Inmet successful in Cayeli bidding (July 27, 2004)

Inmet Mining (IMN-T) moved a step closer to consolidating ownership in its wheelhorse Cayeli copper-zinc mine in eastern Turkey, emerging as the preferred bidder in a tender process by the Turkish government.

Inmet, which owns 55% of the mine, submitted a bid of US$49.25 million on July 23 based on specifications the government’s Privatization Agency had announced a month before. The minority interest is currently held by Turkish state agency Eti Maden Isletmeleri as a 45% shareholding in Cayeli’s operating company.

The tender still has to be approved by two government agencies, the Competition Authority and the Privatization High Council. Those approvals are expected before the end of the third quarter.

In recent years Cayeli has emerged as a major asset for Inmet, providing 41% of operating earnings in the second quarter of 2004 on 27% of revenues. The mine produced 8,100 tonnes copper and 10,000 tonnes zinc in the second quarter of the year, bringing its total for the first half of the year to 17,600 tonnes copper and 19,700 tonnes zinc.

The half-year figures are a 26% increase in copper production and a 49% increase in zinc production over 2003, mainly because of higher zinc grades and significant improvements in recoveries in the mill. Copper recovery increased to 91% in the first half of 2004, against 88% in the first half of 2003; in the same period, the mill recovered 73% of the ore’s zinc, up from 70% in 2003.

At year-end 2003, Cayeli’s proven and probable reserves stood at 15.9 million tonnes at average grades of 3.6% copper, 5.6% zinc, 0.6 gram gold and 44 grams silver per tonne. Additional resources, all classed as inferred, amounted to 3.2 million tonnes at 3.8% copper and 5.9% zinc.

Inmet earned $16.7 million, or 39 per share, on revenues of $102.5 million in the second quarter of 2004. In the second quarter of 2003, the company earned $5 million (10 per share) on revenues of $57.1 million.

At the halfway mark of the year, Inmet is showing net income of $39.7 million (94 per share) on revenues of $227.9 million. After the first six months of 2003, the company had $11.4 million in earnings on $101.9 million in revenues. Increased metal prices accounted for virtually all the year-on-year increase in earnings.