MINING MARKETS & INVESTMENT NEWS — QUERY — Inmet offers to buy back shares

Based on the advice of CIBC Wood Gundy, the board of Inmet Mining (IMN-T) is urging shareholders to tender to the company’s recent offer to buy back up to 65 million of its shares at a 28% premium to the most recent closing price.

Inmet plans to pay $5.65 for each share, plus one newly issued share purchase warrant for each 10 shares purchased. Each warrant would entitle the holder to buy one share for $5.70 in cash at any time within two years.

William James, president of Inmet, says the buyback provides “greater value” to Inmet shareholders than the proposed distribution and merger proposed by Zemex Corp. “The beauty of the buyback is that it will put up to $367 million of cash in the hands of our shareholders, while avoiding the appropriation of Inmet’s assets in favor of Zemex shareholders that is implicit in the Zemex proposal,” he adds.

James notes that the proposed buyback is well within the valuation range of $5.45-6.15 per share determined by TD Securities in a recent independent valuation of Inmet’s shares.

Zemex has requested a meeting of Inmet shareholders for Sept. 17. The industrial minerals company has offered a proposal that starts with a cash distribution of $4.50 per share to Inmet shareholders. Inmet shares would then be consolidated at a ratio of 26.45-to-1, and Zemex would nominate a new board and merge with Inmet on a share-for-share basis. Inmet’s board has recommended that shareholders reject Zemex’s offer.