Inmet Mining (IMN-T) plans to increase a $300-million bought-deal financing to $348 million so it can pay off all debts owed for constructing its Las Cruces copper mine in Spain.
Credit Suisse Securities and CIBC World Markets have agreed to buy 7.825 million shares for $44.50 apiece. They will have an over-allotment option for 30 days allowing them to buy an additional 15% of the number of shares sold – nearly 1.2 million shares.
Inmet shares fell 8% today, or $4.04, on the news to $44.50 per share – now equal to the subscription price – on a trading volume of 2.1 million shares.
The company has a 52-week trading high of $72.50 per share, reached around this time last year, and slumped as low as $12.15 last December. Inmet has 48.3 million shares outstanding. The deal will increase Inmet’s share count by 16% to 56.1 million before the over-allotment option.
The most recent cost estimate for the Las Cruces project was put at about $935 million (602 Euros) to be spent by the end of 2009.
Production at Las Cruces was delayed by almost a year after the Spanish water authority suspended its authorization for the dewatering and reinjection system, constructed to protect the aquifer. It includes a series of wells around and within the Las Cruces open pit that remove water from the surrounding aquifer and re-injects it into adjacent wells to prevent water from flowing into the pit.
The suspension was lifted in April and the company started mining back up again at the end ofthe month,producing its first copper cathodes from its hydrometallurgical processing plant in early June.
Inmet expects to earn $16 million in 2009, bringing in gross copper sales of $77 million. The company estimates it will mine 305,000 tonnes of ore grading 9.8% copper producing 28,800 tonnes of copper at a cost of $195 per tonne of ore processed.
About 23,400 of those copper tonnes will be cathode and the other 5,400 tonnes will be copper in ore that the company will ship directly to smelters, depending on market conditions and renewal of export permits.
If market conditions change and smelters are no long accepting ore, the company says it will stockpile the ore and process it at its own plant.
In addition, Inmet says it still plans to mine 18,200 tonnes of copper in ore to ship directly to smelters but that 12,800 tonnes has been shifted to the 2010 schedule.
Over the life of the mine is expected to produce 17.5 million tonnes grading 6.2% copper for 997,200 tonnes of copper at a cash of $87 per tonne of ore processed.
Over the last six months, the price of copper has risen from US$1.40 per lb. to US$2.34 per lb.
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