Inmet Mining (IMN-T, IEMMF-O) plans to increase a US$300-million bought-deal financing to $348 million so it can pay off all debts related to building its Las Cruces open-pit 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 overallotment 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%, or $4.04, on the June 9 announcement, to $44.50 per share — 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. Before the overallotment, the deal will increase the company’s share count by 16% to 56.1 million; including the overallotment, it will be 19% dilutive.
So far, the company has spent about $850 million (543) on Las Cruces, 20 km northwest of Seville, with another $92 million (52 million) to be spent by the end of 2009. At the end of the first quarter, the company had a cash balance of US$507 million and a total debt of US$531 million.
Production at Las Cruces, a volcanogenic massive sulphide deposit, 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.
The system is comprised of a series of wells around and within the Las Cruces open pit that remove water from the surrounding aquifer and reinjects it into adjacent wells to prevent water from flowing into the pit.
The suspension was lifted this past April and the company started mining again at the end of the month. It produced 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 longer 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 have been shifted to the 2010 schedule.
Over the span of 15 years, the mine is expected to produce 17.5 million tonnes grading 6.2% copper for 997,200 tonnes copper at a cash cost of $87 per tonne of ore processed.
During the last six months, the price of copper has risen to around US$2.35 per lb. from US$1.40 per lb.
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