Inmet Mining bid war speculation swells

From where most people sit, copper miner Inmet Mining Corp. may have the upper hand. It snubbed an unsolicited takeover offer from rival First Quantum Minerals, valuing the company at C$4.9-billion, or C$70 a share, and now some market observers speculate the move will spark a bidding war.

The prize is Inmet`s massive copper asset Cobre Panama in Central America, rare in its size and quality.

"We believe we could see further bids for Inmet in the near term given the scarcity of large, quality copper assets," analyst Fraser Phillips of RBC Dominion Securities Inc. wrote in a note, according to the Globe and Mail.

"Cobre Panama is a large project with an attractive cash cost profile and opportunities for expansion that is fully permitted and essentially fully funded. It is well known to many senior mining companies worldwide that looked at it when Inmet unsuccessfully sought a third partner."

First Quantum has bid twice for Inmet over the period of a month, according to both companies. Inmet rejected the First Quantum bids this week and adopted a shareholder rights plan, also known as a poison pill, which gives it more time to evaluate takeover bids or options.

The takeover offer reflects there is confidence in the outlook for copper prices, despite nagging concern about China`s demand for the metal and a sluggish global economic recovery, and potentially puts Inmet in a comfortable spot to pick and choose its options.

"As long as copper stays where they are or go higher, this is going to be the premier mine. Maybe one of the biggest mines that is going to come into play over the next few years. It's going to be an unbelievable cash cow for Inmet," said Barry Schwartz, vice president and portfolio manager at Baskin Financial Services.

"Everybody's for sale at a certain price."

Inmet said the offer by First Quantum was "highly conditional" and not in the best interests of its shareholders.

First Quantum Chief Executive Philip Pascall said in a statement issued on Thursday that the company ``is both surprised and disappointed at the circumstances under which the Inmet board chose to forego this significant opportunity.``

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