TORONTO - Copper miner Inmet Mining Corp. (TSX:IMN) is taking a cautious approach to a renewed, $5.1-billion takeover bid for the company by rival First Quantum Minerals Ltd. (TSX:FM).
Inmet said Monday that it has not yet received the unsolicited offer announced on the weekend by First Quantum and is urging shareholders to take no action until it can evaluate the details.
Accordingly, it said it would make no further comment until that assessment had been completed.
It's the second time First Quantum has boosted its cash and stock bid for Inmet, which rejected an offer in November from First Quantum, which was worth $4.9 billion in stock and cash.
At the time, Inmet had said the "highly conditional offer" was not in the best interest of its shareholders.
That proposal had First Quantum offering $70 per Inmet share, half in cash and half in stock, and had followed an earlier unsolicited proposal from First Quantum of $62.50 per share.
In a statement released Sunday, First Quantum said it was now offering $72 per Inmet share, half in cash, half in stock.
Inmet shares closed up $3.02 at $72.85 on the Toronto Stock Exchange on Monday, suggesting that at least some investors believe a richer offer may be possible. First Quantum shares closed down 84 cents at $20.11.
First Quantum said that despite the rejection of its earlier bid, it has been approached by a number of Inmet's shareholders expressing interest in the potential for a combined company.
The company said combining the two companies "would create one of the world’s leading and fastest growing copper producers," with the potential to produce more than 1.3 million tonnes of copper annually by 2018.
First Quantum also said it thought the combined company would be able to establish itself as a top five copper producer within five years.
"Our clear preference remains to engage with Inmet, as we believe strongly in the compelling strategic and financial merit of the transaction," said First Quantum chairman and CEO Philip Pascall.
Inmet owns 80 per cent of the Cobre Panama copper project through Minera Panama SA and the remainder is owned by Korea Panama Mining Corp. The total cost of Cobre Panama is estimated at $6.2 billion, including $1.4 billion to be funded by Korea Panama Mining and $4.8 billion through Inmet.
Last week, Inmet increased the proven and probable mineral reserves at Cobre Panama as it updated the mine plan and extended the project's expected life to 40 years from 31 years.
The amount of copper climbed 27 per cent to about 26 billion pounds, while the estimated amount of gold jumped 41 per cent to 7.3 million ounces.
Scotiabank analyst Tom Meyer increased his share price target to $85 from $84 following the reserve update.
"We have increased our target price slightly as Inmet continues to make excellent progress on proving up and demonstrating the significant value in the Cobre Panama project," Meyer wrote in a note to clients.
In addition to Cobre Panama, Inmet has mines in Turkey, Spain and Finland.
The bid by First Quantum follows the sale of its operations in the Democratic Republic of Congo to Kazakhstani miner Eurasian Natural Resources Corp. for $1.25 billion.
First Quantum had written off the value of the assets in 2010 after its operations in Congo were nationalized by the government of the mineral-rich central African country.
The company has said it will focus its efforts on Zambia where it has its flagship Kansanshi mine and is developing other projects including a new mine and smelter.