NEW YORK Inmet Mining Corp. has again recommended that its shareholders reject First Quantum Minerals Ltd.s hostile takeover bid.
First Quantums Canadian $5.1-billion offer, which expires March 11, is simply too low, Inmet chairman David Beatty wrote in an open letter to shareholders March 8.
"I continue to urge you to reject the inadequate First Quantum offer and not tender your shares," he said. "The First Quantum offer was too low when it was worth $72 (per share) in November. It is now worth significantly less. While the long-term fundamental value of Inmet has not changed, the value of the First Quantum offer has declined to $67 (per share) as of (Thursdays) closing price," Beatty said.
Shareholders should recoup some of their investment as the Toronto-based company makes progress on its Cobre Panama project, which is fully financed and permitted, Beatty said.
While First Quantum claims it could eliminate $1 billion in costs at Cobre Panama, which is expected to drive Inmets copper production up 176 percent by 2018 (amm.com, Jan. 23), Inmet told shareholders that First Quantum "has been unable to find the cost savings it touted or has been unwilling to share them with Inmet shareholders," Beatty said. "Still, First Quantum remains very keen on obtaining Cobre Panama; they just dont want to pay you fair value for it and have so far done nothing to improve their offer."
First Quantum said previously that its offer represented a premium of 65 percent to Inmets underlying net cash-adjusted equity value as of Nov. 23 (amm.com, Dec. 17).
The average analyst target price for Inmet is about $79 per share, while the analyst consensus net asset value estimate is about $84, according to Inmet.