Teck Cominco, Inmet agree on Petaquilla project

MONTREAL, March 26 (Reuters) - Teck Cominco Ltd (TCKb.TO: Quote, Profile, Research, Stock Buzz) and Inmet Mining Corp (IMN.TO: Quote, Profile, Research, Stock Buzz) said on Wednesday they will develop the $3.5 billion Petaquilla copper project in Panama, which had been put in doubt because of soaring costs.

Inmet owns a 48 percent interest in Minera Petaquilla S.A. (MPSA), the Panamanian company that holds the Petaquilla concession, while Teck Cominco has the option to receive a 26 percent interest in MPSA in return for providing 52 percent of funding for the project until commercial production.

It will acquire the stake from Petaquilla Copper Ltd (PTC.TO: Quote, Profile, Research, Stock Buzz), which currently owns 52 percent of MPSA.

Inmet Mining will fund the project, but by end-September 2009 or when Inmet has spent $50 million, Teck Cominco would have to decide whether to pay its share of development costs and take up its 26 percent stake, or sell the stake to Inmet.

"This arrangement with Inmet Mining allows the Petaquilla project to proceed expeditiously, while preserving Teck Cominco's flexibility to progress other projects in our growth pipeline such as the Quebrada Blanca hypogene project, the Andacollo hypogene project and several other growth projects in oil sands and gold," Don Lindsay, president and chief executive of Teck Cominco, said in a statement. (Reporting by Robert Melnbardis; Editing by Michael Urquhart)