First Quantum (TSX:FM) and Inmet Mining (TSX:IMN) were caught in a correspondence cross fire, as both companies issued letters over the weekend regarding the possible $5.1 billion hostile takeover bid for Inmet.
Vancouver-based First Quantum said Inmet is trying to sabotage the takeover, while Inmet suggested its counterpart’s complaints were dishonest, mainly because the intention to sell a further stake in Cobre Panama had long been on the table.
“The Board and its advisors are engaged in a thorough and rigorous process to evaluate First Quantum’s offer and to explore the full range of all potential alternatives that may provide greater value to Inmet shareholders, including those activities that have been commenced prior to First Quantum’s bid,” Inmet chairman David Beatty said in a statement.
"We note that, while First Quantum says it wishes to engage in friendly discussions, it is simply not,” Betty added.
To that, First Quantum’s CEO Philip Pascal replied Monday his company “has made, and will continue to make, all reasonable efforts to engage Inmet in a constructive dialogue regarding the merits of a combination of our respective businesses.”
“We also believe that engagement is a matter of fairness (…) since it is the only way in which our offer can be properly evaluated against all other strategic alternatives that might be available to Inmet, including any proposed sale of an additional minority interest in Cobre Panama that could prevent our offer from being completed,” Pascal said in today’s letter to Inmet’s shareholders.
First Quantum launched the bid for its smaller Toronto-based rival, in an effort to own the world's largest undeveloped copper deposit, Cobre Panama last week.
If successful, the deal will be the biggest hostile mining bid since BHP Billiton (ASX, NYSE:BHP) withdrew a $40 billion offer for Potash Corp. of Saskatchewan (TSX, NYSE:POT) in 2010.
First Quantum holds extensive copper, nickel and gold assets throughout Africa and Australia, while Inmet mines copper and zinc in Turkey, Spain and Finland.
The miner said the combined entity would have a projected output of 1.3 million tonnes per year by 2018.
In late December, Inmet lifted its estimate of copper reserves at its flagship Cobre Panama project by 27% and extended the projected mine life by nine years.
Inmet’s flagship project in Panama will be one of the biggest copper mines to come on line in the next several years as well as the biggest mining project ever undertaken in Central America. Cobre Panama is expected to produce 300,000 tonnes of copper per annum worth around $1.1 billion at current prices.