronto-based analyst at TD Newcrest, said in a note today. Barnes cut his recommendation on the shares from buy to hold.
Inmet fell 8 percent to C$46.25 at the close in Toronto, the biggest decline since March 5. Inmet has dropped 29 percent this year.
Korea Panama has committed $1.4 billion to the project and Inmet will pay the balance, Inmet said. The mine will produce 266,000 tons of copper and 87,000 ounces of gold annually, it said. Cobre Panama will run for 31 years based on current reserves and first ore will be processed in the last quarter of 2015 with the first shipment in early 2016.
“We’re not precluding the sale of an additional minority stake in the project as we believe that project becomes increasingly more attractive as construction progresses,” Tilk said today on a conference call.
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