As at May 7, 2012.

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 80 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 had the right to acquire a 20 percent interest (Option Interest) in the Cobre Panama copper project.  KPMC exercised their option, and formalized a 20% ownership stake effective April 25, 2012.  KPMC acquired its interest for total payment of US $199 million in cash, representing 20% of Cobre Panama development costs to the date of closing.

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.

On July 25, 2011, we announced a change to our originally contemplated power plan. We had been working with GDF Suez Energy Central America S.A. (GEF Suez) to jointly develop an “over the fence” 300 megawatt coal-fired power plant to be owned and operated by Suez. We believe the project would benefit more by directly incorporating the power plant as part of the project and as a result we terminated our joint development agreement. We have closely collaborated with Suez to transition Minera Panama as the developer and owner of the power plant. The coal-fired power plant is expected to cost US $646 million, as reported in the Basic Engineering Summary Report released May 2012.

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.

The ESIA was approved by ANAM in December 2011.  View the related official resolution.

Basic Engineering and Full Notice to Proceed
On May 6, 2012, we announced the results of Basic Engineering for Cobre Panama, which included updated capital cost and operating cost estimates for the project.  The total capital cost estimate was revised to US $6.18 billion and cash costs were revised downwards to US $0.72 per pound for Years 2 to 16 and US $0.82 average life of mine.  Including the precious metals stream transaction announced in August 2012 with Franco-Nevada, cash costs are US$ 0.86 for years 2 to 16 and US$ 0.94 average life of mine.

Coinciding with the announcement of Basic Engineering, we announced our financing plan for Cobre Panama, which included the issuance of US $1.5 billion aggregate principal amount of 8.75 percent senior unsecured notes.  The notes issuance closed on May 18, 2012.  We confirmed Full Notice to Proceed with construction of Cobre Panama with the closing of the bond issuance.  For further details on the results of Basic Engineering and our financing plan, please refer to the Basic Engineering Summary Report and press release.

Cobre Panama mineral reserves and resources

Reserves and resources are shown at 100%. Inmet's share is 80%. Reserves are as of December 13, 2012 and resources are as of August, 2012.

Mineral reserve estimates by classification

Metal prices
• Copper (Cu): US $2.25 per pound
• Gold (Au): US $1,000 per ounce
• Silver (Ag): US $16 per ounce
• Molybdenum (Mo): US $13.50 per pound
• Mining costs : US $1.66 per tonne of ore mined, US $1.96 per tonne of waste mined 
• Milling and general and administration cost: US $5.27-$5.52 per tonne of ore milled (depending on the deposit), average life of mine metallurgical recoveries: 89 percent for copper, 55 percent for gold, 44 percent for silver and 53 percent for molybdenum.

Mineral resource estimates by classification

Mineral resources include mineral reserves.

Resource 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 $2.60 per pound, $1.75 per tonne mining cost and $7.02 per tonne total site operating cost, and are tabulated at a cut-off grade of 0.15 percent copper.

Contained metal:

Reserves of 3.06 billion tonnes of ore contain 26 billion pounds of copper and 7.3 million ounces of gold.

Measured and indicated resources, which include the mineral reserves, contain 32.7 billion pounds of copper and 9 million ounces of gold.

Inferred resources contain 18.3 billion pounds of copper and 4.4 million ounces of gold.

Production 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 as at August, 2012 were estimated by Robert Sim, P. Geo., of SIM Geological Inc., a qualified person under National Instrument 43-101.

Mineral reserves as at December 13, 2012 were estimated by William Rose, P.E., of WLR Consulting, Inc., a qualified person under National Instrument 43-101.

Analyst Visit Presentation November 2012

Basic Engineering Presentation May 2012
 
 Basic Engineering Summary Report 

 Balboa Presentation June 2011 

 Cobre Panama Fly-Over Video            
                     

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

Download the Cobre Panama section from our 2011 annual report

Download ESIA Executive Summary (English) (Spanish) (Plain Language). View the related official resolution.

Download Cobre Panama 2010 NI 43-101 Technical Report

Download Law No. 9 February 26 1997 and Adrian (PTQ) Adjoining Concession Area Map

Link to the MPSA website