Inmet pegs Cobre Panama costs at $6.2 billion, stock slumps
By Euan Rocha
TORONTO (Reuters) - Inmet Mining Corp IMN.TO raised projected developments costs for its Cobre Panama copper project in Central America by more than 25 percent to $6.2 billion, and investor worries about the higher costs sent Inmet shares tumbling 7.5 percent on Monday.
The base metal miner, which had previously considered selling a part of its interest in Cobre Panama to defray costs, said late on Sunday that it plans to develop the massive project on its own for now, using cash on hand, debt and other options.
Toronto-based Inmet said it will retain its 80 percent stake in the asset, but it did not close the door on selling a stake in Cobre Panama down the road. The remaining 20 percent in the Panamanian asset is owned by a South Korean consortium.
"Inmet's funding plan appears credible and the company has taken material steps to de-risk the project," TD Securities analyst Greg Barnes said in a note to clients.
"However, Cobre Panama is a massive project that will take four years to build and could face capital expenditure, regulatory and environmental challenges over that time."
Shares of Inmet fell C$3.78 to C$46.47, also hit by a wider commodities-related sell-off sparked by concerns that election results in Europe clouded the region's outlook as it continues to grapple with a sovereign debt crisis.
Inmet announced a $1 billion senior unsecured note offering to help finance the project. The mine is expected to produce an annual average 266,000 tonnes of copper over the 31 years of its expected life, as well as about 87,000 ounces of gold and 1.5 million ounces of silver a year. Continued...