This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Inmet Mining Owners Face Dilemma As First Quantum Dangles Third Bid

Inmet Mining Owners Face Dilemma as First Quantum Dangles Third Bid

Inmet Mining (TSX:IMN) shareholders might want to hold out for a better offer than the $5.2 billion that First Quantum Minerals (TSX:FM) has put on the table. Alternatively, they could wait for Cobre Panama, the second-largest undeveloped copper deposit in the world, to start production in 2016 in the hope that the payoff will be equal to or greater than what they would get in a takeover.

Inmet owns 80 percent of the open-pit copper development project Cobre Panama, and in the midst of First Quantum's bids for the company, Inmet has  raised the mine's estimated life to 40 years from 31 years on higher proven and probable mineral reserves, including a 27-percent boost to estimated copper reserves. The mine is now expected to produce about 300,000 tonnes of copper, worth about $1.1 billion, each year.

Since the bid, Inmet's share price has consistently traded well above the C$72 per share offer, suggesting that investors expect a higher offer, either from First Quantum or from a rival bidder. On January 3, the stock was trading between C$74 and C$75.

First Quantum's interest in Inmet comes a year and a half after Inmet and Lundin Mining (TSX:LUN) decided to cancel a merger plan that was not only marred by political and financial uncertainty for the Cobre Panama mine, but also by Equinox Minerals' (OTC Pink:EQNMF) hostile takeover offer for Lundin. In the first couple of weeks after that merger was announced, Inmet was trading as high as C$79 per share. Immediately following the termination, it traded at C$70.

“The market is clearly saying that we are going to need a higher price to push this through,” Barry Schwartz, a Baskin Financial Services fund manager in Toronto, told Bloomberg. Bloomberg's report also notes that First Quantum's bid values Inmet at 7.6 times its earnings before interest, taxes, depreciation and amortization (EBIDTA) in the last 12 months — the lowest EBIDTA multiple among copper-industry deals of $500 million or more since 2007.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,712.66 +34.43 0.19%
S&P 500 2,061.02 +4.87 0.24%
NASDAQ 4,891.2190 +27.8570 0.57%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs