Petaquilla Minerals Ltd.
OTC Bulletin Board : PTQMF

Petaquilla Minerals Ltd.

January 10, 2007 19:00 ET

Inmet Mining, Petaquilla and Teck Cominco Announce Results of Petaquilla Feasibility Study Update

TORONTO, ONTARIO and VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 10, 2007) - Inmet Mining Corporation (TSX:IMN), Petaquilla Minerals Ltd. (TSX:PTQ)(OTCBB:PTQMF)(FWB:P7Z) and Petaquilla Copper Ltd. (collectively "Petaquilla") and Teck Cominco Limited (TSX:TCK.B)(NYSE:TCK) are pleased to announce the results of the cost update to the 1998 feasibility study recently completed by AMEC Americas Limited (AMEC) concerning the Petaquilla copper project in Panama.

The cost update has concluded that the project will have a capital cost of US $1.7 billion (including working capital) and cash operating costs in years 1 to 10 of US $0.76 per pound of copper produced. Inmet, Petaquilla and Teck Cominco regard these results as encouraging.

Project description and ownership structure

In 1998, AMEC (then H. A. Simons) prepared a comprehensive feasibility study on the Petaquilla copper project in Panama. The recent cost update was based on the same operating parameters, which are summarized in Table 1 below:

Table 1 - Project summary
Mine production
Mineral resources under mine plan(1) 986 million tonnes
Mine life 23 years
Daily mill throughput 120,000 tonnes
Strip ratio (waste to ore) 0.97 to 1.00
Copper 0.5 percent
Gold 0.09 grams per tonne
Molybdenum 0.01 percent
Copper 90 percent
Gold 58 percent
Molybdenum 62 percent
Metal production - life-of-mine
Copper 4,445,000 tonnes
Gold 1,628,000 ounces
Molybdenum 59,500 tonnes
Metal production - average annual years 1 to 10
Copper 223,000 tonnes
Gold 87,000 ounces
Molybdenum 2,680 tonnes

1) The 1998 feasibility study, which was prepared before the adoption of
National Instrument 43-101, estimated that the Petaquilla property contains
the equivalent of approximately 1.1 billion tonnes of indicated mineral
resources, grading 0.5 percent copper, 0.01 percent molybdenum and
0.1 grams per tonne of gold. This estimate included an assessment for
mining dilution and recovery and was based on an open pit mine plan with
an overall strip ratio of 1 to 1; a net smelter return cut-off of
US $3.10 per tonne of ore; and a copper price of US $1.10 per pound. Each
of Inmet, Petaquilla and Teck Cominco believes that the estimate continues
to be relevant and reliable and uses mineral categories that are consistent
with National Instrument 43-101. Accordingly, such estimate was used as the
basis for the revision and update undertaken by AMEC of the 1998
feasibility study. However, a "qualified person" as defined under National
Instrument 43-101 has not done sufficient work to classify this historical
estimate as current mineral resources or mineral reserves. This historical
estimate is therefore not being treated as current mineral resources or
mineral reserves by Inmet, Petaquilla and Teck Cominco and should not be
relied upon as such. In addition, mineral resources do not have
demonstrated economic viability.

Inmet holds a 48 percent equity interest in Minera Petaquilla, S.A., the Panamanian company that holds the Petaquilla concession, while Petaquilla currently holds a 52 percent equity interest. Teck Cominco has the right to acquire a 26 percent equity interest in Minera Petaquilla in return for funding 52 percent of all of the development costs for the project to commercial production. If Teck Cominco funds those development costs, it will recoup 26 percent of the development costs, plus interest at US prime plus two percent per annum, prior to any distributions to Petaquilla. In lieu of receiving funding from Teck Cominco, Petaquilla may opt to finance the development costs for its 26 percent equity interest in the project, in which case Teck Cominco would have a direct 26 percent equity interest in the project.

Scope of work for the cost update

AMEC's scope of work included an update of the existing preproduction and sustaining capital costs, an update of the operating costs and an update of the financial model.

In addition, AMEC conducted five trade-off studies as part of the update to consider opportunities to optimize the design of the project. These studies related to:

- a concentrate pipeline to a Pacific port

- grid power supply alternatives

- the use of larger trucks and shovels in the mine

- the use of a single-line semi-autogenous and ball mill grinding circuit

- the use of larger flotation cells.

Where applicable, the results of the trade-off studies were incorporated into the cost update.

AMEC was not retained to provide, and is not responsible for, nor has it approved, the metal price, oil price, treatment and refining charges and freight pricing assumptions, which were provided by Inmet, Petaquilla and Teck Cominco. In the view of the companies, the assumptions used in the economic analysis set out below are reasonable in light of expected market conditions.

Economic analysis results

The results of the economic analysis, assuming a 60 percent debt scenario and a flat copper price for the life of the project of US $1.30 per pound are provided in Table 2 below. The analysis was done in constant third quarter 2006 US dollars with no inflation of the revenues, capital costs or operating costs. However, the pre-production capital estimate does include a 2.5 percent escalation provision on capital during construction, a contingency of US $140 million and working capital. In addition, the following debt scenario was assumed:

- pro rata drawdown of debt and equity

- interest on the drawn-down debt accumulates

- the first production year is an interest and principal payment holiday

- a 10-year fixed principal repayment schedule

- an interest rate on the debt of 7 percent per annum.

Table 2 - Economic analysis results(1) (100 percent of project)
Assuming 60 percent debt
Net present value at 8 percent US $287 million
Internal rate of return(2) 13.3 percent
Cash cost (average years 1 to 10)(3) US $0.76 per pound
Total cost (average years 1 to 10)(4) US $1.06 per pound

(1) Assumes four years to commencement of production.
(2) Includes sustaining capital and cost of financing development.
(3) Net of by-product credits.
(4) Includes depreciation.

Sensitivity analyses were also carried out assuming flat copper prices for the life of the project at US $1.10 per pound and US $1.50 per pound.

Table 2A below shows the change to the project's net present value, internal rate of return and average cash cost for every US $0.10 per pound change in the copper price, using a discount rate of 8 percent.

Table 2A - Sensitivities on economic analysis results
Net present value +/- US $210 million
Internal rate of return +/- 4 percent
Cash cost (average years 1 to10) +/- US $0.04 per pound

Capital costs

The preproduction capital cost for the project estimated by AMEC is US $1,708 million; the cost breakdown of this estimate is summarized in Table 3 below.

Table 3 - Capital costs
Mine US $301
Concentrator 349
Site and services 143
Port and power plant 214
General 227
Owners costs 126
Engineering, procurement and construction management 92
Contingency 140
Escalation 47
Working capital 69
Total US $1,708

Total sustaining capital is estimated at US $473 million over the life of the mine. Most of the sustaining capital cost is for replacement of, and additions to, the mine and plant mobile equipment.

Operating costs

Life of mine (LOM) site operating costs assuming a copper price of US $1.30 per pound are shown in Table 4 below. The assumptions made for oil, steel and concentrate marketing terms were based on the recent relationship between those elements of costs and copper prices. The oil, steel and concentrate marketing pricing used to estimate costs shown in Table 4 are detailed in Table 4A.

Table 4 - Life-of-mine average operating costs
(US dollars per tonne of ore milled)
Mine US $1.89
Mill 3.26
Plant 0.52
General and administration 0.38
Total US $6.05

Table 4A - Parameters for determining operating costs
Parameters Units Price
Copper US$ per pound 1.30
Gold US$ per ounce 500
Molybdenum US$ per pound 6.50
Oil US$ per barrel 45
Treatment and refining charges(1) US$ per pound of
copper produced 0.26
Ocean freight(2) US$ per tonne 28

(1) Includes price participations above indicated threshold.
(2) Assumes 3/4 of production to Asia; 1/4 to Europe.

Next steps

Inmet, Petaquilla and Teck Cominco are in discussions with a view to formulating a strategy for the further advancement of the Petaquilla copper project. The full revision and update prepared by AMEC will be available at and

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. We believe the expectations reflected in such forward-looking statements are 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 forward-looking statements.

This press release is also available at, and

About Inmet - Inmet is a Canadian-based global mining company that produces copper, zinc and gold. We have interests in four mining operations in locations around the world: Cayeli, Pyhasalmi, Troilus and Ok Tedi.

About Teck Cominco - Teck Cominco is a diversified mining company, headquartered in Vancouver, Canada. Its shares are listed on the Toronto Stock Exchange under the symbols TCK.A and TCK.B and on the New York Stock Exchange under the symbol TCK. The company is a world leader in the production of zinc and metallurgical coal and is also a significant producer of copper, gold, indium and other speciality metals. Further information can be found at

About Petaquilla - Petaquilla Minerals Ltd. ("PTQ") is a British Columbia company which entered into a Plan of Arrangement with Petaquilla Copper Ltd. ("Copper") pursuant to which PTQ transferred to Copper an indirect 52% equity interest in Minera Petaquilla S.A. The Plan of Arrangement became effective on October 18, 2006. Copper is in the process of applying for a listing on a major Canadian stock Exchange. PTQ holds 17,735,406 shares in the capital of Copper.

Contact Information

  • Inmet Mining Corporation
    Jochen Tilk
    President and Chief Operating Officer
    (416) 860-3972
    Teck Cominco Limited
    Greg Waller
    Vice President, Investor Relations and Strategic Analysis
    (604) 687-1117
    Petaquilla Minerals Ltd.
    Tom Byrne
    Manager of Corporate Communications