March 4, 2011 / 3:52 PM / 7 years ago

Inmet shares drop as Panama mining law repeal weighs

TORONTO, March 4 (Reuters) - Shares of Inmet were among the biggest losers on the Toronto Stock Exchange on Friday, after the government of Panama announced plans to repeal a recent law that allows foreign government investment in mines within the Central American country. [ID:nN04106429]

The law, passed less than a month ago, is crucial to Inmet Mining IMN.TO, as the company plans to partner with Singapore’s state investor Temasek and with Korea Resources Corp to finance and build its $4.3 billion Cobre Panama copper-gold project in the country.

Shares of Inmet fell as much as 3.7 percent to C$66.55 in early trade, as the repeal of the law could impact Inmet’s plans to finance the project.

Toronto-based Inmet, which owns copper mines spread across Turkey, Finland and Spain, is trying to acquire rival Lundin Mining (LUN.TO).

However a C$4.8 billion counter offer from Equinox Minerals EQN.AX could derail Inmet’s friendly deal with Lundin. Many analysts doubt that Inmet will join a bidding war for Lundin, as it needs to build a war chest to finance Cobre Panama. [ID:nN27203451]

BMO analyst David Cotterell said he views the development of Cobre Panama as a key part of Inmet’s future growth.

“The funding options for the Cobre Panama Project could potentially place constraints on offering more attractive terms for Lundin,” he said, in a note to clients. (Reporting by Euan Rocha; editing by Janet Guttsman)

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