Download the PDF version.
TORONTO, CANADA--(Marketwire - April 26, 2012) -
All amounts in Canadian dollars unless indicated
otherwise.
Inmet (TSX:IMN) announces first quarter earnings
from continuing operations of $1.39 per share
compared to $0.97 per share in the first quarter of
2011.
First quarter highlights
-
Strong earnings from operations
Earnings from operations were $151 million compared
to $117 million in the first quarter of 2011.
Significantly higher copper sales volumes increased
operating earnings by $72 million - a result of
higher production at Las Cruces and Çayeli, and the
timing of shipments at Çayeli. This was somewhat
offset by lower realized copper and zinc prices
relative to the first quarter of 2011 that reduced
operating earnings by $26 million.
-
Las Cruces production on target
Las Cruces produced 13,300 tonnes of copper cathode
in the quarter compared to 8,100 tonnes produced
during the same period of 2011. The plant achieved
record production of 10,300 tonnes of copper
cathode in the first two months of 2012. March
production was not at the same level due to
scheduled maintenance and a one-day national strike
in Spain. In April, Las Cruces expects to achieve
monthly production of 6,000 tonnes of copper
cathode (design capacity) for the first time.
-
Korea Panama Mining Corporation exercises Cobre
Panama option
On April 25, 2012, Korea Panama Mining Corporation
(KPMC) completed its acquisition of a 20 percent
interest in Minera Panama SA (Minera Panama), owner
and developer of the Cobre Panama development
project, for US $169 million in cash, representing,
together with US $30 million it already paid, its
20 percent share of development costs to date, in
accordance with the option agreement of 2009.
Key financial data
three months ended March 31 (thousands, except per
share amounts)20122011change FINANCIAL HIGHLIGHTS
Sales Gross sales$294,904$254,277+16% Net income Net
income from continuing
operations$96,137$59,405+62%Net income from
continuing operations per share$1.39$0.97+43%Net
income from discontinued operations -$83,439-100%Net
income from discontinued operations per share
-$1.36-100%Net income attributable to Inmet
shareholders$96,137$142,844-33%Net income per
share$1.39$2.33-40% Cash flow Cash flow provided by
operating activities$118,276$118,176- Cash flow
provided by operating activities per share
(1)$1.71$1.92-11% Capital spending
(2)$85,321$40,730+109% OPERATING HIGHLIGHTS
Production Copper (tonnes) 24,800 17,700+40% Zinc
(tonnes) 15,100 21,200-29% Pyrite (tonnes) 211,300
186,100+14% Copper cash cost (US $ per pound)
(3)$1.00$0.95+5%
| | | | |
as at
March 31
|
as at
December 31
| |
FINANCIAL CONDITION
|
2012
|
2011
| | | | | |
Current ratio
| |
8.4 to 1
| |
9.3 to 1
| |
Gross debt to total equity
| |
-
| |
1
|
%
|
Net working capital balance (millions)
|
$
|
1,345
|
$
|
1,304
| |
Cash balance and long-term bonds (millions)
|
$
|
1,730
|
$
|
1,706
| |
Gross debt (millions)
|
$
|
17
|
$
|
17
| |
Shareholders' equity (millions)
|
$
|
3,506
|
$
|
3,414
| |
| |
(1)
|
Cash flow provided by operating activities
divided by average shares outstanding for the
period.
|
(2)
|
The three months ended March 31, 2012 includes
capital spending of $74 million at Cobre
Panama. The three months ended March 31, 2011
includes capital spending of $23 million at
Cobre Panama and $15 million at Las Cruces.
|
(3)
|
Copper cash cost per pound is a non-GAAP
financial measure - see Supplementary
financial information on pages 25 to 26.
|
First quarter press release
Where to find it
Our financial results
|
4
|
Key changes in 2011
|
4
|
Understanding our performance
|
5
| |
Earnings from operations
|
7
| |
Corporate costs
|
11
|
Results of our operations
|
13
| |
Çayeli
|
14
| |
Las Cruces
|
16
| |
Pyhäsalmi
|
18
|
Status of our development project
|
20
| |
Cobre Panama
|
20
|
Managing our liquidity
|
21
|
Financial condition
|
24
|
Supplementary financial information
|
25
|
In this press release, Inmet means Inmet
Mining Corporation and we, us and
our mean Inmet and/or its subsidiaries and
joint ventures. This quarter refers to the
three months ended March 31, 2012. Revised
objective is as of April 26, 2012.
Caution with respect to forward-looking statements
and information
Securities regulators encourage companies to
disclose forward-looking information to help
investors understand a company's future
prospects. This interim report contains statements
about our business, results of operation and future
financial condition.
These statements are "forward-looking"
because we have used what we know and expect today
to make a statement about the future.
Forward-looking statements usually include words
like may, expect, anticipate, believe or other
similar words. Our objectives and outlook have been
prepared based on our existing operations,
expectations and circumstances. Actual events and
results could be substantially different, however,
because of the risks and uncertainties associated
with our business or events that happen after the
date of this interim report.
You should not place undue reliance on
forward-looking statements. As a general policy, we
do not update forward-looking statements except if
there is an offering document or where securities
legislation requires us to do so.
Although we have attempted to identify factors that
would cause actual actions, events or results to
differ materially from those disclosed in the
forward-looking statements or information, there
may be other factors that cause actions, events or
results not to be as anticipated, estimated or
intended. Also, many of the factors are beyond the
control of Inmet. Accordingly, readers should not
place undue reliance on forward-looking statements
or information. Inmet undertakes no obligation to
update forward-looking statements or information as
a result of new information after the date of this
interim report except as required by law. All
forward-looking statements and information herein
are qualified by this cautionary statement.
Our financial results
|
three months ended March 31
| |
(thousands, except per share amounts)
|
2012
| |
2011
| |
change
| |
EARNINGS FROM OPERATIONS (1)
| | | | | | | | |
Çayeli
|
$
|
68,169
| |
$
|
51,473
| |
+32
|
%
|
Las Cruces
| |
53,314
| | |
30,576
| |
+74
|
%
|
Pyhäsalmi
| |
26,987
| | |
34,453
| |
-22
|
%
|
Other
| |
2,837
| | |
-
| |
+100
|
%
| | |
151,307
| | |
116,502
| |
+30
|
%
|
DEVELOPMENT AND EXPLORATION
| | | | | | | | |
Corporate development and exploration
| |
(9,090
|
)
| |
(13,411
|
)
|
-32
|
%
|
CORPORATE COSTS
| | | | | | | | |
General and administration
| |
(10,065
|
)
| |
(8,422
|
)
|
+20
|
%
|
Investment and other income
| |
(6,469
|
)
| |
(5,773
|
)
|
+12
|
%
|
Finance costs
| |
(2,681
|
)
| |
(2,331
|
)
|
+15
|
%
|
Income and capital taxes
| |
(26,865
|
)
| |
(27,160
|
)
|
-1
|
%
| | |
(46,080
|
)
| |
(43,686
|
)
|
+5
|
%
|
Net income from continuing operations
| |
96,137
| | |
59,405
| |
+62
|
%
|
Income from discontinued operation (net of
taxes)
| |
-
| | |
83,439
| |
-100
|
%
|
Net income attributable to Inmet shareholders
|
$
|
96,137
| |
$
|
142,844
| |
-33
|
%
|
Income from continuing operations per common
share
|
$
|
1.39
| |
$
|
0.97
| |
+43
|
%
|
Diluted income from continuing operations per
common share
|
$
|
1.38
| |
$
|
0.96
| |
+44
|
%
|
Basic net income per common share
|
$
|
1.39
| |
$
|
2.33
| |
-40
|
%
|
Diluted net income per common share
|
$
|
1.38
| |
$
|
2.31
| |
-40
|
%
|
Weighted average shares outstanding
| |
69,349
| | |
61,549
| |
+13
|
%
|
(1)
|
Gross sales less smelter processing charges and
freight, cost of sales including depreciation
and provisions for mine reclamation at closed
properties.
|
Key changes in 2012
(millions)
|
three months ended
March 31
| |
see
page
|
EARNINGS FROM OPERATIONS
| | | | |
Sales
| | | | |
Lower copper prices denominated in Canadian
dollars
|
$
|
(22
|
)
|
7
|
Lower zinc prices denominated in Canadian
dollars
| |
(4
|
)
|
7
|
Higher copper sales volumes
| |
72
| |
7
|
Lower zinc sales volume
| |
(8
|
)
|
7
|
Higher other metal sales
| |
5
| | |
Costs
| | | | |
Lower processing charges and freight
| |
2
| |
9
|
Higher operating costs
| |
(4
|
)
|
10
|
Higher depreciation
| |
(4
|
)
|
10
|
Other
| |
(2
|
)
| |
Higher earnings from operations compared to
2011
| |
35
| | | | | | | |
CORPORATE COSTS
| | | | |
Lower corporate development and exploration
costs
| |
4
| |
11
|
Foreign exchange changes
| |
(2
|
)
|
11
|
Higher net income from continuing operations
compared to 2011
| |
37
| | |
Lower income from discontinued operation - Ok
Tedi
| |
(83
|
)
|
12
|
Lower net income attributable to Inmet
shareholders compared to 2011
|
$
|
(46
|
)
| |
Understanding our performance
Metal prices
The table below shows the average metal prices we
realized in US dollars and Canadian dollars (the
prices we realize include finalization adjustments
- see Gross sales on page 7).
|
three months ended March 31
| | |
2012
|
2011
|
change
| |
US dollar metal prices
| | | | | |
Copper (per pound)
|
US $3.87
|
US $4.29
|
-10
|
%
| |
Zinc (per pound)
|
US $0.93
|
US $1.06
|
-12
|
%
|
Canadian dollar metal prices
| | | | | |
Copper (per pound)
|
C $3.88
|
C $4.23
|
-8
|
%
| |
Zinc (per pound)
|
C $0.93
|
C $1.05
|
-11
|
%
|
Copper
Copper prices on the London Metals Exchange (LME)
averaged US $3.77 per pound this quarter, an
increase of 11 percent from the fourth quarter of
2011 and a 14 percent decrease from the first
quarter of 2011.
Zinc
Zinc prices on the LME averaged US $0.92 per pound
this quarter, a 7 percent increase from last
quarter's average price of US $0.86 per pound
and a 16 percent decrease from the first quarter of
2011.
Exchange rates
Exchange rates affect our revenue and earnings. The
table below shows the average exchange rates we
realized this quarter compared to 2011.
|
three months ended March 31
| | |
2012
|
2011
|
change
| |
Exchange rates
| | | | | | | |
1 US$ to C$
|
$
|
1.00
|
$
|
0.99
|
+1
|
%
| |
1 euro to C$
|
$
|
1.31
|
$
|
1.35
|
-3
|
%
| |
1 euro to US$
|
$
|
1.31
|
$
|
1.37
|
-4
|
%
| |
1 US$ to Turkish lira
| |
TL 1.79
| |
TL 1.57
|
+14
|
%
|
Our sales are affected by the conversion of US
dollar revenue to Canadian dollars. Compared to the
same quarter last year, the value of the Canadian
dollar depreciated 1 percent relative to the US
dollar, and appreciated 3 percent relative to the
euro.
Our earnings are affected by changes in foreign
currency exchange rates when we:
-
translate the results of our operations from
their functional currency (US dollars or euros)
to Canadian dollars,
-
translate Çayeli's Turkish lira denominated
costs into its functional currency (US dollars)
-
revalue US dollars that we hold in cash at our
operations whose functional currency is the euro,
and
-
revalue US dollars and euros that we hold in cash
and long-term bonds at Corporate.
Treatment charges for copper increased
Treatment charges are one component of smelter
processing charges. We also pay smelters for
content losses and price participation.
The table below shows the average charges we
realized this quarter. Zinc contracts for 2012 and
2011 were not finalized in the first quarter of the
respective years and therefore the average charges
represent the contract prices from the relevant
prior year. Adjustments to contracts will be
reflected in the second quarter.
|
three months ended March 31
| |
(US$)
|
2012
| |
2011
|
change
| |
Treatment charges
| | | | | | |
Copper (per dry metric tonne of concentrate)
|
US $58
| |
US $48
|
+21
|
%
| |
Zinc (per dry metric tonne of concentrate)
|
US $207
| |
US $258
|
-20
|
%
|
Price participation
| | | | | | |
Copper (per pound)
|
US $0.00
| |
US $0.02
|
-100
|
%
| |
Zinc (per pound)
|
US ($0.01
|
)
|
US $0.00
|
not meaningful
| |
Freight charges
| | | | | | |
Copper (per dry metric tonne of concentrate)
|
US $61
| |
US $50
|
+22
|
%
| |
Zinc (per dry metric tonne of concentrate)
|
US $30
| |
US $25
|
+20
|
%
|
Statutory tax rates
The table below shows the statutory tax rates for
each of our taxable operating mines.
|
2012
| |
2011
| |
change
| |
Statutory tax rates
| | | | | | | |
Çayeli
|
24
|
%
|
24
|
%
|
-
| | |
Las Cruces
|
30
|
%
|
30
|
%
|
-
| | |
Pyhäsalmi
|
24.5
|
%
|
26
|
%
|
-1.5
|
%
|
Earnings from operations
|
three months ended March 31
| |
(thousands)
|
2012
| |
2011
| |
change
| |
Gross sales
|
$
|
294,904
| |
$
|
254,277
| |
+16
|
%
|
Smelter processing charges and freight
| |
(30,302
|
)
| |
(31,585
|
)
|
-4
|
%
|
Cost of sales:
| | | | | | | | | |
Direct production costs
| |
(80,740
|
)
| |
(71,428
|
)
|
+13
|
%
| |
Inventory changes
| |
(5,428
|
)
| |
(7,154
|
)
|
-24
|
%
| |
Other non-cash expenses
| |
3,928
| | |
(568
|
)
|
-792
|
%
| |
Depreciation
| |
(31,055
|
)
| |
(27,040
|
)
|
+15
|
%
|
Earnings from operations
|
$
|
151,307
| |
$
|
116,502
| |
+30
|
%
|
Gross sales were significantly higher
|
three months ended March 31
| |
(thousands)
|
2012
|
2011
|
change
| |
Gross sales by operation
| | | | | | | |
Çayeli
|
$
|
127,423
|
$
|
99,053
|
+29
|
%
| |
Las Cruces
| |
114,007
| |
90,826
|
+26
|
%
| |
Pyhäsalmi
| |
53,474
| |
64,398
|
-17
|
%
| |
$
|
294,904
|
$
|
254,277
|
+16
|
%
|
Gross sales by metal
| | | | | | | |
Copper
|
$
|
243,985
|
$
|
191,704
|
+27
|
%
| |
Zinc
| |
29,582
| |
44,871
|
-34
|
%
| |
Other
| |
21,337
| |
17,702
|
+21
|
%
| |
$
|
294,904
|
$
|
254,277
|
+16
|
%
|
Key components of the change in gross sales:
increasing sales volumes at Las Cruces, timing of
shipments at Çayeli, lower realized copper prices
(millions)
|
three months ended
March 31
| |
Lower copper prices, denominated in Canadian
dollars
|
$
|
(22
|
)
|
Lower zinc prices, denominated in Canadian
dollars
| |
(4
|
)
|
Higher copper sales volumes at Las Cruces
| |
37
| |
Higher copper sales volumes at Çayeli
| |
34
| |
Lower zinc sales volumes at Pyhäsalmi
| |
(12
|
)
|
Changes in other metal sales
| |
5
| |
Other
| |
3
| |
Higher gross sales, compared to 2011
|
$
|
41
| |
We record sales that settle during the reporting
period using the metal price on the day they
settle. For sales that have not settled, we use an
estimate based on the month we expect the sale to
settle and the forward price of the metal at the
end of the reporting period. We recognize the
difference between our estimate and the final price
by adjusting our gross sales in the period when we
settle the sale (finalization adjustment).
This quarter, we recorded $5 million in positive
finalization adjustments from fourth quarter 2011
sales.
At the end of this quarter, the following sales had
not been settled:
-
25 million pounds of copper provisionally priced
at US $3.83 per pound
-
14 million pounds of zinc provisionally priced at
US $0.91 per pound.
The finalization adjustment we record for these
sales will depend on the actual price we receive
when they settle, which can be up to five months
from the time we initially record the sales. We
expect these sales to settle in the following
months:
(millions of pounds)
|
copper
|
zinc
|
April 2012
|
15
|
14
|
May 2012
|
10
|
-
|
Unsettled sales at March 31, 2012
|
25
|
14
|
Higher copper sales volumes, lower zinc sales
volumes
Our sales volumes are directly affected by the
amount of production from our mines and our ability
to ship to our customers.
-
Copper production and sales volumes were higher
than the first quarter of 2011 mainly because of
Las Cruces production and the mining of
higher-grade stopes at Çayeli. Additionally, the
timing of shipments resulted in copper sales
volumes exceeding production volumes at Çayeli by
3,000 tonnes this quarter and 1,500 tonnes in the
first quarter of 2011.
-
Zinc production and sales volumes were lower than
the first quarter of 2011 due to lower zinc
grades at Çayeli and Pyhäsalmi, consistent with
our objectives for this year.
Sales volumes
|
three months ended March 31
| | |
2012
|
2011
|
change
| |
Copper contained in concentrate (tonnes)
|
15,000
|
10,900
|
+38
|
%
|
Copper cathode (tonnes)
|
13,600
|
9,700
|
+40
|
%
|
Total copper (tonnes)
|
28,600
|
20,600
|
+39
|
%
|
Zinc (tonnes)
|
14,500
|
19,700
|
-26
|
%
|
Pyrite (tonnes)
|
112,300
|
141,300
|
-21
|
%
|
Production
|
three months ended March 31
| | objective | |
2012
|
2011
|
change
| | 2012 |
Copper (tonnes)
| | | | | | |
Çayeli
|
8,100
|
6,000
|
+35
|
%
| 27,000 - 30,000 | |
Las Cruces
|
13,300
|
8,100
|
+64
|
%
| 61,700 - 68,600 | |
Pyhäsalmi
|
3,400
|
3,600
|
-6
|
%
| 11,300 - 12,600 | |
24,800
|
17,700
|
+40
|
%
| 100,000 - 111,200 |
Zinc (tonnes)
| | | | | | |
Çayeli
|
10,500
|
12,500
|
-16
|
%
| 36,000 - 39,800 | |
Pyhäsalmi
|
4,600
|
8,700
|
-47
|
%
| 22,800 - 25,200 | |
15,100
|
21,200
|
-29
|
%
| 58,800 - 65,000 |
Pyrite (tonnes)
| | | | | | |
Pyhäsalmi
|
211,300
|
186,100
|
+14
|
%
| 800,000 |
2012 outlook for sales
We use our production objectives to estimate our
sales target. Our production guidance for copper
and zinc remains as previously disclosed.
Our Canadian dollar sales revenues are affected by
the US dollar denominated metal prices we receive
and the exchange rate between the US dollar and
Canadian dollar.
Zinc smelter processing charges down, copper
charges up
|
three months ended March 31
| |
(thousands)
|
2012
| |
2011
| |
change
| |
Smelter processing charges and freight by
operation
| | | | | | | | | |
Çayeli
|
$
|
22,174
| |
$
|
17,894
| |
+24
|
%
| |
Las Cruces
| |
305
| | |
268
| |
+14
|
%
| |
Pyhäsalmi
| |
7,823
| | |
13,423
| |
-42
|
%
| |
$
|
30,302
| |
$
|
31,585
| |
-4
|
%
|
Smelter processing charges and freight by metal
| | | | | | | | | |
Copper
|
$
|
16,981
| |
$
|
11,201
| |
+52
|
%
| |
Zinc
| |
11,327
| | |
17,677
| |
-36
|
%
| |
Other
| |
1,994
| | |
2,707
| |
-26
|
%
| |
$
|
30,302
| |
$
|
31,585
| |
-4
|
%
|
Smelter processing charges by type and freight
| | | | | | | | | |
Copper treatment and refining charges
|
$
|
5,883
| |
$
|
3,381
| |
+74
|
%
| |
Zinc treatment charges
| |
5,947
| | |
9,762
| |
-39
|
%
| |
Copper price participation
| |
-
| | |
386
| |
-100
|
%
| |
Zinc price participation
| |
(259
|
)
| |
(200
|
)
|
+30
|
%
| |
Content losses
| |
10,902
| | |
11,621
| |
-6
|
%
| |
Freight
| |
7,411
| | |
6,307
| |
+18
|
%
| |
Other
| |
418
| | |
328
| |
+27
|
%
| |
$
|
30,302
| |
$
|
31,585
| |
-4
|
%
|
Our copper treatment and refining charges were
higher than they were in the first quarter of 2011
because our terms with smelters were higher, as we
expected, and because we sold more copper. This was
offset by lower zinc treatment charges this quarter
than last year due mainly to lower zinc sales
volumes at Pyhäsalmi.
2012 outlook for smelter processing charges and
freight
We expect our costs for copper treatment and
refining to be slightly higher in 2012 than in 2011
based on recently signed agreements with our
customers. A tight concentrate supply is expected
to keep the copper market in a deficit position in
2012. We do not expect to pay copper price
participation.
We expect total zinc smelter processing charges,
including price participation, to be lower than in
2011 and a continued deficit to exist in the zinc
concentrate market in 2012.
Las Cruces sells its copper cathode production
directly to buyers in the Spanish and Mediterranean
markets and therefore does not incur smelting
processing charges and has relatively low freight
costs.
We expect our ocean freight costs to be similar to
rates realized in 2011.
Higher direct production costs and cost of sales
|
three months ended March 31
| |
(thousands)
|
2012
| |
2011
|
change
| |
Direct production costs by operation
| | | | | | | | |
Çayeli
|
$
|
24,053
| |
$
|
23,378
|
+3
|
%
| |
Las Cruces
| |
41,218
| | |
33,488
|
+23
|
%
| |
Pyhäsalmi
| |
15,469
| | |
14,562
|
+6
|
%
|
Total direct production costs
| |
80,740
| | |
71,428
|
+13
|
%
|
Inventory changes
| |
5,428
| | |
7,154
|
-24
|
%
|
Charges for mine rehabilitation and other
non-cash charges
| |
(3,928
|
)
| |
568
|
-792
|
%
|
Total cost of sales (excluding depreciation)
|
$
|
82,240
| |
$
|
79,150
|
+4
|
%
|
Direct production costs
Direct production costs were $9 million higher than
in the first quarter of 2011, mainly because higher
production at Las Cruces increased variable
electricity and consumables costs, and from
incremental costs associated with the nine day
scheduled maintenance shutdown at this operation.
Inventory changes
Copper inventories at Çayeli decreased at the end
of this quarter, and at Çayeli and Las Cruces in
the first quarter of 2011, because of the timing of
shipments.
Charges for mine rehabilitation and other
non-cash charges
These charges include accruals for asset retirement
obligations, provisions for severance and
retirement and other non-cash expenses. We recorded
a decrease of $3 million this quarter in
post-closure liabilities at our closed properties.
This decrease was a result of an increase in the
discount rates we applied in determining the
liabilities. Under International Financial
Reporting Standards, we are required to revalue our
asset retirement obligations for changes in market
risk-free interest rates.
2012 outlook for cost of sales (excluding
depreciation)
We expect consolidated direct production costs to
be higher in 2012 because higher production at Las
Cruces will increase total variable costs,
primarily electricity and royalties.
Our budget for 2012 assumes our costs at Çayeli and
Pyhäsalmi will be similar to 2011.
Certain variable costs may continue to affect our
earnings, depending on metal prices:
-
royalties at Çayeli are affected by its net
income
-
royalties at Las Cruces are affected by its net
sales.
The total amount we spend in Canadian dollars will
also be affected by the value of the US dollar and
euro relative to the Canadian dollar.
Additionally, changes in market risk-free interest
rates could significantly increase or decrease our
costs related to mine rehabilitation at our closed
properties.
Higher depreciation
|
three months ended March 31
| |
(thousands)
|
2012
|
2011
|
change
| |
Depreciation by operation
| | | | | | | |
Çayeli
|
$
|
7,501
|
$
|
5,226
|
+44
|
%
| |
Las Cruces
| |
21,140
| |
19,556
|
+8
|
%
| |
Pyhäsalmi
| |
2,414
| |
2,258
|
+7
|
%
| |
$
|
31,055
|
$
|
27,040
|
+15
|
%
|
Depreciation was higher this quarter than in 2011
mainly because of higher copper sales volumes at
Las Cruces and Çayeli.
2012 outlook for depreciation
We expect depreciation to be higher in 2012 because
of higher sales volumes at Las Cruces.
Corporate costs
Corporate costs include corporate development and
exploration, general and administration costs,
taxes, interest and other income.
Corporate development and exploration
Costs this quarter were $4 million lower than the
first quarter of 2011. We incurred approximately $6
million of expenses in the first quarter of 2011
from the work related to the arrangement agreement
to merge with Lundin Mining Corporation, which
Inmet and Lundin Mining Corporation agreed to
mutually terminate on March 29, 2011.
Investment and other income
|
three months ended March 31
| |
(thousands)
|
2012
| |
2011
| |
Interest income
|
$
|
4,392
| |
$
|
2,772
| |
Foreign exchange losses
| |
(12,468
|
)
| |
(10,826
|
)
|
Dividend and royalty income
| |
500
| | |
600
| |
Other
| |
1,107
| | |
1,681
| | |
$
|
(6,469
|
)
|
$
|
(5,773
|
)
|
Interest income
Interest income was higher this quarter compared to
the same period last year because our cash balances
were higher.
Foreign exchange losses
We have foreign exchange gains or losses when we
revalue certain foreign denominated assets and
liabilities.
Our foreign exchange losses were from:
|
three months ended March 31
| |
(thousands)
|
2012
| |
2011
| | | | | | | | |
Translation of US dollar held-to-maturity
investments
|
$
|
(5,094
|
)
|
$
|
(1,452
|
)
|
Translation of US dollar cash
| |
(4,659
|
)
| |
(8,237
|
)
|
Translation of Turkish lira taxes payable at
Çayeli
| |
(1,472
|
)
| |
545
| |
Translation of other monetary assets and
liabilities
| |
(1,243
|
)
| |
(1,682
|
)
| |
$
|
(12,468
|
)
|
$
|
(10,826
|
)
|
We continue to hold US dollar bonds in Canada, and
plan to use this money to fund our US dollar
denominated capital program at Cobre Panama. We
recognized total foreign exchange losses of $5.1
million on these funds this quarter because the US
dollar depreciated in value relative to the
Canadian dollar.
In 2012, we started to hold our euro-based
operations' excess cash in US dollars, and as a
result recognized foreign exchange losses of $4.5
million this quarter on the revaluation of
US-denominated cash balances to euros.
Çayeli's income taxes are denominated in
Turkish lira. This operation recognized a foreign
exchange loss of $1.5 million this quarter from the
revaluation of its taxes payable due to the
depreciation of the US dollar (Çayeli's
functional currency) relative to the Turkish lira.
2012 outlook for investment and other
income
Investment and other income is affected by our cash
and held to maturity investment balances, and by
interest rates and exchange rates. At March 31,
2012, we held US $278 million in cash and held to
maturity investments subject to translation in our
Canadian accounts and US $247 million in cash
subject to translation in our euro accounts.
Income tax expense
|
three months ended March 31
| |
(thousands)
|
2012
| |
2011
| |
change
| |
Çayeli
|
$
|
9,791
| |
$
|
11,656
| | | |
Las Cruces
| |
11,581
| | |
7,497
| | | |
Pyhäsalmi
| |
5,353
| | |
7,803
| | | |
Corporate and other
| |
140
| | |
204
| | | | |
$
|
26,865
| |
$
|
27,160
| | | |
Consolidated effective tax rate
| |
22
|
%
| |
31
|
%
|
-9
|
%
|
Our tax expense changes as our earnings change.
The consolidated effective tax rate is lower this
quarter compared to the same quarter of last year,
mainly because Çayeli's taxes were lower as it
recognized a foreign exchange loss from its US
dollar denominated cash (Çayeli's income taxes
are denominated in Turkish lira). Additionally,
there was a decrease in the statutory tax rate at
Pyhäsalmi from 26 percent to 24.5 percent.
2012 outlook for income tax expense
Other than the decrease in the statutory tax rate
at Pyhäsalmi from 26 percent to 24.5 percent, we
expect the statutory tax rates at our operations to
remain the same in 2012 as they were in 2011.
Discontinued operation - 2011
We sold our 18 percent equity interest in Ok Tedi
in January 2011, and have reported our results
relating to Ok Tedi in that year as discontinued
operations. After-tax income of $83 million in 2011
includes net earnings of $17 million in January
2011, before the sale, and a gain on sale of $66
million net of withholding taxes. We paid Papua New
Guinea withholding taxes of $28 million on the
sale.
Results of our operations
2012 estimates
Our financial review by operation includes
estimates for our 2012 operating earnings and
operating cash flows. We have based these estimates
on our 2012 objectives for production (using the
midpoints in our production volume ranges) and cost
per tonne of ore milled (cost per pound of copper
produced at Las Cruces), as well as the following
assumptions for the remaining nine months of the
year:
Copper price
|
US $3.80 per pound
|
Zinc price
|
US $0.95 per pound
|
US $ to C$ exchange rate
|
$1.00
|
euro to C$ exchange rate
|
$1.30
|
Working capital
|
Assume no changes for the year
|
Çayeli
|
three months ended March 31
| | |
2012
|
2011
|
change
| |
Tonnes of ore milled (000's)
| |
299
| |
293
|
+2
|
%
|
Tonnes of ore milled per day
| |
3,300
| |
3,300
|
-
| |
Grades (percent)
| | | | | | | |
copper
| |
3.4
| |
2.9
|
+17
|
%
| |
zinc
| |
5.4
| |
6.3
|
-14
|
%
|
Mill recoveries (percent)
| | | | | | | |
copper
| |
79
| |
71
|
+11
|
%
| |
zinc
| |
65
| |
68
|
-4
|
%
|
Production (tonnes)
| | | | | | | |
copper
| |
8,100
| |
6,000
|
+35
|
%
| |
zinc
| |
10,500
| |
12,500
|
-16
|
%
|
Cost per tonne of ore milled (C$)
|
$
|
80
|
$
|
80
|
-
| |
Higher grades and recoveries increased copper
production
Copper grades this quarter were higher than 2011,
while zinc grades were lower, because we produced
in different areas of the mine. This higher copper
grade ore, and lower zinc grade ore, compared to
last year led to higher copper recoveries and lower
zinc recoveries respectively.
The result was higher copper production and lower
zinc production compared to 2011. Due to the timing
of shipments, Çayeli's copper sales volumes
exceeded production volumes by approximately 3,000
tonnes this quarter and 1,500 tonnes in the first
quarter of 2011.
Cost per tonne of ore milled this quarter was
consistent with the same quarter last year and our
target.
2012 outlook for production
In 2012, mill throughput should remain at
approximately 1.2 million tonnes. We expect lower
copper and zinc grades for the remainder of 2012 as
we produce from lower grade areas of the mine. We
continue to expect to produce between 27,000 tonnes
and 30,000 tonnes of copper and between 36,000 and
39,800 tonnes of zinc. Zinc production at Çayeli
from 2008 to 2011 benefitted from grades well above
the average reserve grade of 4.3 percent. In 2012,
lower zinc grades, as expected, account for the
anticipated decline in zinc production. Both copper
and zinc recoveries should remain near 2011 levels
in 2012, reflecting the ongoing metallurgical
challenges presented by the higher percentages of
bornite containing ores and the decreasing zinc
grade.
Financial review
Higher copper sales volumes due to higher copper
production volumes and timing of shipments
(millions of Canadian dollars unless |
three months ended March 31
| | revised
objective | |
otherwise stated) |
2012
| |
2011
| | 2012 | |
Sales analysis
| | | | | | | | | |
Copper sales (tonnes)
| |
11,100
| | |
7,500
| | | 28,500 | |
Zinc sales (tonnes)
| |
10,300
| | |
10,000
| | | 37,900 | |
Gross copper sales
|
$
|
97
| |
$
|
70
| | $ |
243 | |
Gross zinc sales
| |
21
| | |
23
| | | 79 | |
Other metal sales
| |
9
| | |
6
| | | 18 | |
Gross sales
| |
127
| | |
99
| | | 340 | |
Smelter processing charges and freight
| |
(22
|
)
| |
(18
|
)
| | (66 |
) |
Net sales
|
$
|
105
| |
$
|
81
| | $ |
274 | |
Cost analysis
| | | | | | | | | |
Tonnes of ore milled (thousands)
| |
299
| | |
293
| | | 1,200 | |
Direct production costs ($ per tonne)
|
$
|
80
| |
$
|
80
| | $ |
80 | |
Direct production costs
|
$
|
24
| |
$
|
23
| | $ |
96 | |
Change in inventory
| |
5
| | |
1
| | | - | |
Depreciation and other non-cash costs
| |
8
| | |
6
| | | 32 | |
Operating costs
|
$
|
37
| |
$
|
30
| | $ |
128 | |
Operating earnings
|
$
|
68
| |
$
|
51
| | $ |
146 | |
Operating cash flow
|
$
|
31
| |
$
|
54
| | $ |
137 | |
The objective for 2012 uses the assumptions listed
on page 13.
The table below shows what contributed to the
change in operating earnings and operating cash
flow between 2012 and 2011.
(millions)
|
three months ended
March 31
| |
Lower copper prices, denominated in Canadian
dollars
|
$
|
(6
|
)
|
Lower zinc prices
| |
(3
|
)
|
Higher copper sales volumes
| |
26
| |
Higher other metal sales
| |
3
| |
Higher depreciation
| |
(2
|
)
|
Other
| |
(1
|
)
|
Higher operating earnings, compared to 2011
| |
17
| |
Change in cash taxes
| |
2
| |
Changes in working capital (see note 12 on page
41)
| |
(43
|
)
|
Change in depreciation
| |
2
| |
Other
| |
(1
|
)
|
Lower operating cash flow, compared to 2011
|
$
|
(23
|
)
|
Capital spending
|
three months ended March 31
| | objective |
(thousands)
|
2012
|
2011
|
change
| | 2012 |
Capital spending
|
$
|
2,300
|
$
|
2,400
|
-4
|
%
| $ |
20,000 |
2012 outlook for capital spending
We expect to spend $20 million on capital in 2012,
including $7 million to upgrade our ore pass system
to address deterioration that has accumulated over
time from normal abrasion, and to extend the
shotcrete slickline and replace certain mobile
equipment.
Las Cruces
|
three months ended March 31
| | |
2012
|
2011
|
change
| |
Tonnes of ore processed (000's)
| |
246
| |
173
|
+42
|
%
|
Copper grades (percent)
| |
6.7
| |
6.1
|
+10
|
%
|
Plant recoveries (percent)
| |
85
| |
77
|
+10
|
%
|
Cathode copper production (tonnes)
| |
13,300
| |
8,100
|
+64
|
%
|
Cost per pound of cathode produced (C$)
|
$
|
1.40
|
$
|
1.88
|
-26
|
%
|
Higher copper production
Las Cruces production this quarter was
significantly higher than the first quarter of
2011, increasing to 13,300 tonnes of copper cathode
from 8,100 tonnes. The plant achieved record
production of 10,300 tonnes of copper cathode in
the first two months of 2012. March production was
lower due to a nine-day planned maintenance
shutdown, a one-day national strike, and the time
required for overall process stabilization
following each of these stoppages. This represents
the majority of scheduled shutdown time this year.
We achieved recoveries of 85 percent in the
quarter, a significant increase over the first
quarter of last year when recoveries were affected
by an oxygen supply failure.
A drier than normal rainy season has allowed the
water level in the pit to remain low and all pond
levels are within expected limits.
Cost per pound of copper produced this quarter was
significantly lower than the same quarter of 2011
due to higher production volumes; however it was
higher than our overall objective for this year due
to lower production volumes to accommodate the
plant shutdown in March and incremental shutdown
costs of approximately $3 million.
2012 outlook for production
For 2012, we continue to expect to produce between
61,700 and 68,600 tonnes of copper cathode, or
approximately 90 percent of design capacity. No
major construction projects or major shutdowns are
planned for the remainder of the year. In total, we
expect a minimum of 90 percent operating time
throughout 2012.
Las Cruces' unit operating costs should
continue to decrease as production volumes increase
and we have not made any adjustment to previous
cost guidance.
Financial review
Higher sales volumes due to higher production
(millions of Canadian dollars unless
otherwise stated) |
three months ended March 31
| revised
objective | | |
2012
|
2011
| 2012 | |
Sales analysis
| | | | | | | |
Copper sales (tonnes)
| |
13,600
| |
9,700
| | 65,200 | |
Gross copper sales
|
$
|
114
|
$
|
91
| $ |
549 | |
Freight
| |
-
| |
-
| | (3 |
) |
Net sales
|
$
|
114
|
$
|
91
| $ |
546 | |
Cost analysis
| | | | | | | |
Pounds of copper produced (millions)
| |
29
| |
18
| | 144 | |
Direct production costs ($ per pound)
|
$
|
1.40
|
$
|
1.88
| $ |
1.14 | |
Direct production costs
|
$
|
41
|
$
|
33
| $ |
164 | |
Change in inventory
| |
-
| |
7
| | - | |
Depreciation and other non-cash costs
| |
20
| |
20
| | 97 | |
Operating costs
|
$
|
61
|
$
|
60
| $ |
261 | |
Operating earnings
|
$
|
53
|
$
|
31
| $ |
285 | |
Operating cash flow
|
$
|
80
|
$
|
58
| $ |
381 | |
The objective for 2012 uses the assumptions listed
on page 13.
The table below shows what contributed to the
change in operating earnings and operating cash
flow between 2012 and 2011.
(millions)
|
three months ended
March 31
| |
Lower copper prices, denominated in Canadian
dollars
|
$
|
(14
|
)
|
Higher copper sales volume
| |
43
| |
Higher production costs
| |
(8
|
)
|
Other
| |
1
| |
Higher operating earnings, compared to 2011
| |
22
| |
Changes in working capital (see note 12 on page
41)
| |
1
| |
Other
| |
(1
|
)
|
Higher operating cash flow, compared to 2011
|
$
|
22
| |
Capital spending
|
three months ended March 31
| | objective |
(thousands) |
2012
|
2011
|
change
| | 2012 |
Capital spending
|
$
|
6,200
|
$
|
14,800
|
-58
|
%
| $ |
48,000 |
2012 outlook for capital spending
We expect to spend $48 million on capital projects
in 2012. The largest expenditures will come in the
areas of mine development, tailings facility
expansion and land purchase.
Pyhäsalmi
|
three months ended March 31
| | |
2012
|
2011
|
change
| |
Tonnes of ore milled (000's)
| |
342
| |
335
|
+2
|
%
|
Tonnes of ore milled per day
| |
3,800
| |
3,700
|
+3
|
%
|
Grades (percent)
| | | | | | | |
copper
| |
1.0
| |
1.1
|
-9
|
%
| |
zinc
| |
1.5
| |
2.9
|
-48
|
%
| |
sulphur
| |
43
| |
42
|
+2
|
%
|
Mill recoveries (percent)
| | | | | | | |
copper
| |
96
| |
96
|
-
| | |
zinc
| |
90
| |
91
|
-1
|
%
|
Production (tonnes)
| | | | | | | |
copper
| |
3,400
| |
3,600
|
-6
|
%
| |
zinc
| |
4,600
| |
8,700
|
-47
|
%
| |
pyrite
| |
211,300
| |
186,100
|
+14
|
%
|
Cost per tonne of ore milled (C$)
|
$
|
45
|
$
|
43
|
+5
|
%
|
Lower zinc grades this quarter in line with plan
Pyhäsalmi maintained its strong performance in the
first quarter of 2012, processing at an annualized
rate in-line with its annual objective and
achieving copper recoveries of 96 percent and zinc
recoveries of 90 percent. Copper grades this
quarter were slightly lower than the first quarter
of 2011. Zinc grades this quarter were lower than
the first quarter of 2011 and consistent with our
plan, due to the availability of fewer zinc-rich
stopes this year. Copper and zinc production this
quarter were therefore lower than the first quarter
of 2011.
Operating costs were higher this quarter primarily
from labour and materials costs.
2012 outlook for production
Pyhäsalmi expects to mine 1.4 million tonnes of
approximately 1 percent copper and 2 percent zinc
in 2012, and produce between 11,300 tonnes and
12,600 tonnes of copper and 22,800 tonnes and
25,200 tonnes of zinc. Copper and zinc production
should be lower than it was in 2011 as fewer higher
grade stopes are available in the short-term mining
sequence. Both copper and zinc grades should
recover after 2012.
Pyhäsalmi expects to produce 800,000 tonnes of
pyrite in 2012 and expects to sell 915,000 tonnes
of pyrite, an increase of 115,000 tonnes from our
original objective, due to stronger demand from
Asian customers.
Financial review
Lower earnings because of lower zinc sales volumes
|
three months ended March 31
| | revised objective | |
(millions of Canadian dollars unless
otherwise stated) |
2012
| |
2011
| | 2012 | |
Sales analysis
| | | | | | | | | |
Copper sales (tonnes)
| |
3,900
| | |
3,500
| | | 11,900 | |
Zinc sales (tonnes)
| |
4,200
| | |
9,700
| | | 24,000 | |
Pyrite sales (tonnes)
| |
112,300
| | |
141,300
| | | 915,000 | |
Gross copper sales
|
$
|
33
| |
$
|
31
| | $ |
99 | |
Gross zinc sales
| |
9
| | |
22
| | | 50 | |
Other metal sales
| |
11
| | |
11
| | | 81 | |
Gross sales
| |
53
| | |
64
| | | 230 | |
Smelter processing charges and freight
| |
(8
|
)
| |
(13
|
)
| | (55 |
) |
Net sales
|
$
|
45
| |
$
|
51
| | $ |
175 | |
Cost analysis
| | | | | | | | | |
Tonnes of ore milled (thousands)
| |
342
| | |
335
| | | 1,370 | |
Direct production costs ($ per tonne)
|
$
|
45
| |
$
|
43
| | $ |
43 | |
Direct production costs
|
$
|
15
| |
$
|
15
| | $ |
58 | |
Change in inventory
| |
1
| | |
-
| | | - | |
Depreciation and other non-cash costs
| |
2
| | |
2
| | | 11 | |
Operating costs
|
$
|
18
| |
$
|
17
| | $ |
69 | |
Operating earnings
|
$
|
27
| |
$
|
34
| | $ |
106 | |
Operating cash flow
|
$
|
27
| |
$
|
40
| | $ |
89 | |
The objective for 2012 uses the assumptions listed
on page 13.
The table below shows what contributed to the
change in operating earnings and operating cash
flow between 2012 and 2011.
(millions)
|
three months ended
March 31
| |
Lower copper and zinc prices, denominated in
Canadian dollars
|
$
|
(4
|
)
|
Lower zinc sales volumes
| |
(7
|
)
|
Higher other metal sales
| |
2
| |
Other
| |
2
| |
Lower operating earnings, compared to 2011
| |
(7
|
)
|
Change in cash taxes
| |
2
| |
Changes in working capital (see note 12 on page
41)
| |
(8
|
)
|
Lower operating cash flow, compared to 2011
|
$
|
(13
|
)
|
Capital spending
|
three months ended March 31
| | objective |
(thousands)
|
2012
|
2011
|
change
| | 2012 |
Capital spending
|
$
|
2,500
|
$
|
300
|
+733
|
%
| $ |
10,000 |
2012 outlook for capital spending
Capital spending of $10 million in 2012 will
primarily be to replace underground mobile
equipment, improve the tailings impoundment area,
and upgrade the satellite ore grinding circuit and
zinc cleaner cells.
Status of our development project
Cobre Panama
Basic engineering progressed this quarter and is
currently under independent review. We continue to
expect to conclude and report on basic engineering
in the second quarter of 2012 and we continue to
advance a range of financing options to provide us
with the financial capacity to proceed with the
project.
We made progress with several early works projects
this quarter in preparation to proceed with
construction, including further work on a pioneer
road and other road by-passes and upgrades and the
initiation of several permits required for
additional work. We also continued with basic
engineering of the power plant.
On April 25, 2012, KPMC completed its acquisition
of a 20 percent interest in Minera Panama, owner
and developer of Cobre Panama. KPMC acquired its
interest for US $169 million in cash, representing,
together with US $30 million it already paid, its
20 percent share of development costs to date.
2012 outlook for development
We plan to:
-
continue to build our privilege to operate
through intensive dialogue with stakeholders at
the community, regional and national levels, to
increase their understanding of the project and
its benefits to Panama, and our understanding of
their potential concerns
-
continue to improve site access and
infrastructure, including the completion of early
works projects that will facilitate
contractors' mobilization for site capture
-
complete additional work on resource definition,
metallurgical recoveries, pit design and other
engineering to allow us to include the Balboa and
Brazo mineralization in our mine plan for Cobre
Panama
-
complete basic engineering, review readiness
plans and prepare to initiate site capture upon
receipt of the main permits
-
continue to work with SK Engineering and
Construction to complete basic engineering for
the coal-fired power plant and begin detailed
engineering and procurement
-
update the capital and operating expenditure
estimates for the development project at the
conclusion of basic engineering
-
develop and implement, with the assistance of our
EP+CM contractors, project specific Health &
Safety and Environmental and Social mitigation
plans that are consistent with the ESIA and
Inmet's Corporate Responsibility Standards
-
continue to grow the strength of our management
team and human resources dedicated to the
project.
Capital expenditure guidance for the remainder of
2012 will be provided in the second quarter after
basic engineering is concluded and with
consideration of a final decision to proceed with
full-scale construction of the project.
Managing our liquidity
We develop our financing strategy by looking at our
long-term capital requirements and deciding on the
optimal mix of cash, future operating cash flow,
credit facilities and project financing.
Our capital structure includes a liquidity cushion
that gives us the flexibility to deal with
operational disruptions or general market
downturns.
|
three months ended March 31
| |
(millions)
|
2012
| |
2011
| |
CASH FROM OPERATING ACTIVITIES
| | | | | | |
Çayeli
|
$
|
31
| |
$
|
54
| |
Las Cruces
| |
80
| | |
58
| |
Pyhäsalmi
| |
27
| | |
40
| |
Corporate development and exploration not
incurred by operations
| |
(6
|
)
| |
(12
|
)
|
General and administration
| |
(10
|
)
| |
(8
|
)
|
Foreign exchange losses on US dollar
denominated cash
| |
(5
|
)
| |
(8
|
)
|
Other
| |
1
| | |
(6
|
)
| | |
118
| | |
118
| |
CASH FROM INVESTING AND FINANCING
| | | | | | |
Purchase of property, plant and equipment
| |
(85
|
)
| |
(41
|
)
|
Purchase and maturity of long-term investments,
net
| |
48
| | |
(267
|
)
|
Foreign exchange on cash held in foreign
currency
| |
1
| | |
3
| |
Other
| |
(6
|
)
| |
(2
|
)
| | |
(42
|
)
| |
(307
|
)
|
CASH FROM DISCONTINUED OPERATION (OK TEDI)
| |
-
| | |
307
| |
Increase in cash
| |
76
| | |
118
| |
Cash and short-term investments
| | | | | | | |
Beginning of period
| |
1,083
| | |
326
| | |
End of period
|
$
|
1,159
| |
$
|
444
| |
Our available liquidity also includes $571 million
of held to maturity investments ($623 million at
December 31, 2011), providing a total of $1,730
million in capital available to finance our growth
strategy as at March 31, 2012.
OPERATING ACTIVITIES
Key components of the change in operating cash
flows
(millions)
|
three months ended
March 31
| |
Higher earnings from operations (see page 4)
|
$
|
35
| |
Add back higher depreciation included in
earnings from operations
| |
4
| |
Lower tax expense
| |
4
| |
Changes in working capital (see note 12 on page
41)
| |
(49
|
)
|
Lower realized foreign exchange loss on cash
| |
4
| |
Lower corporate development and exploration
| |
4
| |
Other
| |
(2
|
)
|
Change in operating cash flow, compared to 2011
|
$
|
-
| |
Operating cash flows this quarter were consistent
with the first quarter of 2011. While operating
earnings before depreciation were higher than 2011
by $39 million, net working capital this quarter
end was significantly higher mainly reflecting
higher accounts receivable at Çayeli due to higher
sales volumes and the timing of collections from
customers.
2012 outlook for cash from operating
activities
The table below shows expected operating cash flow
from our operations, based on our outlook for metal
prices and production (see page 13), and the
assumptions in Results of our operations
(starting on page 13).
2012 estimated operating cash flow by operation
(millions)
| |
Çayeli
|
$
|
137
|
Las Cruces
| |
381
|
Pyhäsalmi
| |
89
| |
$
|
607
|
INVESTING AND FINANCING
Capital spending
|
three months ended March 31
|
(millions)
|
2012
|
2011
|
Çayeli
|
$
|
2
|
$
|
2
|
Las Cruces
| |
6
| |
15
|
Pyhäsalmi
| |
2
| |
-
|
Cobre Panama
| |
75
| |
24
| |
$
|
85
|
$
|
41
|
Please see Results of our operations and
Status of our development project for a
discussion of actual results and our 2012
objectives. Capital spending this quarter was
mainly for Cobre Panama.
Cash from discontinued operation - 2011
In January 2011, we sold our 18 percent equity
interest in Ok Tedi for net proceeds of $307
million (after Papua New Guinea withholding taxes).
Purchase and maturing of long-term investments
This quarter, $49 million of our bond portfolio
matured and was converted into cash. In the first
quarter of 2011, we used most of the US dollar
proceeds from the sale of Ok Tedi to purchase US
Treasury bonds with AA credit ratings.
2012 outlook for investing and financing
Capital spending
At our operating mines, we expect capital spending
to be $78 million in 2012, most significantly $48
million at Las Cruces, including $22 million for
mine development, as well as several smaller
expenditures including a tailings facility
expansion, land purchase and certain plant
improvements. We will provide capital spending
guidance for Cobre Panama for 2012 in the second
quarter after basic engineering is finalized and
released.
On April 25, 2012, KPMC completed its acquisition
of a 20 percent interest in Minera Panama, owner
and developer of Cobre Panama. KPMC acquired its
interest for US $169 million in cash, representing,
together with US $30 million it already paid, its
20 percent share of development costs to date.
Financial condition
Our strategy is to make sure we have sufficient
liquidity (including cash and committed credit
facilities) to finance our operating requirements
as well as our growth projects. At March 31, 2012,
we had $1,730 million in total funds, including
$1,159 million of cash and short-term investments
and $571 million invested in long-term bonds.
Cash
At March 31, 2012 our cash and short-term
investments of $1,159 million included cash and
money market instruments that mature in 90 days or
less.
Our policy is to invest excess cash in highly
liquid investments of the highest credit quality,
and to limit our exposure to individual
counterparties to minimize the risk associated with
these investments. We base our decisions about the
length of maturities on our cash flow requirements,
rates of return and other factors.
At March 31, 2012, we held cash and short-term
investments in the following:
-
A to AAA rated treasury funds and money market
funds managed by leading international fund
managers, who are investing in money market and
short-term debt securities and fixed income
securities issued by leading international
financial institutions and their sponsored
securitization vehicles.
-
Cash, term and overnight deposits with leading
Canadian and international financial
institutions.
See note 3 on page 36 in the consolidated financial
statements for more details about where our cash is
invested.
Long-term bonds
We hold a bond portfolio to provide better yields
while minimizing our investment risk. As at March
31, 2012, the portfolio was $571 million and
included:
-
58 percent US Treasury bonds
-
4 percent Government of Canada bonds
-
33 percent Canadian Provincial Government bonds
-
5 percent corporate bonds.
The bonds mature between April 2012 and August
2016. Although our intention is to hold these
investments to maturity, there is a liquid market
for them and they are available to us at any time.
Restricted cash
Our restricted cash balance of $78 million as at
March 31, 2012 included:
-
$19 million in cash collateralized letters of
credit for Inmet
-
$57 million at Las Cruces related to a
reclamation bond, issuing letters of credit to
suppliers and the local water authority and for
its labour bond to the government
-
$2 million for future reclamation at Pyhäsalmi.
COMMON SHARES
Common shares outstanding as of March 31, 2012
|
69,365,748
|
Deferred share units outstanding as of March
31, 2012 (redeemable on a one-for-one basis for
common shares)
|
91,772
|
Dividend declaration
The board of directors has declared an eligible
dividend of $0.10 per common share payable on June
15, 2012 to common shareholders of record as at May
31, 2012.
Supplementary financial information
Page 26 includes supplementary financial
information about cash costs. These measures do not
fall into the category of International Financial
Reporting Standards.
We use unit cash cost information as a key
performance indicator, both on a segmented and
consolidated basis. We have included cash costs as
supplementary information because we believe our
key stakeholders use these measures as a financial
indicator of our profitability and cash flows
before the effects of capital investment and
financing costs, such as interest.
Since cash costs are not recognized financial
measures under International Financial Reporting
Standards, they should not be considered in
isolation of earnings or cash flows. There is also
no standard way to calculate cash costs, so they
are not a reliable way to compare us to other
companies.
About Inmet
Inmet is a Canadian-based global mining company
that produces copper and zinc. We have three
wholly-owned mining operations: Çayeli (Turkey),
Las Cruces (Spain) and Pyhäsalmi (Finland).
Following KPMC's acquisition of a 20 percent
interest in Minera Panama, we have an 80 percent
interest in Cobre Panama, a development property in
Panama.
This press release is also available at www.inmetmining.com
.
First quarter conference call
Will be held on
You can also dial in by calling
-
Local or international: +1.416.695.6616
-
Toll-free within North America: +1.800.952.6845
Starting at approximately 10:30 a.m. (ET) Friday,
April 27, 2012, a conference call replay will be
available
-
Local or international: +1.905.694.9451 passcode
7808342
-
Toll-free within North America: +1.800.408.3053
passcode 7808342
INMET MINING CORPORATION
|
Supplementary financial information
| |
Cash costs
|
2012 For the three months ended March 31
| |
|
per pound of copper
| | |
ÇAYELI
| |
LAS CRUCES
|
PYHÄSALMI
| |
TOTAL
| |
(US dollars)
| | | | | | | | | | | | | | | | | | | | | | | |
Direct production costs
|
$
|
1.23
| |
$
|
1.34
|
$
|
2.11
| |
$
|
1.41
| |
Royalties and variable compensation
| |
0.12
| | |
0.07
| |
-
| | |
0.08
| |
Smelter processing charges and freight
| |
1.03
| | |
0.01
| |
0.79
| | |
0.45
| |
Metal credits
| |
(1.59
|
)
| |
-
| |
(3.09
|
)
| |
(0.94
|
)
| | | | | | | | | | | | |
Cash cost
|
$
|
0.79
| |
$
|
1.42
|
$
|
(0.19
|
)
|
$
|
1.00
| | | | | | | | | | | | | | | | | | | | | | | | | |
2011 For the three months ended March 31
| | | | |
per pound of copper
| | |
ÇAYELI
| |
LAS CRUCES
|
PYHÄSALMI
| |
TOTAL
| |
(US dollars)
| | | | | | | | | | | | | | | | | | | | | | | |
Direct production costs
|
$
|
1.62
| |
$
|
1.83
|
$
|
1.87
| |
$
|
1.77
| |
Royalties and variable compensation
| |
0.18
| | |
0.09
| |
-
| | |
0.10
| |
Smelter processing charges and freight
| |
1.83
| | |
0.01
| |
1.30
| | |
0.89
| |
Metal credits
| |
(3.02
|
)
| |
-
| |
(3.86
|
)
| |
(1.81
|
)
| | | | | | | | | | | | |
Cash cost
|
$
|
0.61
| |
$
|
1.93
|
$
|
(0.69
|
)
|
$
|
0.95
| | | | | | | | | | | | | | | | | |
Reconciliation of cash costs to statements of
earnings
| |
2012 For the three months ended March 31
| | | | |
per pound of copper
| |
(millions of Canadian dollars, except where
otherwise noted)
|
ÇAYELI
| |
LAS CRUCES
|
PYHÄSALMI
| |
TOTAL
| |
GAAP reference
| |
page 15
| | |
page 17
| |
page 19
| | | | | | | | | | | | | | | | |
Direct production costs
|
$
|
24
| |
$
|
41
|
$
|
15
| |
$
|
80
| |
Smelter processing charges and freight
| |
22
| | |
-
| |
8
| | |
30
| |
By product sales
| |
(30
|
)
| |
-
| |
(20
|
)
| |
(50
|
)
|
Adjust smelter processing and freight, and
sales to production basis
| |
(2
|
)
| |
-
| |
(4
|
)
| |
(6
|
)
|
Operating costs net of metal credits
|
$
|
14
| |
$
|
41
|
$
|
(1
|
)
|
$
|
54
| |
US $ to C$ exchange rate
|
$
|
1.00
| |
$
|
1.00
|
$
|
1.00
| |
$
|
1.00
| |
Inmet's share of production (000's)
| |
17,800
| | |
29,400
| |
7,500
| | |
54,700
| |
Cash cost (US dollars)
|
$
|
0.79
| |
$
|
1.42
|
$
|
(0.19
|
)
|
$
|
1.00
| | | | | | | | | |
2011 For the three months ended March 31
| | | | | |
per pound of copper
| |
(millions of Canadian dollars, except where
otherwise noted)
|
ÇAYELI
| |
LAS CRUCES
|
PYHÄSALMI
| |
TOTAL
| |
GAAP reference
| |
page 15
| | |
page 17
| |
page 19
| | | | | | | | | | | | | | | | |
Direct production costs
|
$
|
23
| |
$
|
33
|
$
|
15
| |
$
|
71
| |
Smelter processing charges and freight
| |
18
| | |
-
| |
13
| | |
31
| |
By product sales
| |
(30
|
)
| |
-
| |
(33
|
)
| |
(63
|
)
|
Adjust smelter processing and freight, and
sales to production basis
| |
(3
|
)
| |
-
| |
-
| | |
(3
|
)
|
Operating costs net of metal credits
|
$
|
8
| |
$
|
33
|
$
|
(5
|
)
|
$
|
36
| |
US $ to C$ exchange rate
|
$
|
0.99
| |
$
|
0.99
|
$
|
0.99
| |
$
|
0.99
| |
Inmet's share of production (000's)
| |
13,200
| | |
17,800
| |
8,000
| | |
39,000
| |
Cash cost (US dollars)
|
$
|
0.61
| |
$
|
1.93
|
$
|
(0.69
|
)
|
$
|
0.95
| |
INMET MINING CORPORATION
| | | | | |
Quarterly review
| | | | | |
(unaudited)
| | | | | | | | | | | | | | |
Latest Four Quarters
| | | | | | | | |
(thousands of Canadian dollars, except per
share amounts)
|
2012
First
quarter
| |
2011
Fourth
quarter
| |
2011
Third
quarter
| |
2011
Second
quarter
| |
STATEMENTS OF EARNINGS
| | | | | | | | | | | | |
Gross sales
|
$
|
294,904
| |
$
|
241,059
| |
$
|
261,757
| |
$
|
221,952
| |
Smelter processing charges and freight
| |
(30,302
|
)
| |
(28,228
|
)
| |
(37,043
|
)
| |
(33,870
|
)
|
Cost of sales (excluding depreciation)
| |
(82,240
|
)
| |
(93,138
|
)
| |
(81,144
|
)
| |
(73,644
|
)
| |
Depreciation
| |
(31,055
|
)
| |
(27,716
|
)
| |
(27,321
|
)
| |
(26,649
|
)
| | |
151,307
| | |
91,977
| | |
116,249
| | |
87,789
| |
Corporate development and exploration
| |
(9,090
|
)
| |
(6,541
|
)
| |
(4,688
|
)
| |
(4,562
|
)
|
General and administration
| |
(10,065
|
)
| |
(7,734
|
)
| |
(9,987
|
)
| |
(8,258
|
)
|
Investment and other income
| |
(6,469
|
)
| |
(4,011
|
)
| |
35,778
| | |
4,731
| |
Finance costs
| |
(2,681
|
)
| |
(2,390
|
)
| |
(2,377
|
)
| |
(2,386
|
)
|
Income tax expense
| |
(26,865
|
)
| |
(23,229
|
)
| |
(33,770
|
)
| |
(21,264
|
)
|
Net income attributable to Inmet equity holders
|
$
|
96,137
| |
$
|
48,072
| |
$
|
101,205
| |
$
|
56,050
| | | | | | | | | | | | | | |
Net Income per share
| | | | | | | | | | | | | |
Basic
|
$
|
1.39
| |
$
|
0.69
| |
$
|
1.46
| |
$
|
0.86
| | |
Diluted
|
$
|
1.38
| |
$
|
0.69
| |
$
|
1.46
| |
$
|
0.86
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
Previous Four Quarters
| | | | | | | | |
(thousands of Canadian dollars, except per
share amounts)
|
2011
First
quarter
| |
2010(1)
Fourth
quarter
| |
2010(1)
Third
quarter
| |
2010(1)
Second
quarter
| |
STATEMENTS OF EARNINGS
| | | | | | | | | | | | |
Gross sales
|
$
|
254,277
| |
$
|
230,269
| |
$
|
225,960
| |
$
|
161,165
| |
Smelter processing charges and freight
| |
(31,585
|
)
| |
(35,733
|
)
| |
(34,358
|
)
| |
(35,272
|
)
|
Cost of sales (excluding depreciation)
| |
(79,150
|
)
| |
(82,967
|
)
| |
(70,503
|
)
| |
(48,123
|
)
| |
Depreciation
| |
(27,040
|
)
| |
(18,882
|
)
| |
(19,062
|
)
| |
(10,328
|
)
| | |
116,502
| | |
92,687
| | |
102,037
| | |
67,442
| |
Corporate development and exploration
| |
(13,411
|
)
| |
(5,434
|
)
| |
(2,758
|
)
| |
(2,524
|
)
|
General and administration
| |
(8,422
|
)
| |
(4,758
|
)
| |
(3,985
|
)
| |
(6,200
|
)
|
Investment and other income
| |
(5,773
|
)
| |
50,622
| | |
3,197
| | |
3,321
| |
Finance costs
| |
(2,331
|
)
| |
(4,294
|
)
| |
(5,239
|
)
| |
(1,770
|
)
|
Income tax expense
| |
(27,160
|
)
| |
(31,960
|
)
| |
(25,266
|
)
| |
(8,775
|
)
|
Income from continuing operations
| |
59,405
| | |
96,863
| | |
67,986
| | |
51,494
| |
Income from discontinued operation (net of
taxes)
| |
83,439
| | |
47,993
| | |
33,569
| | |
12,475
| | |
$
|
142,844
| |
$
|
144,856
| |
$
|
101,555
| |
$
|
63,969
| |
Net income attributable to:
| | | | | | | | | | | | | |
Inmet equity holders
|
$
|
142,844
| |
$
|
146,932
| |
$
|
91,678
| |
$
|
68,495
| | |
Non-controlling interest
| |
-
| | |
(2,076
|
)
| |
9,877
| | |
(4,526
|
)
| |
$
|
142,844
| |
$
|
144,856
| |
$
|
101,555
| |
$
|
63,969
| |
Income from continuing operations per share
| | | | | | | | | | | | | |
Basic
|
$
|
0.97
| |
$
|
1.73
| |
$
|
1.04
| |
$
|
1.00
| | |
Diluted
|
$
|
0.96
| |
$
|
1.73
| |
$
|
1.04
| |
$
|
1.00
| |
Income from discontinuing operations per share
| | | | | | | | | | | | | |
Basic
|
$
|
1.36
| |
$
|
0.84
| |
$
|
0.60
| |
$
|
0.22
| | |
Diluted
|
$
|
1.35
| |
$
|
0.84
| |
$
|
0.60
| |
$
|
0.22
| |
Net Income per share
| | | | | | | | | | | | | |
Basic
|
$
|
2.33
| |
$
|
2.57
| |
$
|
1.64
| |
$
|
1.22
| | |
Diluted
|
$
|
2.31
| |
$
|
2.57
| |
$
|
1.64
| |
$
|
1.22
| |
| |
(1)
|
Information from 2010 restated in accordance
with IFRS, including presentation of our share
of Ok Tedi as discontinued operations.
|
| |
Consolidated financial statements
| |
INMET MINING CORPORATION
|
Consolidated statements of financial position
| |
(thousands of Canadian dollars)
|
Note
reference
|
March 31,
2012
| |
December 31,
2011
| | | |
(unaudited)
| | | |
Assets
| | | | | | | |
Current assets:
| | | | | | | | |
Cash and short term investments
|
3
|
$
|
1,159,388
| |
$
|
1,082,893
| | |
Restricted cash
|
4
| |
955
| | |
810
| | |
Accounts receivable
| | |
130,245
| | |
105,213
| | |
Inventories
| | |
84,336
| | |
90,533
| | |
Current portion of held to maturity investments
| | |
150,750
| | |
181,699
| | | | | | | | | | | | |
1,525,674
| | |
1,461,148
| |
Restricted cash
|
4
| |
77,249
| | |
71,822
| |
Property, plant and equipment
| | |
1,913,642
| | |
1,830,992
| |
Investments in equity securities
| | |
3,272
| | |
3,161
| |
Held to maturity investments
| | |
419,815
| | |
441,775
| |
Deferred income tax assets
| | |
58
| | |
327
| |
Other assets
| | |
1,468
| | |
1,425
| |
Total assets
| |
$
|
3,941,178
| |
$
|
3,810,650
| | | | | | | | | |
Liabilities
| | | | | | | |
Current liabilities:
| | | | | | | | |
Accounts payable and accrued liabilities
| |
$
|
167,203
| |
$
|
143,149
| | |
Provisions
| | |
13,357
| | |
13,517
| | | | |
180,560
| | |
156,666
| |
Long-term debt
| | |
17,446
| | |
17,126
| |
Provisions
| | |
178,176
| | |
175,609
| |
Other liabilities
| | |
17,595
| | |
17,719
| |
Deferred income tax liabilities
| | |
41,821
| | |
29,282
| |
Total liabilities
| | |
435,598
| | |
396,402
| | | | | | | | | |
Commitments and contingencies
|
13
| | | | | | | | | | | | | | |
Equity
| | | | | | | |
Share capital
| | |
1,592,412
| | |
1,591,948
| |
Contributed surplus
| | |
66,801
| | |
66,752
| |
Share based compensation
|
5
| |
10,031
| | |
8,527
| |
Retained earnings
| | |
2,007,942
| | |
1,911,805
| |
Accumulated other comprehensive loss
|
6
| |
(171,606
|
)
| |
(164,784
|
)
|
Total equity
| | |
3,505,580
| | |
3,414,248
| |
Total liabilities and equity
| |
$
|
3,941,178
| |
$
|
3,810,650
| |
(See accompanying notes)
| | | | | | | |
| |
INMET MINING CORPORATION
|
Segmented statements of financial position
|
| | | | | | | | | | | | | | | | | | | | |
2012 As at March 31 (unaudited)
|
CORPORATE
& OTHER
|
ÇAYELI
|
LAS
CRUCES
|
PYHÄSALMI
|
COBRE
PANAMA
|
TOTAL
|
(thousands of Canadian dollars)
| |
(Turkey)
|
(Spain)
|
(Finland)
|
(Panama)
| | | | | | | | | | | | | | |
Assets
| | | | | | | | | | | | |
Cash and short-term investments
|
$
|
761,538
|
$
|
163,291
|
$
|
102,594
|
$
|
68,736
|
$
|
63,229
|
$
|
1,159,388
|
Other current assets
| |
156,982
| |
75,354
| |
82,112
| |
49,914
| |
1,924
| |
366,286
|
Restricted cash
| |
19,549
| |
-
| |
56,070
| |
1,630
| |
-
| |
77,249
|
Property, plant and equipment
| |
1,646
| |
135,813
| |
894,868
| |
68,896
| |
812,419
| |
1,913,642
|
Investments in equity securities
| |
3,272
| |
-
| |
-
| |
-
| |
-
| |
3,272
|
Held to maturity investments
| |
338,667
| |
81,148
| |
-
| |
-
| |
-
| |
419,815
|
Other non-current assets
| |
1,354
| |
172
| |
-
| |
-
| |
-
| |
1,526
| |
$
|
1,283,008
|
$
|
455,778
|
$
|
1,135,644
|
$
|
189,176
|
$
|
877,572
|
$
|
3,941,178
| | | | | | | | | | | | | |
Liabilities
| | | | | | | | | | | | |
Current liabilities
|
$
|
17,000
|
$
|
39,198
|
$
|
58,074
|
$
|
16,793
|
$
|
49,495
|
$
|
180,560
|
Long-term debt
| |
17,446
| |
-
| |
-
| |
-
| |
-
| |
17,446
|
Provisions
| |
67,987
| |
18,505
| |
60,357
| |
31,327
| |
-
| |
178,176
|
Other liabilities
| |
676
| |
-
| |
16,919
| |
-
| |
-
| |
17,595
|
Deferred income tax liabilities
| |
-
| |
585
| |
29,600
| |
11,636
| |
-
| |
41,821
| |
$
|
103,109
|
$
|
58,288
|
$
|
164,950
|
$
|
59,756
|
$
|
49,495
|
$
|
435,598
| | | | | | | | | | | | | | | | | | | | |
2011 As at December 31
|
CORPORATE
& OTHER
|
ÇAYELI
|
LAS
CRUCES
|
PYHÄSALMI
|
COBRE
PANAMA
|
TOTAL
|
(thousands of Canadian dollars)
| |
(Turkey)
|
(Spain)
|
(Finland)
|
(Panama)
| | | | | | | | | | | | | | |
Assets
| | | | | | | | | | | | |
Cash and short-term investments
|
$
|
734,794
|
$
|
137,590
|
$
|
136,128
|
$
|
47,623
|
$
|
26,758
|
$
|
1,082,893
|
Other current assets
| |
189,749
| |
46,197
| |
86,683
| |
53,597
| |
2,029
| |
378,255
|
Restricted cash
| |
16,842
| |
-
| |
53,364
| |
1,616
| |
-
| |
71,822
|
Property, plant and equipment
| |
1,236
| |
142,260
| |
897,860
| |
68,274
| |
721,362
| |
1,830,992
|
Investments in equity securities
| |
3,161
| |
-
| |
-
| |
-
| |
-
| |
3,161
|
Held to maturity investments
| |
359,452
| |
82,323
| |
-
| |
-
| |
-
| |
441,775
|
Other non-current assets
| |
1,303
| |
449
| |
-
| |
-
| |
-
| |
1,752
| |
$
|
1,306,537
|
$
|
408,819
|
$
|
1,174,035
|
$
|
171,110
|
$
|
750,149
|
$
|
3,810,650
| | | | | | | | | | | | | |
Liabilities
| | | | | | | | | | | | |
Current liabilities
|
$
|
22,006
|
$
|
42,822
|
$
|
54,898
|
$
|
16,957
|
$
|
19,983
|
$
|
156,666
|
Long-term debt
| |
17,126
| |
-
| |
-
| |
-
| |
-
| |
17,126
|
Provisions
| |
71,083
| |
18,023
| |
55,626
| |
30,877
| |
-
| |
175,609
|
Other liabilities
| |
676
| |
-
| |
17,043
| |
-
| |
-
| |
17,719
|
Deferred income tax liabilities
| |
-
| |
-
| |
17,656
| |
11,626
| |
-
| |
29,282
| |
$
|
110,891
|
$
|
60,845
|
$
|
145,223
|
$
|
59,460
|
$
|
19,983
|
$
|
396,402
|
| |
INMET MINING CORPORATION
|
Consolidated statements of changes in equity
|
(unaudited)
|
| | | | | | | | | | | |
Attributable to Inmet equity holders
| |
(thousands of Canadian dollars)
|
Share
Capital
|
Retained
earnings
| |
Contributed
surplus
| |
Share based
compensation
|
Accumulated
other
comprehensive
income (loss)
| |
Total
| |
Balance as at December 31, 2010
|
$
|
1,089,576
|
$
|
1,577,507
| |
$
|
66,131
| |
$
|
6,542
|
$
|
(185,217
|
)
|
$
|
2,554,539
| |
Comprehensive income
| |
-
| |
142,844
| | |
-
| | |
-
| |
33,868
| | |
176,712
| |
Equity settled share-based compensation plans
| |
-
| |
-
| | |
151
| | |
1,041
| |
-
| | |
1,192
| |
Balance as at March 31, 2011
|
$
|
1,089,576
|
$
|
1,720,351
| |
$
|
66,282
| |
$
|
7,583
|
$
|
(151,349
|
)
|
$
|
2,732,443
| |
Comprehensive income
| |
-
| |
205,327
| | |
-
| | |
-
| |
(13,435
|
)
| |
191,892
| |
Equity settled share-based compensation plans
| |
204
| |
-
| | |
470
| | |
944
| |
-
| | |
1,618
| |
Dividends
| |
-
| |
(13,873
|
)
| |
-
| | |
-
| |
-
| | |
(13,873
|
)
|
Issuance of share capital
| |
502,168
| |
-
| | |
-
| | |
-
| |
-
| | |
502,168
| |
Balance as at December 31, 2011
|
$
|
1,591,948
|
$
|
1,911,805
| |
$
|
66,752
| |
$
|
8,527
|
$
|
(164,784
|
)
|
$
|
3,414,248
| |
Comprehensive income (loss)
| |
-
| |
96,137
| | |
-
| | |
-
| |
(6,822
|
)
| |
89,315
| |
Equity settled share-based compensation plans
| |
464
| |
-
| | |
49
| | |
1,504
| |
-
| | |
2,017
| |
Balance as at March 31, 2012
|
$
|
1,592,412
|
$
|
2,007,942
| |
$
|
66,801
| |
$
|
10,031
|
$
|
(171,606
|
)
|
$
|
3,505,580
| |
| |
INMET MINING CORPORATION
|
Consolidated statements of earnings
|
(unaudited)
| |
| |
Three Months Ended March 31
| |
(thousands of Canadian dollars except per share
amounts)
|
Note
reference
|
2012
| |
2011
| | | | | | | | | |
Gross sales
| |
$
|
294,904
| |
$
|
254,277
| |
Smelter processing charges and freight
| | |
(30,302
|
)
| |
(31,585
|
)
|
Cost of sales (excluding depreciation)
| | |
(82,240
|
)
| |
(79,150
|
)
| |
Depreciation
| | |
(31,055
|
)
| |
(27,040
|
)
|
Earnings from operations
| | |
151,307
| | |
116,502
| | | | | | | | | |
Corporate development and exploration
| | |
(9,090
|
)
| |
(13,411
|
)
|
General and administration
| | |
(10,065
|
)
| |
(8,422
|
)
|
Investment and other income
|
7
| |
(6,469
|
)
| |
(5,773
|
)
|
Finance costs
|
8
| |
(2,681
|
)
| |
(2,331
|
)
|
Income before taxation
| | |
123,002
| | |
86,565
| | | | | | | | | |
Income tax expense
|
9
| |
(26,865
|
)
| |
(27,160
|
)
|
Income from continuing operations
| | |
96,137
| |
$
|
59,405
| |
Income from discontinued operation (net of
taxes)
|
10
| |
-
| | |
83,439
| |
Net income
| | |
96,137
| |
$
|
142,844
| | | | | | | | | |
Earnings per common share
|
11
| | | | | | | | | | | | | | |
Income from continuing operations
| | | | | | | | |
Basic
| |
$
|
1.39
| |
$
|
0.97
| | |
Diluted
| |
$
|
1.38
| |
$
|
0.96
| | | | | | | | | |
Income from discontinued operation
| | | | | | | | |
Basic
| |
$
|
-
| |
$
|
1.36
| | |
Diluted
| |
$
|
-
| |
$
|
1.35
| | | | | | | | | |
Net income
| | | | | | | | |
Basic
| |
$
|
1.39
| |
$
|
2.33
| | |
Diluted
| |
$
|
1.38
| |
$
|
2.31
| |
(See accompanying notes)
| | | | | | | |
| |
INMET MINING CORPORATION
|
Segmented statements of earnings
|
(unaudited)
| |
| | | | | | | | | | | | | | |
2012 For the three months ended March 31
|
CORPORATE
& OTHER
| |
ÇAYELI
| |
LAS
CRUCES
| |
PYHÄSALMI
| |
COBRE
PANAMA
| |
DISCONTINUED
OPERATIONS -
OK TEDI
| |
TOTAL
| |
(thousands of Canadian dollars)
| | | | |
(Turkey
|
)
| |
(Spain
|
)
| |
(Finland
|
)
| |
(Panama
|
)
| |
(Papua
New Guinea
|
)
| | | | | | | | | | | | | | | | | | | | | | | | | |
Gross sales
|
$
|
-
| |
$
|
127,423
| |
$
|
114,007
| |
$
|
53,474
| |
$
|
-
| |
$
|
-
| |
$
|
294,904
| |
Smelter processing charges and freight
| |
-
| | |
(22,174
|
)
| |
(305
|
)
| |
(7,823
|
)
| |
-
| | |
-
| | |
(30,302
|
)
|
Cost of sales (excluding depreciation)
| |
2,837
| | |
(29,579
|
)
| |
(39,248
|
)
| |
(16,250
|
)
| |
-
| | |
-
| | |
(82,240
|
)
| |
Depreciation
| |
-
| | |
(7,501
|
)
| |
(21,140
|
)
| |
(2,414
|
)
| |
-
| | |
-
| | |
(31,055
|
)
|
Earnings from operations
| |
2,837
| | |
68,169
| | |
53,314
| | |
26,987
| | |
-
| | |
-
| | |
151,307
| | | | | | | | | | | | | | | | | | | | | | | |
Corporate development and exploration
| |
(5,702
|
)
| |
(394
|
)
| |
(948
|
)
| |
(800
|
)
| |
(1,246
|
)
| |
-
| | |
(9,090
|
)
|
General and administration
| |
(10,065
|
)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(10,065
|
)
|
Investment and other income
| |
(4,275
|
)
| |
(1,914
|
)
| |
(112
|
)
| |
(168
|
)
| |
-
| | |
-
| | |
(6,469
|
)
|
Finance costs
| |
(841
|
)
| |
(348
|
)
| |
(1,304
|
)
| |
(188
|
)
| |
-
| | |
-
| | |
(2,681
|
)
|
Income tax expense
| |
(140
|
)
| |
(9,791
|
)
| |
(11,581
|
)
| |
(5,353
|
)
| |
-
| | |
-
| | |
(26,865
|
)
| | | | | | | | | | | | | | | | | | | | | | |
Net income
|
$
|
(18,186
|
)
|
$
|
55,722
| |
$
|
39,369
| |
$
|
20,478
| |
$
|
(1,246
|
)
|
$
|
-
| |
$
|
96,137
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2011 For the three months ended March 31
|
CORPORATE
& OTHER
| |
ÇAYELI
| |
LAS
CRUCES
| |
PYHÄSALMI
| |
COBRE
PANAMA
| |
DISCONTINUED
OPERATIONS -
OK TEDI
| |
TOTAL
| |
(thousands of Canadian dollars)
| | |
(Turkey)
| |
(Spain)
| |
(Finland)
| |
(Panama)
| |
(Papua
New Guinea)
| | | | | | | | | | | | | | | | | | | | | | | | | |
Gross sales
|
$
|
-
| |
$
|
99,053
| |
$
|
90,826
| |
$
|
64,398
| |
$
|
-
| |
$
|
-
| |
$
|
254,277
| |
Smelter processing charges and freight
| |
-
| | |
(17,894
|
)
| |
(268
|
)
| |
(13,423
|
)
| |
-
| | |
-
| | |
(31,585
|
)
|
Cost of sales (excluding depreciation)
| |
-
| | |
(24,460
|
)
| |
(40,426
|
)
| |
(14,264
|
)
| |
-
| | |
-
| | |
(79,150
|
)
| |
Depreciation
| |
-
| | |
(5,226
|
)
| |
(19,556
|
)
| |
(2,258
|
)
| |
-
| | |
-
| | |
(27,040
|
)
|
Earnings from operations
| |
-
| | |
51,473
| | |
30,576
| | |
34,453
| | |
-
| | |
-
| | |
116,502
| | | | | | | | | | | | | | | | | | | | | | | |
Corporate development and exploration
| |
(9,969
|
)
| |
(478
|
)
| |
(5
|
)
| |
(730
|
)
| |
(2,229
|
)
| |
-
| | |
(13,411
|
)
|
General and administration
| |
(8,422
|
)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(8,422
|
)
|
Investment and other income
| |
(6,995
|
)
| |
850
| | |
248
| | |
124
| | |
-
| | |
-
| | |
(5,773
|
)
|
Finance costs
| |
(941
|
)
| |
(147
|
)
| |
(1,024
|
)
| |
(219
|
)
| |
-
| | |
-
| | |
(2,331
|
)
|
Income tax expense
| |
(204
|
)
| |
(11,656
|
)
| |
(7,497
|
)
| |
(7,803
|
)
| |
-
| | |
-
| | |
(27,160
|
)
|
Net income from continuing operations
|
$
|
(26,531
|
)
|
$
|
40,042
| |
$
|
22,298
| |
$
|
25,825
| |
$
|
(2,229
|
)
|
$
|
-
| |
$
|
59,405
| | | | | | | | | | | | | | | | | | | | | | | |
Income from discontinued operation (net of
taxes)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
83,439
| | |
83,439
| |
Net income
|
$
|
(26,531
|
)
|
$
|
40,042
| |
$
|
22,298
| |
$
|
25,825
| |
$
|
(2,229
|
)
|
$
|
83,439
| |
$
|
142,844
| |
| |
INMET MINING CORPORATION
|
Consolidated statements of comprehensive income
|
(unaudited)
|
| | | | | | | |
Three Months Ended
March 31
| |
(thousands of Canadian dollars)
|
Note
reference
|
2012
| |
2011
| | | | | | | | | |
Net income
| |
$
|
96,137
| |
$
|
142,844
| | | | | | | | | |
Other comprehensive income for the period:
| | | | | | | |
Continuing operations
| | | | | | | | |
Changes in fair value of investments
| | |
103
| | |
(540
|
)
| |
Currency translation adjustments
| | |
(6,927
|
)
| |
17,956
| |
Income tax recovery related to investments -
other comprehensive income
| | |
2
| | |
77
| | | | |
(6,822
|
)
| |
17,493
| |
Other comprehensive income from discontinued
operation (net of taxes)
| | |
-
| | |
16,375
| | | | | | | | | |
Comprehensive income
| |
$
|
89,315
| |
$
|
176,712
| | | | | | | | | |
(See accompanying notes)
| | | | | | | |
| |
INMET MINING CORPORATION
|
Consolidated statements of cash flows
|
(unaudited)
| |
| |
Three Months Ended
March 31
| |
(thousands of Canadian dollars)
|
Note
reference
|
2012
| |
2011
| | | | | | | | | |
Cash provided by (used in) operating
activities(1)
| | | | | | | | | | | | | | | |
Net income from continuing operations
| |
$
|
96,137
| |
$
|
59,405
| |
Add (deduct) items not affecting cash:
| | | | | | | | |
Depreciation
| | |
31,055
| | |
27,040
| | |
Deferred income taxes
| | |
12,346
| | |
8,389
| | |
Accretion expense on provisions and capital
leases
| | |
2,234
| | |
1,891
| | |
Change in asset retirement obligations at
closed sites
| | |
(2,837
|
)
| |
-
| | |
Foreign exchange loss
| | |
7,643
| | |
4,225
| | |
Other
| | |
1,977
| | |
(418
|
)
|
Settlement of asset retirement obligations
| | |
(911
|
)
| |
(1,666
|
)
|
Net change in non-cash working capital
|
12
| |
(29,368
|
)
| |
19,310
| | | | |
118,276
| | |
118,176
| | | | | | | | | |
Cash provided by (used in) investing activities
| | | | | | | | | | | | | | | |
Purchase of property, plant and equipment
| | |
(85,321
|
)
| |
(40,730
|
)
|
Acquisition of held to maturity investments
| | |
(1,161
|
)
| |
(275,456
|
)
|
Maturing of held to maturity investments
| | |
48,932
| | |
8,000
| |
Funding received under Cobre Panama option
agreement
| | |
-
| | |
3,944
| |
Purchase of equity securities
| | |
-
| | |
(3,493
|
)
|
Sale of short-term investments
| | |
266,948
| | |
7,278
| |
Other
| | |
-
| | |
126
| | | | |
229,398
| | |
(300,331
|
)
| | | | | | | | |
Cash provided by (used in) financing activities
| | | | | | | | | | | | | | | |
Financial assurance payments
| | |
(5,070
|
)
| |
(1,952
|
)
|
Other
| | |
(492
|
)
| |
(884
|
)
| | | |
(5,562
|
)
| |
(2,836
|
)
| | | | | | | | | | | | | | | | |
Foreign exchange on cash held in foreign
currencies
| | |
1,331
| | |
3,140
| | | | | | | | | |
Cash provided by discontinued operation
|
10
| |
-
| | |
306,982
| | | | | | | | | |
Increase in cash:
| | |
343,443
| | |
125,131
| |
Cash:
| | | | | | | | |
Beginning of period
| | |
815,945
| | |
319,129
| | |
End of period
| |
$
|
1,159,388
| |
$
|
444,260
| |
Short term investments
| | |
-
| | |
-
| | | | | | | | | |
Cash and short-term investments
| |
$
|
1,159,388
| |
$
|
444,260
| | | | | | | | | |
(See accompanying notes)
| | | | | | | | | | | | | | | |
(1)Supplementary cash flow information:
| | | | | | | | | | | | | | | | | |
Cash interest paid
| |
$
|
549
| |
$
|
562
| | | |
Cash taxes paid
| |
$
|
13,765
| |
$
|
17,509
| |
| |
INMET MINING CORPORATION
|
Segmented statements of cash flows
|
(unaudited)
| |
| | | | | | | | | | | | | | |
2012 For the three months ended March 31
|
CORPORATE
& OTHER
| |
ÇAYELI
| |
LAS
CRUCES
| |
PYHÄSALMI
| |
COBRE
PANAMA
| |
DISCONTINUED
OPERATIONS -
OK TEDI
| |
TOTAL
| |
(thousands of Canadian dollars)
| | |
(Turkey)
| |
(Spain)
| |
(Finland)
| |
(Panama)
| |
(Papua
New Guinea)
| | | |
Cash provided by (used in) operating activities
| | | | | | | | | | | | | | | | | | | | | |
Before net change in non-cash working capital
|
$
|
(13,829
|
)
|
$
|
67,197
| |
$
|
73,648
| |
$
|
23,165
| |
$
|
(2,537
|
)
|
$
|
-
| |
$
|
147,644
| |
Net change in non-cash working capital
| |
(3,158
|
)
| |
(36,373
|
)
| |
6,386
| | |
3,777
| | |
-
| | |
-
| | |
(29,368
|
)
| | |
(16,987
|
)
| |
30,824
| | |
80,034
| | |
26,942
| | |
(2,537
|
)
| |
-
| | |
118,276
| |
Cash provided by (used in) investing activities
| | | | | | | | | | | | | | | | | | | | | |
Purchase of property, plant and equipment
| |
(587
|
)
| |
(2,324
|
)
| |
(6,182
|
)
| |
(2,462
|
)
| |
(73,766
|
)
| |
-
| | |
(85,321
|
)
|
Acquisition of held to maturity investments
| |
(702
|
)
| |
(459
|
)
| |
-
| | |
-
| | |
-
| | |
-
| | |
(1,161
|
)
|
Maturity of held-to-maturity investments
| |
48,932
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
48,932
| |
Sale of short-term investments
| |
266,948
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
266,948
| | | |
314,591
| | |
(2,783
|
)
| |
(6,182
|
)
| |
(2,462
|
)
| |
(73,766
|
)
| |
-
| | |
229,398
| | | | | | | | | | | | | | | | | | | | | | | |
Cash provided by (used in) financing activities
| |
(2,751
|
)
| |
-
| | |
(2,811
|
)
| |
-
| | |
-
| | |
-
| | |
(5,562
|
)
| | | | | | | | | | | | | | | | | | | | | | |
Foreign exchange on cash held in foreign
currencies
| |
2,240
| | |
(2,457
|
)
| |
692
| | |
725
| | |
131
| | |
-
| | |
1,331
| | | | | | | | | | | | | | | | | | | | | | | |
Intergroup funding (distributions)
| |
(3,401
|
)
| |
117
| | |
(105,267
|
)
| |
(4,092
|
)
| |
112,643
| | |
-
| | |
-
| |
Increase (decrease) in cash
| |
293,692
| | |
25,701
| | |
(33,534
|
)
| |
21,113
| | |
36,471
| | |
-
| | |
343,443
| |
Cash:
| | | | | | | | | | | | | | | | | | | | | | |
Beginning of year
| |
467,846
| | |
137,590
| | |
136,128
| | |
47,623
| | |
26,758
| | |
-
| | |
815,945
| | |
End of period
| |
761,538
| | |
163,291
| | |
102,594
| | |
68,736
| | |
63,229
| | |
-
| | |
1,159,388
| |
Short term investments
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Cash and short-term investments
|
$
|
761,538
| |
$
|
163,291
| |
$
|
102,594
| |
$
|
68,736
| |
$
|
63,229
| |
$
|
-
| |
$
|
1,159,388
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2011 For the three months ended March 31
|
CORPORATE
& OTHER
| |
ÇAYELI
| |
LAS
CRUCES
| |
PYHÄSALMI
| |
COBRE
PANAMA
| |
DISCONTINUED
OPERATIONS -
OK TEDI
| |
TOTAL
| |
(thousands of Canadian dollars)
| | |
(Turkey)
| |
(Spain)
| |
(Finland)
| |
(Panama)
| |
(Papua
New Guinea)
| | | |
Cash provided by (used in) operating activities
| | | | | | | | | | | | | | | | | | | | | |
Before net change in non-cash working capital
|
$
|
(26,380
|
)
|
$
|
46,882
| |
$
|
52,264
| |
$
|
28,329
| |
$
|
(2,229
|
)
|
$
|
-
| |
$
|
98,866
| |
Net change in non-cash working capital
| |
(4,841
|
)
| |
7,115
| | |
5,426
| | |
11,610
| | |
-
| | |
-
| | |
19,310
| | | |
(31,221
|
)
| |
53,997
| | |
57,690
| | |
39,939
| | |
(2,229
|
)
| |
-
| | |
118,176
| |
Cash provided by (used in) investing activities
| | | | | | | | | | | | | | | | | | | | | |
Purchase of property, plant and equipment
| |
(182
|
)
| |
(2,416
|
)
| |
(14,834
|
)
| |
(326
|
)
| |
(22,972
|
)
| |
-
| | |
(40,730
|
)
|
Acquisition of held to maturity investments
| |
(274,979
|
)
| |
(477
|
)
| |
-
| | |
-
| | |
-
| | |
-
| | |
(275,456
|
)
|
Maturing of held to maturity investments
| |
8,000
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
8,000
| |
Funding received under Cobre Panama option
agreement
| |
-
| | |
-
| | |
-
| | |
-
| | |
3,944
| | |
-
| | |
3,944
| |
Purchase of equity investments
| |
(3,493
|
)
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
(3,493
|
)
|
Sale of short-term investments
| |
-
| | |
-
| | |
7,278
| | |
-
| | |
-
| | |
-
| | |
7,278
| |
Other
| |
126
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
126
| | | |
(270,528
|
)
| |
(2,893
|
)
| |
(7,556
|
)
| |
(326
|
)
| |
(19,028
|
)
| |
-
| | |
(300,331
|
)
| | | | | | | | | | | | | | | | | | | | | | |
Cash provided by (used in) financing activities
| |
139
| | |
-
| | |
(2,975
|
)
| |
-
| | |
-
| | |
-
| | |
(2,836
|
)
| | | | | | | | | | | | | | | | | | | | | | |
Foreign exchange on cash held in foreign
currencies
| |
-
| | |
(3,520
|
)
| |
2,433
| | |
4,320
| | |
(93
|
)
| |
-
| | |
3,140
| | | | | | | | | | | | | | | | | | | | | | | |
Cash provided by discontinued operation
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
306,982
| | |
306,982
| | | | | | | | | | | | | | | | | | | | | | | |
Intergroup funding (distributions)
| |
302,598
| | |
(79
|
)
| |
(14,590
|
)
| |
1,910
| | |
17,143
| | |
(306,982
|
)
| |
-
| |
Increase (decrease) in cash
| |
988
| | |
47,505
| | |
35,002
| | |
45,843
| | |
(4,207
|
)
| |
-
| | |
125,131
| |
Cash:
| | | | | | | | | | | | | | | | | | | | | | |
Beginning of year
| |
53,184
| | |
107,750
| | |
52,570
| | |
97,056
| | |
8,569
| | |
-
| | |
319,129
| | |
End of period
| |
54,172
| | |
155,255
| | |
87,572
| | |
142,899
| | |
4,362
| | |
-
| | |
444,260
| |
Short term investments
| |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| | |
-
| |
Cash and short-term investments
|
$
|
54,172
| |
$
|
155,255
| |
$
|
87,572
| |
$
|
142,899
| |
$
|
4,362
| |
$
|
-
| |
$
|
444,260
| |
Notes to the consolidated financial statements
1. Corporate information
Inmet Mining Corporation is a publicly traded
corporation listed on the Toronto Stock Exchange.
Our registered and head office is 330 Bay Street,
Suite 1000, Toronto, Canada. Our principal
activities are the exploration, development and
mining of base metals.
2. Basis of presentation and statement of
compliance
We prepared these interim consolidated financial
statements using the same accounting policies and
methods as those described in our consolidated
financial statements for the year ended December
31, 2011. These interim financial statements are in
compliance with International Accounting Standard
34, Interim Financial Reporting (IAS 34).
Accordingly, certain information and disclosure
normally included in annual financial statements
prepared in accordance with International Financial
Reporting Standards have been omitted or condensed.
The preparation of financial statements in
accordance with IAS 34 requires us to use certain
critical accounting estimates and requires us to
exercise judgement in applying our accounting
policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions
and estimates are significant to the financial
statements, have been set out in note 4 to our
consolidated financial statements for the year
ended December 31, 2011. These interim financial
statements should be read in conjunction with our
consolidated financial statements for the year
ended December 31, 2011, which are included in our
2011 annual report.
3. Cash and short-term investments |
March 31,
2012
|
December 31,
2011
|
Cash and cash equivalents:
| | | | |
Liquidity funds
|
$
|
493,311
|
$
|
387,857
|
Term deposits
| |
22,638
| |
6,763
|
Overnight deposits
| |
20,153
| |
72,701
|
Bankers acceptances
| |
25,208
| |
920
|
Money market funds
| |
80,639
| |
130,485
|
Corporate
| |
56,475
| |
11,974
|
Bank deposits
| |
123,144
| |
32,764
|
Provincial short-term notes
| |
337,820
| |
172,481
| | |
1,159,388
| |
815,945
| | | | | |
Short-term investments:
| | | | |
Corporate
| |
-
| |
50,184
|
Provincial short term notes
| |
-
| |
193,339
|
Bankers acceptances
| |
-
| |
23,425
| | |
-
| |
266,948
|
Total cash and short-term instruments
|
$
|
1,159,388
|
$
|
1,082,893
|
4. Restricted cash |
March 31,
2012
| |
December 31,
2011
| | | | | | | | |
Collateralized cash for letter of credit
facility - Inmet Mining
|
$
|
19,549
| |
$
|
16,842
| |
Collateralized cash for letters of credit - Las
Cruces
| |
57,025
| | |
54,174
| |
Collateralized cash for Pyhäsalmi reclamation
| |
1,630
| | |
1,616
| | | |
78,204
| | |
72,632
| |
Less current portion:
| | | | | | | |
Collateralized cash for letters of credit - Las
Cruces
| |
(955
|
)
| |
(810
|
)
| |
$
|
77,249
| |
$
|
71,822
| |
5. Stock-based compensation
During the first quarter of 2012, the following
issuances were made under our equity-based
compensation plans:
Stock option plan
On February 22, 2012, a grant of 83,084 options was
made to senior management, with an exercise price
of $64.17, graded vesting and an expiry date of
February 22, 2019. We calculated the compensation
expense for these options using the Black Scholes
valuation model and assuming the following weighted
average parameters, resulting in a weighted average
fair value of $29.23 per option: 5 year expected
life, 50 percent expected volatility, expected
dividend rate of 0.3 percent annually and a risk
free interest rate of 1.5 percent.
Performance share unit (PSU) plan
On February 22, 2012, the Board granted 36,580 PSUs
to senior executives based on a 5 day VWAP prior to
the grant date of $64.17 and a 3 year vesting
period from January 1, 2012 to December 31, 2014.
We used a Monte Carlo simulation model to calculate
the compensation expense for the PSUs assuming no
forfeitures, 3 year historical average volatilities
and a 3-year risk free interest rate of 1.33%,
resulting in a March 31, 2012 fair value per PSU of
$66.71.
We recognized the following share-based
compensation expense in general and administration
relating to all outstanding equity-based awards:
|
three months ended March 31
| |
2012
|
2011
| | | | | |
Stock option plan
|
$
|
1,744
|
$
|
-
|
Performance share unit plan
| |
253
| |
-
|
Long-term incentive plan
| |
-
| |
759
|
Deferred share unit plan
| |
224
| |
282
|
Share award plan
| |
49
| |
151
| |
$
|
2,270
|
$
|
1,192
|
6. Accumulated other comprehensive loss
Accumulated other comprehensive loss includes:
|
March 31,
2012
| |
December 31,
2011
| | | | | | | | |
Unrealized gains (losses) on investments (net
of tax of $96) (December 31, 2011 - $94)
|
$
|
(447
|
)
|
$
|
(552
|
)
|
Currency translation adjustment
| |
(171,159
|
)
| |
(164,232
|
)
|
Accumulated other comprehensive loss
|
$
|
(171,606
|
)
|
$
|
(164,784
|
)
|
Currency translation adjustments
The table below is breakdown of our currency
translation adjustments.
|
March 31,
2012
| |
December 31,
2011
| | | | | | | | |
Pyhäsalmi (euro functional currency)
|
$
|
(26,354
|
)
|
$
|
(28,277
|
)
|
Las Cruces (euro functional currency)
| |
(97,271
|
)
| |
(106,456
|
)
|
Çayeli (US dollar functional currency)
| |
(21,807
|
)
| |
(15,563
|
)
|
Cobre Panama (US dollar functional currency)
| |
(25,727
|
)
| |
(13,936
|
)
| |
$
|
(171,159
|
)
|
$
|
(164,232
|
)
|
The Canadian dollar to US dollar exchange rate was
$1.00 at March 31, 2012 and $1.02 at December 31,
2011. The Canadian dollar to euro exchange rate was
$1.33 at March 31, 2012 and $1.32 at December 31,
2011.
7. Investment and other income |
Three months ended March 31
| | |
2012
| |
2011
| | | | | | | | |
Interest income
|
$
|
4,392
| |
$
|
2,772
| |
Dividend and royalty income
| |
500
| | |
600
| |
Foreign exchange loss
| |
(12,468
|
)
| |
(10,826
|
)
|
Other
| |
1,107
| | |
1,681
| | |
$
|
(6,469
|
)
|
$
|
(5,773
|
)
|
Foreign exchange loss is a result of:
|
Three months ended March 31
| | |
2012
| |
2011
| | | | | | | | |
Translation of US dollar held-to-maturity
investments
|
$
|
(5,094
|
)
|
$
|
(1,452
|
)
|
Translation of US dollar cash
| |
(4,659
|
)
| |
(8,237
|
)
|
Translation of Turkish lira taxes payable at
Çayeli
| |
(1,472
|
)
| |
545
| |
Translation of other monetary assets and
liabilities
| |
(1,243
|
)
| |
(1,682
|
)
| |
$
|
(12,468
|
)
|
$
|
(10,826
|
)
|
8. Finance costs |
Three months ended March 31
| |
2012
|
2011
| | | | | |
Interest on note payable
|
$
|
274
|
$
|
279
|
Accretion on note payable
| |
173
| |
161
|
Accretion on provisions and capital lease
obligations
| |
2,234
| |
1,891
| |
$
|
2,681
|
$
|
2,331
|
9. Income tax
For the three months ended March 31, 2012:
|
Corporate
and other
| |
Çayeli
(Turkey)
|
Las Cruces
(Spain)
|
Pyhäsalmi
(Finland)
| |
Total
| | | | | | | | | | | | | |
Current income taxes
|
$
|
145
| |
$
|
8,933
|
$
|
-
|
$
|
5,441
| |
$
|
14,519
|
Deferred income taxes
| |
(5
|
)
| |
858
| |
11,581
| |
(88
|
)
| |
12,346
|
Income tax expense
|
$
|
140
| |
$
|
9,791
|
$
|
11,581
|
$
|
5,353
| |
$
|
26,865
|
For the three months ended March 31, 2010:
|
Corporate
and other
| |
Çayeli
(Turkey)
|
Las Cruces
(Spain)
|
Pyhäsalmi
(Finland)
| |
Total
| | | | | | | | | | | | | |
Current income taxes
|
$
|
249
| |
$
|
10,590
|
$
|
-
|
$
|
7,932
| |
$
|
18,771
|
Deferred income taxes
| |
(45
|
)
| |
1,066
| |
7,497
| |
(129
|
)
| |
8,389
|
Income tax expense
|
$
|
204
| |
$
|
11,656
|
$
|
7,497
|
$
|
7,803
| |
$
|
27,160
|
10. Sale of our interest in Ok Tedi
On January 29, 2011, Ok Tedi Mining Limited
repurchased our 18 percent equity interest in Ok
Tedi for US $335 million. Our interest in Ok Tedi
met the criteria of an asset held for sale, so we
presented our share of the results of operations of
Ok Tedi as discontinued operations in the
consolidated statements of earnings and the
consolidated statements of cash flow retroactively.
In 2011, after-tax income of $83 million from this
discontinued operation includes net earnings of $17
million in January, before the sale, and a gain on
sale of $66 million net of withholding taxes. Papua
New Guinea withholding taxes of $28 million were
paid on the sale and no Canadian taxes were payable
because we utilized our Canadian tax attributes.
The following tables provide a breakdown of our
share of the earnings at Ok Tedi for the three
months ended March 31, 2011.
Statements of earnings
|
three months ended
March 31, 2011
| | | | | |
Gross sales
|
$
|
44,865
| |
Smelter processing charges and freight
| |
(4,051
|
)
|
Cost of sales (excluding depreciation)
| |
(12,116
|
)
|
Depreciation
| |
(2,272
|
)
| | |
26,426
| |
Investment and other income
| |
(80
|
)
|
Finance costs
| |
(33
|
)
|
Income tax expense
| |
(9,670
|
)
| | |
16,643
| |
Gain on sale of our interest
| |
79,029
| |
Income tax expense on sale of our interest
| |
(12,233
|
)
|
Net income from discontinued operation
|
$
|
83,439
| |
11. Net income per share |
three months ended March 31
|
(thousands)
|
2012
|
2011
|
Income from continuing operations available to
common shareholders
|
$
|
96,137
|
$
|
59,405
|
Income from discontinued operations available
to common shareholders
| |
-
| |
83,439
|
Net income available to common shareholders
|
$
|
96,137
|
$
|
142,844
| | | | | |
|
three months ended March 31
|
(thousands)
|
2012
|
2011
|
Weighted average common shares outstanding
|
69,349
|
61,549
|
Plus incremental shares from assumed
conversions:
| | | |
Deferred share units
|
92
|
112
| |
Long term incentive plan units
|
-
|
52
|
Diluted weighted average common shares
outstanding
|
69,441
|
61,713
|
The table below shows our earnings per common share
for the three months ended March 31.
|
three months ended March 31
|
(Canadian dollars per share)
|
2012
|
2011
| |
Basic
|
Diluted
|
Basic
|
Diluted
|
Net income from continuing operations per share
|
$
|
1.39
|
$
|
1.38
|
$
|
0.97
|
$
|
0.96
|
Income from discontinued operations per share
| |
-
| |
-
| |
1.36
| |
1.35
|
Net income per share
|
$
|
1.39
|
$
|
1.38
|
$
|
2.33
|
$
|
2.31
|
12. Statements of cash flows
The tables below show the components of our net
change in non-cash working capital by segment.
For the three months ended March 31, 2012:
|
Corporate
and other
| |
Çayeli
(Turkey)
| |
Las Cruces
(Spain)
| |
Pyhäsalmi
(Finland)
| |
Total
| | | | | | | | | | | | | | | | | |
Accounts receivable
|
$
|
1,139
| |
$
|
(35,676
|
)
|
$
|
5,949
| |
$
|
3,617
| |
$
|
(24,971
|
)
|
Inventories
| |
-
| | |
4,464
| | |
(2,007
|
)
| |
1,264
| | |
3,721
| |
Accounts payable and accrued liabilities
| |
(4,689
|
)
| |
(6,924
|
)
| |
2,444
| | |
(365
|
)
| |
(9,534
|
)
|
Taxes payable
| |
686
| | |
1,765
| | |
-
| | |
(739
|
)
| |
1,712
| |
Other
| |
(294
|
)
| |
(2
|
)
| |
-
| | |
-
| | |
(296
|
)
| |
$
|
(3,158
|
)
|
$
|
(36,373
|
)
|
$
|
6,386
| |
$
|
3,777
| |
$
|
(29,368
|
)
|
For the three months ended March 31, 2011:
|
Corporate
and other
| |
Çayeli
(Turkey)
| |
Las Cruces
(Spain)
| |
Pyhäsalmi
(Finland)
| |
Total
| | | | | | | | | | | | | | | | | |
Accounts receivable
|
$
|
(760
|
)
|
$
|
7,585
| |
$
|
(5,246
|
)
|
$
|
9,077
| |
$
|
10,656
| |
Inventories
| |
-
| | |
711
| | |
5,971
| | |
(66
|
)
| |
6,616
| |
Accounts payable and accrued liabilities
| |
(2,169
|
)
| |
812
| | |
4,701
| | |
(2,400
|
)
| |
944
| |
Taxes payable
| |
(1,402
|
)
| |
(1,990
|
)
| |
-
| | |
4,999
| | |
1,607
| |
Other
| |
(510
|
)
| |
(3
|
)
| |
-
| | |
-
| | |
(513
|
)
| |
$
|
(4,841
|
)
|
$
|
7,115
| |
$
|
5,426
| |
$
|
11,610
| |
$
|
19,310
| |
13. Capital commitments
As at March 31, 2012, Cobre Panama had committed
$149.1 million for the design and supply of two SAG
mills, four ball mills and the related gearless
drives, engineering, and early works.
14. Event after balance sheet date
On April 25, 2012, Korea Panama Mining Corporation
completed its acquisition of a 20 percent interest
in Minera Panama, SA, owner and developer of Cobre
Panama, for US $169 million in cash, representing,
together with US $30 million it already paid, its
20 percent share of development costs to date.
For Additional Information, Please Contact:
Inmet Mining Corporation
Jochen Tilk
President and Chief Executive Officer
+1.416.860.3972
Inmet Mining Corporation
Flora Wood
Director, Investor Relations
+1.416.361.4808
www.inmetmining.com
|