As I posted earlier, Inmet Mining rejected a $4.9B takeover from First Quantum today (link here). Inmet has two main components that make it an attractive buyout:

1. Current annual production of 240M lbs at a cost of $1/lb

2. Future additional annual production of 500M lbs at a cost of $0.82/lb

Clearly a big motivation for the buyout is the future production capacity at Cobre Panama. I just thought I'd share a few comments comparing the projects.

Ownership

Inmet owns 80% of the Cobre Panama deposit. However, Inmet previously sold off 86% of their precious metals stream in order to fund construction. Copper Fox has the advantage of still being fully exposed to precious metal prices. Copper Fox's ownership level is not yet known.

Power Supply

Cobre Panama will be required to build their own coal fired power plant. This will cost $646M and will add to the complexity of the project. Schaft Creek has the advantage of being able to tie into the NTL for power.

Schedule

Cobre Panama is ahead of Schaft Creek in progress. They've completed basic engineering and have begun construction. Cobre Panama is schedule for start up in 2017 which may match Schaft Creek's schedule.

The Deposit

At current spot prices, both projects have very similar rock values (after recoveries). Schaft Creek is around $41.80 / tonne and Cobre Panama is around $38.12 / tonne. However, Cobre Panama has the advantage of having a strip ratio of only 0.58, whereas Schaft Creek is around 2.

Cobre Panama has a much larger defined deposit. The P&P reserves are around 20B lbs of copper. Copper Fox will likely be around 6B lbs.

Revenue Sources

Cobre Panama is heavily leveraged to the price of copper. Nearly all of their revenue will come from copper, versus 56% of revenue from copper for Schaft Creek. This gives Schaft Creek the advantage of some commodity price hedging.