Inmet triples profits

Increased production of pricier copper and zinc enabled Inmet Mining (IMN-T) to more than triple its earnings to $22.9 million (or 49 per share) during the first quarter.

A year earlier, the Toronto-based miner had earned $6.5 million (14 a share). The increase reflects not only higher metal prices but a change in the way Inmet accounts for its 18% stake in the Ok Tedi mine in Papua New Guinea.

The Papua New Guinea Sustainable Development Program owns a 52% stake in Ok Tedi, with the government of Papua New Guinea holding the remaining 30%.

Cash generated by operations between the two first quarters swelled to $64.1 million from $1.2 million.

In all, Inmet produced 17,300 tonnes copper in the recent quarter (compared with 15,500 tonnes a year earlier), 14,300 tonnes zinc (10,900 tonnes) and 57,500 oz. gold (59,300 oz.). Total cash costs were US45 per lb. copper (US55 a year earlier), and US$268 per oz. gold (US$248).

Inmet’s realized copper price was 72% higher than in the first quarter of 2003, at US$1.29 per lb.; zinc was up about 40% at US50 per lb; and its realized gold price was 13% higher at US$371 per oz.

Ok Tedi contributed cash flow of $18.6 million during the period, despite the failure of a semi-autogenous grinding mill in January. The mill has since been repaired.

Inmet expects Ok Tedi’s performance to improve in the second quarter, with daily throughput pegged at 84,000 tonnes. However, over the balance of the year, copper and gold grades are expected to fall as less skarn ore is processed.

At the Cayeli copper-zinc mine in Turkey, production was little-changed despite a 54% increase in mill throughput; mining stope availability and logistical problems cut into production. Still, operating cash flow climbed by $37 million, to $31.5 million. A shaft extension is on schedule (10% complete) and budget; commissioning is slated for the first quarter of 2006.

Inmet says it plans to trim Cayeli’s targeted throughput rate to 1.1 million tonnes (from the previous target of 1.25 million tonnes) for the year. Higher expected copper grades will offset the decrease, but zinc grades are expected to fall.

Inmet says contract talks continue at Cayeli.

In Finland, zinc production rose 17% to 9,000 tonnes on higher grades at Pyhasalmi; cash costs fell 70% to US8 per lb.; operating cash flow more than doubled to $11.9 million. Looking ahead, copper grades are expected to fall, as zinc grades remain unchanged.

Cash flow from the Troilus gold mine in northern Quebec nearly tripled to $10.8 million, even as production slipped 11% to 37,300 oz. on lower grades. Total cash costs increased US$20, to US$268 per oz., on the lower production rate. Inmet recently approved an $18.5-million mill expansion at Troilus. The plan envisages a 15% increase in mill throughput plus a 2% increase in recoveries. Construction will begin in late May; commissioning is expected by year-end.

At quarter’s end, Inmet had cash and equivalents totaling $277.8 million, up from $71.2 million a year earlier; long-term debt was slightly lower at $23.4 million.