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Cobre Panama is a large open-pit copper development project in Panama. The concession is located 120 kilometres west of Panama City and 20 kilometres from the Caribbean Sea coast, in the district of Donoso, Colon province, in the Republic of Panama. The concession consists of four zones totalling 13,600 hectares.

Access to the project area is via the Pan-American Highway system from Panama City to Penonome, surfaced all-weather roads to Llano Grande, and gravel roads via the town of Coclecito. The topography in the concession area is low elevation (less than 300 metres) but rugged with considerable local relief covered by dense rainforest. Climatic conditions are tropical with high precipitation levels, high humidity and relatively high temperatures of 25ºC to 30ºC year-round.

Geology
In 1968, a United Nations Development Program team discovered copper, gold and molybdenum porphyry mineralization in the Petaquilla River region of north-central Panama during a regional survey.

Subsequent exploration outlined the Botija, Colina and Valle Grande porphyry deposits which developed around granodioritic stocks within and peripheral to the Oligocene Petaquilla batholith. Significant epithermal mineralization has also been identified in a more distal setting to the batholith, as well as several other prospects and deposits.

Business structure
We have a 100 percent equity interest in Minera Panamá, S.A. (MPSA), the Panamanian company that holds the Cobre Panama concession. MPSA was incorporated in January 1997 under the laws of the Republic of Panama and has a mineral concession to explore and exploit the Cobre Panama property (Contract-Law No. 9 of February 26, 1997, promulgated by the Government of Panama). Contract-Law No. 9 has an initial twenty-year term from its date of enactment in February 1997 with provisions for two consecutive extensions of twenty years each.

Option Agreement
On October 28, 2009 Inmet and MPSA entered into an option agreement (Option Agreement) with LS-Nikko Copper Inc. (LS-Nikko) through its wholly-owned subsidiary Korea Panama Mining Corp. (KPMC) under which KPMC has the right to acquire a 20 percent interest (Option Interest) in the Cobre Panama copper project(Project). If KPMC exercises the option, it will receive an equity interest in MPSA, owner of the Project.

LS-Nikko has guaranteed KPMC’s obligations under the Option Agreement and Korea Resources Corporation (KORES) will provide financial support to KPMC. The Option Agreement contemplates that KORES may in future become an equal shareholder of KPMC with LS-Nikko.
During the option period, KPMC and Inmet will fund their respective proportionate shares of MPSA’s development costs to a maximum of US$150 million, and Inmet will fund MPSA’s development costs in excess of US$150 million. Assuming MPSA incurs US$150 million of development costs during the option period, KPMC’s non-refundable share would be US$30 million.

The option agreement was amended in July 2011 to permit KPMC to make its election on whether to exercise its option to acquire a 20 percent interest in MPSA by the later of 60 days after an Inmet Board announcement concerning the construction and development of the project as described in the final FEED study, or the date that is seven days after we have publicly announced approval of the Environmental and Social Impact Assessment (ESiA) by the Autoridad Nacional del Ambiente (ANAM), the Panamanian environmental regulator. The Board made such an announcement on July 25, 2011.

On this basis, and assuming the ESiA is approved by the end of September, the latest exercise date for the KPMC option is expected to be early October, assuming seven days after we have announced ANAM’s approval of the ESiA expected at the end of September 2011. If for some unforeseen reason, the ESiA approval is delayed, the amendment includes an expiry date of June 20, 2013. If the option is exercised, KPMC must invest in MPSA an amount that will be its proportionate share of the development investments in MPSA up to November 30, 2009 (the date on which the option agreement was executed) or approximately US$125 million. In addition, as KPMC reached their $30 million cap on development expenditure participation at the end of June, 2011, KPMC will also invest their proportionate share of all development funding from July, 2011 to the date at which they make their election.

Assuming the option is exercised, Inmet, LS-Nikko, KPMC and MPSA will enter into a shareholders’ agreement containing usual and customary terms to govern the affairs of MPSA and their relationships amongst each other, the essential terms of which have already been agreed to by them. Among other things, the terms will address financing of the Project and governance of MPSA. In addition, Inmet would continue to oversee development and operation of the Project. MPSA and LS-Nikko will also enter into, on terms to be negotiated, an offtake purchase agreement on closing of the option under which LS-Nikko would be entitled to purchase, pro rata to the Option Interest, a share of MPSA’s concentrates production, subject to LS-Nikko arranging for related financing.

Front End Engineering and Design (FEED) Study
On March 31, 2010, we announced the results of the FEED study for Cobre Panama, including capital cost estimates, operating cost estimates, mineral reserves, and other information. The study showed a significant increase in mineral reserves and resources making Cobre Panama one of the largest undeveloped copper porphyry deposits in the world.

Cobre Panama mineral reserves and resources

Mineral reserve estimates by classification

Metal prices Mining costs
• Copper (Cu): US $2.00 per pound • US $1.33 per tonne of material mined
• Gold (Au): US $750 per ounce • Milling and general and administration costs combined
• Silver (Ag): US $12.50 per ounce • US $5.37 per tonne of ore milled
• Molybdenum (Mo):US $12.00 per pound

Mineral resources include mineral reserves. Grades are estimated using ordinary kriging with a nominal block size of 25 metres by 25 metres by 15 metres. Resources are limited inside a pit shell defined by a copper price of US $2.30 per pound, the same operating costs used for reserves, and are tabulated at a cut-off grade of 0.15 percent copper. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Contained metal:

Reserves of 2.14 billion tonnes of ore contain 20 billion pounds of copper and 5.0 million ounces of gold.

Measured and indicated resources, which include the mineral reserves, contain 26 billion pounds of copper and 6.3 million ounces of gold.

Inferred resources contain 17 billion pounds of copper and 4.1 million ounces of gold.

The current mine plan (which is based on mineral reserves) defines mining operations until 2045, or for 30 years after production begins. We expect operations to continue beyond 2045 because of the size of the mineral resource. The table below provides a production and cost summary:

Quality assurance
Mineral reserves and resources have been prepared in accordance with the definitions and guidelines adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (called the CIM definitions and guidelines), and according to National Instrument 43-101 of the Canadian Securities Administrators.

Mineral resources were estimated by Robert Sim, P. Geo., of SIM Geological Inc. and Bruce Davis, Ph.D., Fellow of the AusIMM (FAusIMM), BD Resource Consulting Inc., both qualified persons under National Instrument 43-101.

Mineral reserves were estimated by William Rose, P.E., of WLR Consulting, Inc., a qualified person under National Instrument 43-101.


Environmental and Social Impact Assessment
On September 5th, 2010 we submitted our Environmental and Social Impact Assessment (ESIA) to the Autoridad Nacional del Ambiente (ANAM), the Panamanian environmental regulatory authority. The ESIA was prepared by Golder Associates and describes the existing socio-environmental conditions in the project area, the likely impacts and benefits that will result from the project and the commitments that we will undertake to minimize such impacts and enhance such benefits. It represents one of the most intensive studies ever undertaken of the socio-environmental context of the Atlantic slope of Panama. Over a period of 42 months, more than 40,000 person-hours of field time were recorded, involving more than 100 Panamanian and international experts in the preparation of the document. Three rounds of public consultation were undertaken in local communities. The ESIA document consists of 14,913 pages in 40 volumes.

A technical Executive Summary (in English and Spanish) and a plain language Executive Summary (in English) are available through the links below. Electronic copies of the entire ESIA document (in English and Spanish) are available upon request.

quick links and downloads

     

                                                         
Panama Invest June 2011 - Inmet               Cobre Panama Analyst Tour March 2011
     
    

                                                        
Balboa Presentation June 2011                    Cobre Panama Fly-Over Video


Download the Cobre Panama section from our third quarter press release for the most recent update.

Download  ESIA Executive Summary (English) (Spanish) (Plain Language)

Download  Cobre Panama 2010 NI 43-101 Technical Report

Download  Cobre Panama 2010 FEED Study Executive Summary

Download Contract-Law No. 9 Panama 1997

Link to the MPSA website.