Analysts at RBC Capital Markets have issued an outperform
recommendation for mid-tier copper miner Inmet, as the $169
million sale of a 20% stake in its Minera Panama operation to
Korean Panama Mining Corp (KPMC) closes.
Minera Panama is the owner and developer of the Cobre Panama
copper-gold-molybdenum project, located 120km west of Panama
"KPMC has acquired its interest for $169 million in cash, which
represents 20% of the project development costs to date,
combined with the $30 million option price previously paid,"
the RBC analysts said in a note on Thursday April 26.
"The previous estimate on the cost of the 20% interest was
approximately $155 million."
This means the final price paid by KPMC is more than 9% higher
than originally estimated.
An update on the project's economics
expected this quarter, followed by news of the selection of a
"Inmet now holds an 80% interest in Cobre Panama. Finding
partners to assist with development of the project is key due
to the huge capital expenditures that must be made to bring the
project on-line," the analysts said.
"We estimate capital costs to be approximately $6 billion. An
update on project economics along with a basic engineering
study is expected to be released by Inmet in [the second
The RBC analysts' outperform recommendation is based on the
assumption that Las Cruces, the company's Spanish copper
project, will be able to reach full production in 2012.
"[This will result] in upside potential for Inmet's earnings
and cash flow. [There is also] upside potential at Cobre
Panama, and compelling valuation based on our [net asset value]
analysis," they said.
Potential share price catalysts boosters for the company
include the partnership process at Cobre Panama, they added.
Inmet's shares were trading at C$54.35 ($55.12) each at the end
of the day on the Toronto Stock Exchange on Wednesday, April
25, up 3.88% compared with the previous day's close.