LONDON First Quantum
Minerals Ltd., which recently placed a bid for Inmet Mining
Corp., expressed concern over suggestions that Inmet could sell
a further minority interest in its flagship Cobre Panama
First Quantum said in a letter
addressed to Inmet chairman David Beatty that it had been
approached both directly and indirectly by Inmet shareholders
saying that they were concerned about the possible stake
"It is a condition of First
Quantums offer that Inmet and its subsidiaries not take
any action which might have the effect of materially
diminishing the economic value to First Quantum of the
acquisition of Inmet shares," First Quantum chairman and chief
executive officer Philip Pascall said in the letter. "We are,
therefore, very concerned that the special committee could be
contemplating steps which could deprive Inmet shareholders the
opportunity to consider our offer."
Inmets special committee
was set up to advise on the potential risks of accepting the
Canadian $5.1-billion ($5.2-billion) takeover bid by First
amm.com, Jan. 10).
Toronto-based Inmet has said
that the special committee and its financial advisers will look
into potential strategic alternatives to enhance shareholder
value, some of which predate the offer.
Columbia-based First Quantum is "troubled" by the possibility
that this could relate to the sale of another minority stake in
Cobre Panama, Pascall said.
"We consider that any attempt to
complete such a transaction during the currency of our offer
would be inappropriate in the circumstances and constitute an
improper short-term defensive tactic in response to our
long-term strategic proposal," Pascall said. "It risks being
value destroying, further reducing the flexibility of
developing Cobre Panama without in any way diminishing the
Inmet has already sold off a
20-percent minority stake in Cobre Panama, as well as part of
its anticipated precious metals stream.
In a response, Beatty said that
Inmets board of directors "is well aware" of its duties
and responsibilities with respect to the First Quantum offer.
"The board and its advisers are engaged in a thorough and
rigorous process to evaluate First Quantums offer and to
explore the full range of all potential alternatives that may
provide greater value to Inmet shareholders," he said, noting
that Inmets board is now considering whether the First
Quantum bid adequately compensates its shareholders.
Beatty also confirmed that
Inmets board is looking at the possible risks associated
with accepting First Quantum shares as consideration.
"Inmet is very proud of its
track record of building long-term shareholder value, and we
are very comfortable that the decisions we have made regarding
Cobre Panama," Beatty said. "We have positioned it to become
one of the worlds largest and lowest-cost copper
The Inmet board will file a
directors circular and will make a formal recommendation
to shareholders by Jan. 24. Until then, Inmet shareholders have
been advised not to take any action or tender to the takeover
A version of this article
was first published by AMM sister publication Metal