Chinese to fund Petaquilla development

Inmet Mining (IMN-T, IEMMF-O) and Teck Cominco (TEK.SV.B-T, TCKBF-O) would be bought out of their interests in the Petaquilla copper project in central Panama under a financing plan now being worked on by Petaquilla Minerals (PTQ-T, PTQMF-O).

Petaquilla announced it had signed a memorandum of understanding with “one of China’s largest integrated metal producers” to take up shares of Petaquilla and fund a buyout of Petaquilla’s joint-venture partners. It did not announce which company was buying in.

Among the Chinese metal producers that have made efforts to pick up overseas projects are China Minmetals, China Non-Ferrous Metal Mining and gold miner Zijin Mining Group.

The investor is also offering financing for the project and an agreement to buy copper concentrate from the mine. Petaquilla, with a resource of 1.1 billion tonnes running 0.50% copper, 0.015% molybdenum and 0.09 gram gold per tonne, has been essentially on hold since a 1998 feasibility study concluded developing the deposit was not economic. The initial capital cost — estimated at the time at US$1.1 billion — was prohibitive.

Petaquilla Minerals holds a 52% interest and Inmet the remaining 48%. Teck, which had funded the feasibility study, held an option to earn a 26% interest from Petaquilla by funding the junior company’s share of development costs, but has annually elected to defer its participation.

The Panamanian government approved the project’s mining plan in October.