Ok Tedi to Repurchase Five Percent Net Smelter Royalty From Inmet Mining for US$335 Million
Inmet Mining Corporation announced that it has reached agreement with Ok Tedi Mining Limited (OTML) for OTML to repurchase from Inmet the previously announced 5 percent net smelter royalty (NSR) that Inmet was to receive from OTML. OTML will pay US$335 million to Inmet to repurchase the NSR. The repurchase of the NSR has been approved by the board and shareholders of OTML.
Under the prior arrangement for the NSR, Inmet would have exchanged its 18 percent equity interest in OTML and at closing for that transaction, would have received a cash payment equal to 18 percent of OTML’s working capital and a 5 percent net smelter royalty on revenues of product produced from the Ok Tedi mine thereafter. The NSR would have applied during Ok Tedi’s current mine life, which is expected to end by mid-2014.
Under the NSR repurchase agreement, Inmet will now receive at closing the cash payment of US$335 million in lieu of its entitlements under the NSR arrangement. Closing of the NSR repurchase is expected to take place on or before January 31, 2011.
