First Quantum is under scrutiny from Moody's because of a conflict the mining company has with bondholders.
The debt ratings for First Quantum, a holding company of Minera Panama, will be revised downwards by the rating agency Moodys, after the company reported in late November a dispute with bondholders over debt in the amount of $2 billion.
The bonds in question were issued by FQM Akubra, a FQM subsidiary which merged with Inmet Mining Corporation ("Inmet") earlier this year, following the completion of a tender offer, made by Inmet FQM.
Following the acquisition of Inmet Mining, the former owner of the mega mining project in Panama, First Quantum has suspended construction contracts with SNC-Lavalin, for $120 million.
A statement by SNC-Lavalin notes that, "First Quantum Minerals, which recently acquired a majority stake in Inmet Mining Corporation (Inmet), and took control of the Cobre Panama project, typically directs and executes its projects based on direct internal recruitment procedures, looking for external experience only when necessary. "
With an offer of $5.1 billion, the Canadian mining company has finally gained control of the Cobre Panama mining project.
As indicated by The Globe and Mail, holders of more than 61% of the shares of Inmet Mining accepted the hostile bid from First Quantum, for more than $5 billion in cash and shares.In theory, the purchase could fall if another friendly bidder appeared, but this is seems very unlikely, says the newspaper.
After reaching the deadline for Inmet Mining shareholders to accept the sale offer by First Quantum, the results are still not known.
Laestrella.com.pa reports that "With a few hours to go to beat the deadline yesterday on the purchase offer by the Canadian mining company First Quantum (FQM) for its peer Inmet Mining (IMN) -holding company of Minera Panama - the pressure increased to convince shareholders to sell their shares.'
The Board of Inmet has already rejected the first offer by First Quantum, which is now making a hostile bid, directly contacting shareholders of IMnet.
Panamaamerica.com.pa reports that "... The multinational is seeking to gain control of the two mines operating in Panama, in a transaction that would exceed 5 billion dollars. The company made a direct appeal to shareholders of Inmet, and has already made first contact with a director of Petaquilla Minerals in Canada. "
Inmet Mining, which owns the copper mining megaproject in Panama, has rejected a $4.89 billion takeover bid.
First Quantum Minerals Ltd, a larger mining company based in Canada, made an unsolicited offer of $4.89 billion, or $70 per share for Inmet Mining, which was rejected by its board, for being "highly conditional" and not in the best interest of its shareholders.
The mining company has signed contracts with four companies to supply its fleet of mobile mining equipment.
In a press release, the parent company Inmet Mining announced it has completed the selection of mobile mining equipment suppliers and has awarded two contracts:
- P & H Mining Equipment for rope shovels.
- Komatsu Holding South America for shovels and hydraulic excavators and trucks.
The Canadian mining company Petaquilla Minerals Ltd has again rejected a takeover offer of $130 million from Inmet Mining Corp.
The offer, 19% higher than Inmet’s offer in September, "still does not match the appropriate value for the Petaquilla shares ", the company said.
The statement adds that Petaquilla Minerals will continue to explore strategic alternatives, including negotiations with third parties for a potential deal.
The conflict between Minera Panamá and Petaquilla Gold over land for mineral extraction in Panama will have to go to international arbitration.
In 2010 Minera Panama, a subsidiary of Inmet Mining, asked the Ministry of Economy and Finance (MEF) to lease 7.453 hectares for the development of an ambitious project to extract copper, bordering the mining concession that the company has had since 1997.
The Panama Maritime Authority has granted a concession for 20 years to Minera Panama SA covering eight acres in Punta Rincon, in the province of Colon, for the construction of its port.
According to Resolution No. 130, published in the Official Gazette 27132, Minera Panama is authorized to construct a port in the district of Donoso, where from 2016 it will load copper concentrate which has been extracted from its mining concession located in the same district.
Panama's government has rejected a request to reject exploration permits and mining operations at the San Juan area.
Inmet Mining asked the Department of Mineral Resources of Panama to reject all applications for exploration and exploitation of mineral concessions affecting Minera Panama, a subsidiary of Inmet Mining. This request includes in particular include the San Juan concession, of 11.145 acres, operated by Petaquilla Minerals, a company which Inmet Mining is currently attempting to buy through a hostile bid.
The acquisition could help control the environmental problems of the Molejón mine in the neighboring and much larger Cobre Panama project.
The hostile bid by Inmet Mining Corp. to Petaquilla Minerals Ltd. seems to be more than the simple acquisition of a mine adjacent to its huge gold and copper mine, the Cobre Panama project.
Greg Barnes, an analyst at TD Securities in Toronto, believes that the proposed $112 million acquisition could be an example of preventive damage limitation.
After closing the bond issuance with $1.5 billion, Inmet Mining has announced that it has $6.2 billion funding available, to cover the cost of the mine in Donoso, Panama.
The board of Inmet Mining, parent company of Minera Panama, has given permission for the construction of a copper mine in Donoso, Colon province.
Having gathered enough funding, Inmet Mining said it will proceed with building the mining project, in which it owns 80% of the shares. The remaining 20% is owned by the South Korean government consortium formed by Korea Resources Corp. and LS-Nikko Copper Inc. who injected $1.4 billion.
The Canadian owned mining company owner is not looking for more equity partners, but will instead fund development of the mine by issuing bonds.
The reduction of risks to the project has enabled it to seek finance by issuance of debt, whose principal will mature in 2020. This will not alter, in principle, the current composition of capital, of which 80% is owned by Inmet Mining Corp.
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