Canadian gold miner INMET Mining has announced it has reached an understanding to exchange its 18% equity interest in Ok Tedi Mining Limited (OTML) for a 5% net smelter return royalty on revenues of product from the Ok Tedi mine.

The proposal will safeguard Inmet from the financial impact of OTML’s future operating and capital costs, the company said.

An agreement for the sale has been reached with PNG Sustainable Development Programme Limited (PNG SDPL), which holds a 52% stake in OTML.

Approvals are pending from the Government of Papua New Guinea, which owns the remaining 30%, and from major shareholder BHP Billiton, which sold its 52% interest in OTML to PNG SDPL.

Once approved, the royalty is expected to begin from 1 August and continue until end of 2013.

Inmet is expected to receive a payment equal to 18% of OTML’s working capital of $30m approximately and quarterly payments in respect of the royalty thereafter.

Meanwhile, Inmet said that it has produced first copper cathodes from its Cobre Las Cruces SA mine in Spain.

The mine resumed operations at the bottom of the mine pit on 29 April and delivered its first ore on 26 May.

Inmet intends to increase the mine’s annual production to 72,000t of cathode copper in the near future.