Inmet Mining Corporation (Inmet) (TSX:IMN) announced that it has entered into an option agreement (Option Agreement) with LS-Nikko Copper Inc. (LS-Nikko) under which LS-Nikko has the right to acquire a 20 percent interest (Option Interest) in the Cobre Panama copper project in Panama (Project). If LS-Nikko exercises the option, it will receive an equity interest in Minera Panama, S.A. (MPSA), owner of the Project. LS-Nikko may, prior to January 31, 2010, elect to increase the Option Interest to 30 percent (see also Inmet Mining Corporation).

LS-Nikko is holding the option through a wholly-owned subsidiary, Korea Panama Mining Corp. (KPMC). LS-Nikko has guaranteed KPMC's obligations under the Option Agreement and Korea Resources Corporation (KORES) will provide financial support to KPMC. The Option Agreement contemplates that KORES may in future become an equal shareholder of KPMC with LS-Nikko.

During the option period, KPMC and Inmet will fund their respective proportionate shares of MPSA's development costs to a maximum of US$150 million, and Inmet will fund MPSA's development costs in excess of US$150 million. Assuming MPSA incurs US$150 million of development costs during the option period, KPMC's non-refundable share would be US$30 million with a 20 percent Option Interest or US$45 million with a 30 percent Option Interest.

The option will be exercisable for a 60 day period after Inmet has publicly announced a decision to proceed with construction and development of the Project. Should the option be exercised, KPMC must invest in MPSA an amount that will be its proportionate share of Inmet's US$501 million investment in MPSA. Such proportionate share will be approximately US$125.5 million if the Option Interest is 20 percent and US$215 million if the Option Interest is 30 percent. In addition, KPMC would also invest in MPSA its proportionate share of MPSA's development costs during the option period, if any, that are in excess of US$150 million.

Assuming the option is exercised, Inmet, LS-Nikko, KPMC and MPSA will enter into a shareholders' agreement containing usual and customary terms to govern the affairs of MPSA and their relationships amongst each other, the essential terms of which have already been agreed to by them. Among other things, the terms will address financing of the Project and governance of MPSA. In addition, Inmet would continue to oversee development and operation of the Project. MPSA and LS-Nikko will also enter into, on terms to be negotiated, an offtake purchase agreement on closing of the option under which LS-Nikko would be entitled to purchase, pro rata to the Option Interest, a share of MPSA's concentrates production, subject to LS-Nikko arranging for related financing.

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