TEXT - S&P comments Inmet Mining Corp
Dec 12 - Standard & Poor's Ratings Services today said its ratings and outlook on Inmet Mining Corp. (B+/Stable/--), including its issue-level and recovery ratings, are unchanged following the company's up to US$500 million proposed senior unsecured notes offering. We expect the notes will rank equally with all of Inmet's existing and future unsecured and unsubordinated indebtedness. In our opinion, the proceeds from the proposed notes offering enhance financial flexibility, particularly by providing clarity on funding Inmet's portion of the remaining estimated capital expenditures at the Cobre Panama construction project. At the same time, the company's higher pro forma debt balance will increase its sensitivity to a moderate change in base metals prices. We estimate that a 20% decline in copper prices--relative to our base case assumption for copper of US$3.50 per pound through next year--would likely result in the company's adjusted debt-to-EBITDA leverage ratio surpassing 4.5x, a key threshold for downgrading Inmet. The stable outlook on Inmet reflects our view that contemporary base metals prices should support the company's credit measures with funds from operations (FFO) generation reinforcing its liquidity in a period of extraordinarily large growth capital expenditures. Under our base case assumption, we expect Inmet to generate an average adjusted debt-to-EBITDA leverage ratio under 4x and an average adjusted FFO to debt of close to 15% in the next few years. Inmet operates three mines in Finland, Spain, and Turkey, and holds a majority interest in the Cobre Panama construction project in Panama.