Teck Cominco, Inmet nudge Petaquilla development forward

Vancouver – Teck Cominco (TCK.B-T, TCK-N) and Inmet Mining (IMN-T, IEMMF-O) have decided to move forward with planned development of the Petaquilla copper project in north-central Panama.

Teck Cominco was under the gun to make a development decision for the large copper deposit by March 31, 2008 under its agreement to earn 26% interest of the project from Petaquilla Copper (PTC-T), which holds 52%, by committing to fund the junior’s share of costs to production. Inmet has 48% of the property.

The two majors have scrummed, deciding to collaborate on advancing the project. Inmet will now fund the next stage of project expenditures instead of Teck Cominco — that has borne all the front-end engineering and design costs to date. Once the interim period is over Teck Cominco can elect to either continue participating in the project and resume funding or sell its interest.

“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,” states Don Lindsay, president and CEO of Teck Cominco in the new release.

Teck Cominco will transfer its 26% interest into a new wholly-owned subsidiary that will in turn be managed by Inmet, which will become the de facto operator of the Petaquilla project.

Under the arrangement Inmet will also provide project funding for both Teck Cominco’s 26% and for Petaquilla Copper’s 26%. Once Inmet has funded US$50 million or by September 30, 2009, Teck Cominco must decide whether it will fund its share of costs and will be responsible to reimburse its partner for all funding its has provided.

Should Teck Cominco opt to not fund its share of costs, Inmet will have rights to purchase its interest in the Petaquilla partnership for the amount it funded Teck Cominco’s share plus interest. Teck Cominco would also be responsible to reimburse Inmet for any project funding provided on Teck Cominco’s behalf to that date plus interest.

Earlier this year revised engineering studies estimated capital costs of about US$3.5 billion to develop Petaquilla versus an estimated US$1.1 billion tabled in 1998. Cash costs of roughly US85 per lb. copper are forecast over the initial ten years of operation.

The initial 1998 bankable feasibility study reviewed three main porphyry deposits on the Petaquilla area for a pre-National Instrument 43-101 mineable reserve tally of 1.1 billion tonnes grading 0.5% copper, 0.09 gram gold and 0.015% molybdenum. The report proposed a 120,000 tonne-per-day throughput and a 23-year mine life with a stripping ratio of 0.97-to-1.

Upon the issuance of necessary permits, construction of mining at Petaquilla is expected to take just shy of four years. Permitting would follow the submission of a social and environmental impact assessment, anticipated to be completed by late 2008.