Inmet, Outokumpu rework share deal (October 13, 2003)

Finland’s Outokumpu has raised ;23 million by selling 4 million shares in Inmet Mining (INM-T).

The shares were issued to Outokumpu as part of Inmet’s acquisition of the Pyhasalmi copper-zinc mine in Finland in early 2002. They were originally subject to a hold period expiring in March 2005. The shares were valued at ;13 million at the time.

Under a recent amendment, the two companies agreed to waive the restriction on the sale of the shares. In return, Outokumpu has extended the maturity date of a ;14-million, 6% promissory note written by Inmet under the Pyhasalmi acquisition. The note will now mature on Oct. 3, 2013, instead of March 19, 2012. Outokumpu has also paid Inmet ;600,000 in cash.

The life-of-mine concentrate sales agreements between the Pyhasalmi mine and Outokumpu’s Kokkola and Harjavalta smelters remain in effect, as does the technology alliance between the two companies.

During the six months ended June 30, Pyhasalmi milled 666,000 tonnes of ore grading 1.2% copper and 3% zinc to produce 7,700 tonnes copper, 18,700 tonnes zinc, and 410,000 tonnes pyrite. Cash costs were US20 per lb. copper.

Inmet expects zinc grades at Pyhasalmi to decrease over the balance of the year as mining moves to lower-grade stopes. Cash costs for the year are pegged at US36 per lb. copper, and mill throughput should remain at current levels.

The mine is expected to operate until 2015 by exploiting a new deposit, more than 1 km underground, via a newly constructed, 1.45-km-deep, automated hoisting shaft.

Buoyed by higher sales volumes at Pyhasalmi, lower operating costs at the Troilus gold mine in Quebec, and a higher gold price, Inmet enjoyed a second-quarter profit of $5.3 million (or 11 per share), compared with year-earlier income of $1.6 million (2 a share). Revenue between the two periods slipped by about $3 million, to $57.1 million, owing to the strengthening loonie.