TORONTO, June 2 /CNW/ - Inmet Mining Corporation (IMN-TSX) announced that
it has reached an understanding to exchange its 18 percent equity interest in
Ok Tedi Mining Limited (OTML) for a 5 percent net smelter return (NSR) royalty
on revenues of product from the Ok Tedi mine.
The proposed transaction has been structured to be neutral on a net asset
value basis and to enable OTML to pursue certain projects outside the scope of
its current activities while insulating Inmet's economic interest from the
financial impact of OTML's future operating and capital costs.
The understanding has been reached with the 52 percent majority
shareholder of OTML, PNG Sustainable Development Programme Limited (PNG SDPL).
The consent of the Independent State of Papua New Guinea, which owns the
remaining 30 percent of OTML, as well as BHP Billiton Ltd., which previously
ceded its 52 percent interest in OTML to PNG SDPL, is required to give effect
to the understanding and proceed with the settlement and execution of
definitive documents for that purpose between Inmet and OTML.
Inmet understands that PNG SDPL has presented the non-binding draft term
sheet that reflects the understanding between it and PNG SDPL to the
Government of Papua New Guinea for approval and that the term sheet will be
discussed as a matter of public record. It is possible that the Government may
not find the terms of the understanding reached between Inmet and PNG SDPL
acceptable, in which case the proposed transaction would not proceed as
If the understanding is ultimately given effect, the NSR would apply to
proceeds from the sale of all mineral products from the Ok Tedi mine as
operated under the current mine plan less treatment charges and penalties,
insurance, freight and sampling/assaying costs as well as a royalty
aggregating 2 percent of revenues that are presently paid by OTML to the
government of Papua New Guinea the Western Province and local landowners (the
"PNG Royalty"). For the purpose of determining proceeds under the NSR, only
gains and losses from hedging and forward sales in effect as of May 18, 2009
would be included.
The term of the NSR would be expected to commence on or about August 1,
2009. Based on the current mine plan, the term is anticipated to continue
until December 31, 2013. This end date would be adjusted to reflect any
acceleration, delay, sterilization or change in cut-off grade ore that is
contained in the approved pit shell and budget.
In addition to the NSR, Inmet would, at closing, receive a payment equal
to 18 percent of OTML's working capital, which we estimate would be
approximately US$30 million. Thereafter, Inmet would receive quarterly
payments in respect of the NSR. The NSR would rank in priority to all liens
and security interests on the property and assets of OTML other than the PNG
Royalty. It would also be assignable by Inmet to a third party on written
notice to OTML.
At closing, Inmet would cease to be a shareholder of OTML, would give up
its representation on the Board of Directors of OTML and would have no further
rights or funding obligations in respect of OTML in that capacity.
The closing of a transaction to give effect to the understanding would be
subject to certain conditions precedent, including receipt of favourable
advance rulings from the Papua New Guinea tax authorities concerning the
transaction. Assuming the consents of the Government of Papua New Guinea and
BHP Billiton are obtained we anticipate that closing would take place on or
before July 31, 2009.
Forward looking information
Securities regulators encourage companies to disclose forward-looking
information to help investors understand a company's future prospects. This
press release contains forward-looking information. These are
"forward-looking" because we have used what we know and expect today to make a
statement about the future. Forward-looking statements usually include words
such as may, expect, anticipate, and believe or other similar words. Capital
and operating cost estimates are forward-looking statements, and are based on
assumptions that we believe to be reasonable. However, actual events and
results could be substantially different because of the risks and
uncertainties associated with our respective business or events that happen
after the date of this press release. You should not place undue reliance on
Inmet is a Canadian-based global mining company that produces copper,
zinc and gold. We have interests in five mining operations in locations around
the world: Cayeli, Las Cruces, Pyhasalmi, Troilus and Ok Tedi. We also have a
100 percent interest in the Petaquilla development property in Panama.
This press release is also available at www.inmetmining.com.
For further information:
For further information: Jochen Tilk, President and Chief Operating
Officer, (416) 860-3972