* First Quantum says 85.5 pct of shareholders tender to bid
* Continues consolidation among copper miners
* Says can keep to Inmet schedule on Cobre Panama
* Sees "full pipeline" but more deals possible
By Julie Gordon and Clara Ferreira-Marques
TORONTO/LONDON, March 22 First Quantum Minerals
Ltd said on Friday it had won enough shareholder support
to take over Inmet Mining Corp, winning a C$5.1 billion
hostile battle for control of one of the world's largest
untapped copper deposits.
The deal - the latest in an industry that has concentrated
to leave ever fewer pure copper miners behind - creates one of
the world's biggest producers of the red metal.
It also transforms First Quantum, which until now has made
more than 80 percent of its profit in Zambia.
First Quantum, for its part, faces arguably its toughest
test to date in Inmet's $6.2 billion Cobre Panama project, the
jewel in the miner's crown.
Cobre Panama is one of the biggest untapped copper deposits
in the world, but also one of the most expensive - in an
untested country with little mining history.
"They've certainly shown themselves to be very efficient and
effective project managers in the past, successfully executing
on what much larger firms have struggled with," said Daniel
Rohr, a mining analyst at Morningstar.
First Quantum, which cut its teeth in Zambia as the country
re-privatised its mines in the 1990s, is betting its hands-on
approach to construction, procurement and supervision will help
slash costs at Cobre Panama while keeping to deadlines.
"There will be a hiatus of three to six months, whatever it
takes to do a comprehensive reassessment and renegotiations
where required. But our build time will be much shorter," First
Quantum President Clive Newall told Reuters.
"We have a two-year construction phase (at) our projects, so
we will be able to stick pretty closely to Inmet's schedule,
which was for commissioning at the end of 2016 or the beginning
Newall dismissed concerns that Inmet's existing contracts
might have locked in high costs. But he said it would be
"several months" before the group could publish specific targets
and its own plan for the mine, where challenges include heavy
The deal is the latest in a copper industry where rising
costs and a dearth of new deposits have prompted consolidation,
leaving only a handful of mid-sized base metals producers such
as HudBay Minerals Inc and Lundin Mining Corp.
Poland's KGHM sealed a C$3 billion takeover of
Quadra FNX in 2012, while Barrick Gold Corp's C$7.3
billion deal to acquire Equinox Minerals in 2011 took yet
another mid-sized base metal company off the market.
With Cobre Panama and its own development projects coming on
stream over the next five years, First Quantum now expects to be
producing some 1.3 million tonnes of copper annually by 2018,
making it one of the top five producers in the world.
Newall said that while First Quantum has no plans to trim
its own portfolio, more deals were not off the cards, as major
mining companies streamline portfolios and put dozens of assets
up for sale, including copper deposits.
"We have a pretty full pipeline for the next few years, but
that doesn't mean we'll stop looking," he said. "There is going
to be a period, over the next year to 18 months, where there are
going to be some opportunities. It is just that we will be
setting the bar ever higher."
First Quantum said in Friday's statement that a total of
60.1 million Inmet shares, representing about 85.5 percent of
outstanding shares, had been tendered in favor of its offer.
The offer has been extended to 5 p.m. EDT (2100 GMT) on
April 1. If able to secure 90 percent of the shares, First
Quantum will proceed with a compulsory acquisition.
Toronto-based Inmet, which rejected First Quantum's advances
for months, recommended on Friday that shareholders tender their
shares to the offer. The miner also announced the resignation of
its entire board and named four First Quantum officers to the
Jefferies International, Goldman Sachs and RBC Capital
Markets acted as financial advisers for First Quantum on the
deal, while Fasken Martineau DuMoulin acted as legal counsel.
First Quantum's shares closed down 2.3 percent at C$20.12,
while Inmet's shares closed 1.5 percent lower at C$69.11 on the
Toronto Stock Exchange.