Pyhasalmi a moneymaker for Inmet

In spite of low prices for zinc and copper, Inmet Mining (IMN-T) saw good operating performance from its two copper-zinc mines, Pyhasalmi in Finland and Cayeli in Turkey, and posted a $1.6-million profit for the quarter just ended.

Pyhasalmi, which produced 9,000 tonnes zinc and 3,300 tonnes copper (both in concentrate), plus 112,000 tonnes pyrite for sulphuric acid production, contributed $4.4 million in operating earnings during the quarter. Cayeli produced 8,400 tonnes copper and 11,400 tonnes zinc, contributing operating earnings of $8.2 million.

For the three months ended June 30, Inmet received revenue of $60.1 million, up from $26.7 million a year before. Earnings for the quarter were $1.6 million (or 2 per share), compared to $1.1 million in the first quarter of 2001.

The jump in revenues reflected the company’s consolidation of results from both Cayeli and Pyhasalmi in the recent quarter. Inmet, which had owned 49% of Cayeli, bought a further 6% from its Turkish partner in the first quarter of the year, enabling it to put 100% of its revenue on the books. Its purchase of Pyhasalmi from Finnish downstream metal producer Outokumpu closed at the beginning of the second quarter.

At Cayeli, 264,000 tonnes of ore were milled, with average grades of 3.9% copper and 5.8% zinc. Mill throughput at Cayeli is budgeted at 1 million tonnes for the year, and stood at 535,000 tonnes at the end of the quarter. Inmet expects to mill 1.25 million tonnes in 2003.

Copper production of 8,400 tonnes in the quarter was lower than in the corresponding period of 2001, when grades were higher. Recoveries in the mill fell to 82%, from 91% a year before.

Zinc production increased, to 11,400 tonnes from 9,600 tonnes in the first quarter and from 8,000 tonnes in the second quarter of 2001. Improved recoveries and higher grades contributed to the increase.

Production costs at Cayeli, net of zinc credits, were US$950 per tonne copper. The company is aiming for US$925 over the year. Two capital projects — a new tailings pipeline and expansions to crushing, flotation, and zinc concentrate drying in the mill — are on schedule and on budget. The projects have a total capital cost of US$8.3 million.

Pyhasalmi rang up cash costs of US$550 per tonne for copper, after credit for zinc byproduct production. Grades, which averaged 1.1% copper and 3.1% zinc during the quarter, are expected to decline over the rest of the year, and full-year costs are forecast at US$770 per tonne.

The Troilus gold mine in north-central Quebec was also profitable in the quarter, providing $1.7 million in operating earnings. Mill throughput increased to 1.5 million tonnes in the quarter, up from 1.3 million in the first quarter, and also up from 1.3 million in the second quarter of 2001. Cash costs were US$261 per oz., up from US$239 per oz. the year before.

Mining at Troilus is moving to the northern part of the pit, where grades are lower; lower grades and a higher stripping ratio (around 2.5:1) contributed to increased costs.

Inmet received a $3.4-million dividend from its shareholding in Ok Tedi Mining in the quarter, which was applied against the carrying value of the investment. The mine has improved its cost performance in 2002.

BHP Billiton (BHP-N) sold out of its 52% interest in Ok Tedi Mining early in the first quarter of the year, and the majority interest is now held by PNG Sustainable Development Program. The government of Papua New Guinea holds the remaining 30%.