Petaquilla Says Teck Cominco Has Not Satisfied Conditions of Deal

By The Canadian Press
30 Apr 2008 at 08:26 AM GMT-04:00

VANCOUVER (CP) -- Petaquilla Copper Ltd. [TSX:PTC] said Tuesday that Teck Cominco Ltd. [TSX:TCK.B; NYSE:TCK] has failed to satisfy the conditions of its deal for a stake in the Petaquilla copper property in Panama, a claim denied by the company.

Petaquilla said it believes Teck Cominco failed to satisfy the conditions for making a final commitment to the project.

?The sole document supporting Teck Cominco's final commitment is a draft interim FEED study delivered on January 31, 2008,? the company said.

Teck Cominco spokesman Doug Horswill said he believed Teck Cominco had done nothing wrong.

?We don't believe that the allegations by Petaquilla Copper Ltd. have any merit and that we have acted appropriately and in accordance with the agreements,? Horswill said.

?We will vigorously defend ourselves in respect to this matter in any and all ways that we can.?

Petaquilla Copper said it has delivered a ?notice of request to arbitrate? to Teck Cominco regarding a dispute over the project.

Petaquilla Copper said its position is that Teck Cominco no longer has an interest in the Petaquilla copper property and that it now holds a 52% stake in the project.

Inmet Mining Corp. [TSX:IMN] holds the remaining 48% stake.

Last month, Teck Cominco and Inmet signed a deal to go ahead with the development of the project where the expected costs to build the mine have more than doubled.

Under terms of the existing agreement between Teck Cominco, Inmet Mining and Petaquilla Copper, Teck Cominco may acquire a 26% stake in the project by committing to fund up to 52% of development costs.

Teck Cominco would then receive 52% of project cash flow until it has recouped its entire investment plus interest on amounts advanced on behalf of Petaquilla Copper.

Petaquilla Copper has the option to finance all or part of the development costs for its 26% stake in the project in lieu of funding from Teck Cominco.

However Inmet and Teck Cominco have agreed that on an interim basis Inmet will provide additional personnel to an affiliate of Teck Cominco that will act as operator of the project and will fund project expenditures instead of Teck Cominco.

Teck Cominco has been funding 100% of front end engineering and design costs to date. At the end of the interim period, Teck Cominco may elect either to continue participating in the project and resume funding or to sell its interest.

Inmet said in February the Petaquilla project will cost US$3.5 billion to develop, more than double an earlier estimate from a year ago.

The proposed mine would have a life of 23 years and would produce 4.4 million tonnes of copper, 1.6 million ounces of gold and 59,500 tonnes of molybdenum, a valuable industrial metal, during the project's lifetime.

The increase in costs at Petaquilla comes as the mining industry around the world deals with rising costs and is the second project in recent months Teck has been involved in to see its expected price soar.

? The Canadian Press 2008