Inmet Mining down 7% after Panama government announces law repeal

Inmet Mining (TSE:IMN) was down 7.41% to Can$64 on Friday after the Government of Panama announced that it will repeal recently enacted legislation, known as Law 8, that modifies the Panamanian mineral resources code.

The price drop complicates the company’s proposed merger with Lundin Mining. In Jan. 2011, Inmet and Lundin Mining announced a merger that would create Canada’s largest base metal producer. However, Equinox Minerals launched a hostile bid for Lundin in late February.

Inmet Mining disputes whether the new action by the Panamanian government will have an impact upon its operations.

“The intent to repeal Law 8 recognizes concerns from indigenous communities residing within areas known as Comarcas that are recognized under Panamanian law. Inmet’s Cobre Panama project is neither situated on nor adjacent to any Comarcas, and has had government and local community support,” said the company in a statement.

Inmet Mining is currently developing Cobre Panama, a large open-pit copper project located 120 km west of Panama City, that will cost US$4.3 billion to build. It would be the largest copper mine in Central America.

According to Reuters, Panama’s National Assembly repealed a law blocking foreign investment in mining in Feb. 2011. The move was strongly resisted by environmental and indigenous groups.

Michael Allan McCrae wrote this story. You can contact him at mmccrae@mining.com or @michaelmccrae.