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 As at December 31, 2007.

Petaquilla is a large open-pit copper project in Panama that’s in the pre-development phase. The property is located 120 kilometres west of Panama City, 20 kilometers from the Caribbean coast. We have a 48 percent interest in Minera Panama S.A. (“MPSA”), the Panamanian company that holds the Petaquilla concession. Petaquilla Copper (PTC) holds a 26 percent interest in MPSA since Teck Cominco announced its election on March 26, 2008 to acquire half of PTC’s 52 percent or 26 percent of the joint venture in accordance with an existing MPSA shareholder agreement between Inmet, Teck Cominco and PTC.

A United Nations Development Program team discovered copper, gold and molybdenum porphyry mineralization during a regional survey in 1968. Since then a significant amount of work on the project has been carried out including a number of feasibility studies. In 1998, AMEC Americas Limited (AMEC) (then H. A. Simons) prepared a feasibility study on Petaquilla. The study determined that over a potential 23 year life, the Petaquilla mine could produce 4.4 million tonnes of copper, 1.6 million ounces of gold and 59,500 tonnes of molybdenum.

In April 2006, Inmet, PTC and Teck Cominco engaged AMEC to update the 1998 feasibility study by re-estimating the capital and operating costs for the project and to review opportunities for optimization. The cost update of the feasibility study was completed in January 2007. In May 2007, Inmet, PML, PTC and Teck Cominco approved a comprehensive work program to facilitate the rapid development of the Petaquilla Copper Project in Panama. The agreed work program is intended to advance the project through to completion of a Front-end Engineering and Design (“FEED”) Program and an updated Social Environmental Impact Assessment for the project. The work includes programs to advance the dialogue with local communities and other affected stakeholders. The budget for the work plan was approximately US$24 million. Apart from certain minor shared costs, the work plan was funded by Teck Cominco.

AMEC Americas Limited was awarded the contract for Front End Engineering and Design (FEED) services and Golder Associates was awarded the work on the Social and Environmental Impact Assessment (SEIA).

The interim FEED study was completed in January 2008 and estimated that the capital cost required to develop the Petaquilla project would be US $3.5 billion (including a contingency of $515 million but not working capital or escalation). The capital cost estimate includes approximately $500 million for the construction of an oil-fired power plant and approximately $280 million for port facilities. Cash costs, including operating and realization costs net of by-product credits, in years 1 to 10 of the project are estimated to average US $0.85 per pound of copper produced. The study is based on the mine plan developed in 1998, which contemplates a 23-year mine life. The project includes a concentrator capable of processing 120,000 tonnes per day of ore. Construction would take approximately 44 months from issuance of construction permits. Permitting would follow the submission of a social and environmental impact assessment.

Capital costs for the project increased substantially over the previous estimate because of scope changes, including enhancements in erosion control, water management and other environmental protection measures, and increases in equipment and construction costs that have been affecting projects worldwide. Despite the increase in capital costs required to develop Petaquilla, the shareholders believe that the project still has the potential to be a world-class mining operation.

Work is continuing on the final FEED study. A project review team is studying opportunities to reduce the capital costs from the interim FEED study estimate. Several possible opportunities have already been identified in the area of the grinding circuit, power supply and port infrastructure. The project review team is evaluating these opportunities and, where appropriate, will incorporate them into the capital cost estimate.

On March 26, 2008, Inmet and Teck Cominco announced an arrangement under which they would proceed with the project. Under the arrangement, Teck Cominco elected to acquire from PTC a 26 percent interest in MPSA by committing to participate in work plans and budgets and to fund up to 52 percent of development costs for the project through to commercial production. Teck Cominco would receive 52 percent of the project cash flow until it has recouped its entire investment plus interest on amounts advanced on behalf of Petaquilla Copper.

Inmet and Teck Cominco agreed to make the commitments to proceed with the project contemplated by the MPSA shareholders agreement and also agreed that on an interim basis Inmet will fund project expenditures on behalf of Teck Cominco and Inmet would act as operator of the project on behalf of Teck Cominco.

At the earlier of September 30, 2009 or the date on which Inmet has provided project funding of at least US$50 million, Teck Cominco must elect whether it will fund for its own account its share of development costs. Should Teck Cominco decide to so fund, it would reimburse Inmet for any project funding provided by Inmet on Teck Cominco’s behalf to that date plus interest. After Teck Cominco has elected to fund its share of development costs, Teck Cominco and Inmet will jointly participate in the governance of the new Teck Cominco subsidiary as operator of the project and the indemnity provided by Inmet in respect of that subsidiary would terminate.

If on the election date described above Teck Cominco elects not to fund its share of development costs, then Inmet would offer to purchase, and Teck Cominco would sell, Teck Cominco’s interest in MPSA, subject to the provisions of the MPSA shareholders agreement. The purchase price for Teck Cominco’s interest would be equal to the funding provided by Inmet under the arrangement for development costs plus accrued interest plus the fee payable to Inmet for providing the indemnity in respect of Teck Cominco’s final commitment. In such event Teck Cominco will reimburse Inmet for any project funding provided by Inmet on Teck Cominco’s behalf to that date plus interest.

Under our agreement with Teck Cominco, Inmet began acting as operator of the project on behalf of Teck Cominco as of April 1, 2008. Inmet also has funded $8 million for development costs. During the third quarter, the following work was performed:

Drilling
Drilling to expand the resource, to confirm prospective locations for plant and other facilities and to provide geotechnical information for engineering work.

Plant and equipment
Because of the long lead times required to receive equipment, Inmet has placed an order for two SAG mills, four ball mills and the associated gearless drives, subject to cancellation terms.

Social and environmental impact assessment
Following the completion of the baseline studies, the work is now moving to the impact assessment stage. MPSA expects to submit the impact assessment to the Panamanian environmental authorities by September 2009.

Engineering
Engineering work is advancing, and Inmet’s goal is to complete the front end engineering and design (FEED) by mid 2009.

Petaquilla team
MPSA continues to build a strong and dedicated team to lead all development, engineering, technical, environmental and permitting activities in Panama. MPSA has also begun to consider engineering firms with a view to rewarding the contract once the FEED study is complete.

All-cash offer for PTC

On July 6, 2008, Inmet announced that it intends to make an all-cash offer for all of the outstanding common shares of Petaquilla Copper Ltd. at a price of $2.00 per share.

On July 28, 2008, Inmet announced that it had filed the formal offer for all of the outstanding common shares of PTC with Canadian securities regulators and has mailed the offer and related documents to PTC shareholders. Under the offer, PTC shareholders will receive Cdn $2.00 per share in cash. The offer represents a 108 percent premium to the closing price of the shares on the Toronto Stock Exchange as at July 4, 2008, the last trading day immediately prior to announcement of the offer, and a premium of 85 percent to the 20-day volume weighted average price as at the same date.

On August 29, 2008, PTC entered into a definitive support agreement with Inmet in connection with Inmet’s revised offer to acquire all of the Company’s common shares for $2.20 each.

On September 19, 2008, Inmet announced that it had taken up and accepted for payment the 163,116, 924 common shares deposited to the revised Inmet offer to acquire all of the Company’s common shares. As a result, Inmet became the owner of approximately 95.4 percent of the Company’s issued and outstanding common shares (82.6 percent on a fully diluted basis).

On October 30, 2008, PTC announced that it had mailed to shareholders and warrant holders and filed on the System for Electronic Document Analysis and Retrieval (SEDAR) a management information circular and related documents in connection with a special meeting of shareholders to be held on Wednesday, November 26, 2008. The special meeting has been called to approve, among other things, a plan or arrangement with 6910360 Canada Inc. (6910360), a wholly-owned subsidiary of Inmet, under which 6910360 will acquire the common shares of PTC it does not already own for a purchase price of $2.20 per common share. Upon the plan of arrangement becoming effective, PTC would become a wholly-owned subsidiary of Inmet and application would be made to the Toronto Stock Exchange to de-list PTC and to the relevant securities regulators to cause the company to cease to be a reporting issuer.


Offer for Petaquilla Copper

quick links

Petaquilla Feasibility Study Update- Volume 1
(PDF English - 13.3 MB)

Petaquilla Feasibility Study Update - Volume 2
(PDF English - 6.3 MB)

Petaquilla Feasibility Study Update - Mine Plan
(PDF English - 32 KB)



Latest news
Access any of our news releases in this section

Press Release April 30, 2008
Press Release March 26, 2008
Press Release February 8, 2008
Press Release May 7, 2007
Press Release January 10 2007