Inmet Mining Announces Preliminary Second Quarter Production Results and Progress Update for Las Cruces
TORONTO, CANADA -- (Marketwire) -- 07/22/10 -- Inmet Mining Corporation (TSX: IMN) announced its preliminary production results for the three and six months ended June 30, 2010 and provided a progress update for the ramp up of production at Las Cruces.
Preliminary production results for three and six months ended June 30, 2010
Production at our established operations is on track for achievement of our previously stated estimates for 2010. At Las Cruces, copper production in the second quarter of 2010 was below our expectations as further explained in the section below (see Progress at Las Cruces).
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three months six months revised
ended June ended June objective
Inmet's share(1) 30, 2010 30, 2010 2010(3)
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Copper (tonnes)
Cayeli 7,100 14,200 30,500
Las Cruces cathode 4,600 7,800 25,000
Las Cruces copper contained in ore - - 12,300
Pyhasalmi 4,000 6,900 13,400
Troilus 700 2,000 2,000
Ok Tedi(2) 6,100 12,800 29,300
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22,500 43,700 112,500
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Zinc (tonnes)
Cayeli 15,000 26,500 51,700
Pyhasalmi 5,600 12,800 31,300
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20,600 39,300 83,000
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Gold (ounces)
Troilus 18,600 37,900 37,900
Ok Tedi(2) 18,100 39,000 102,600
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36,700 76,900 140,500
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(1) Inmet's share represents 100 percent for Cayeli, Pyhasalmi and Troilus,
18 percent for Ok Tedi and 70 percent for Las Cruces.
(2) This production objective is based on a full year of production and is
subject to change based on the possible exchange of our 18 percent equity
interest in Ok Tedi for a 5 percent net smelter return royalty which is
expected to occur in the third quarter of 2010.
(3) We revised our objective for copper cathode at Las Cruces from 36,400
tonnes to between 20,000 and 30,000 tonnes (see Looking ahead for details).
We also revised Troilus' copper and gold objectives from 2,100 tonnes to
2,000 tonnes and 36,400 ounces to 37,900 ounces respectively to reflect
actual production results as Troilus concluded operations at the end of the
second quarter.
Progress at Las Cruces
During the second quarter, cathode production has improved by approximately 44 percent compared to the previous quarter and the plant demonstrated during consecutive running days its ability to reach the currently available plant capacity. However, a number of equipment failures and operational issues delayed the ramp-up of the plant and limited our ability to operate continuously. As a result, we produced 6,600 tonnes of copper cathode during the second quarter as compared to a target of 12,400 tonnes. This represents approximately 37 percent of design capacity (72,000 tonnes of copper cathode per year) or 55 percent of available capacity. Available capacity reflects the temporary constraint of having only two of the three leach residue filters available as one is dedicated to the neutralization plant. Installation of the new neutralization filter is on track and the necessary additional filtration capacity should be available by the end of July. Excluding the impact of production days lost due to mechanical failures, we produced at approximately 46 percent of design capacity for the quarter or 69 percent of available capacity. During the quarter, we achieved production for single days nearing 100 percent of design capacity and for extended periods we operated at over 60 percent of design capacity.
In May, production ran very well as we produced at an average daily rate of 104 tonnes of copper cathode or 52 percent of design capacity and 78 percent of available capacity while operating 28 days during the month. This encouraged us to believe we were moving towards commercial production rates by the end of the second quarter.
We experienced a set-back during June because of unexpected non-corrosion related equipment failures mostly related to the grinding and leach thickeners causing 10 days of lost production time.
After one year since the start up of the plant, we have confirmed the exceptional quality of a high grade ore body, a sound leaching and electrowinning process and that we have completed or initiated the necessary technical improvements to the plant to improve reliability. We believe that our ramp up pattern is typical of hydrometallurgical plants and other complex processes and that the critical step to achieving full production at this point is to improve reliability and operational uptime.
Looking ahead
In July, we have continued to focus on increasing available plant capacity and reducing the causes of equipment failures and downtime as we identified these to be the root causes of our ramp up challenges. The most important steps are:
-- installed an additional pressure filter and completed commissioning of
the filter to increase capacity and remove a significant bottleneck to
throughput
-- adding permanent water treatment capacity which will be commissioned in
the third quarter. This will allow for a more consistent discharge into
the aquifer and maintain water balance throughout the process
-- completing phase two of the Dewatering and Reinjection System which will
reduce the quantity of water flowing into the pit and the resulting
water treatment load in both the plant and water treatment facility
-- adding a large surge tank between leaching and filtration to further
smooth out the leaching operation toward the end of this year
-- applying a disciplined and systematic problem solving process to
identify and address root causes of downtime.
We believe we have identified the key bottlenecks to production. All of these steps and improvements should significantly add to our operating reliability. July month to date has demonstrated further signs of improvement and we have returned to production rates similar to those in May.
We believe there will be continuing challenges in the ramping up process and we are encouraged by the improved capability of our operating teams to address those as they have demonstrated in recent months. We will continue with the rigorous implementation of the ramp up plan to achieve our goal of full production by the end of the year. We require a period of continuous operation to accurately predict the timing of achieving our performance but believe a range for our 70 percent share of production of 20,000 to 30,000 tonnes of copper cathode is achievable.
We have begun mining high grade ore and stockpiling it in preparation for shipping to smelters. We have not yet received the necessary permit from the regulators to move the material off-site and cannot determine when this will occur.
Taking all factors into account, we believe it is appropriate to cease capitalizing Las Cruces' pre-operating costs net of sales and to begin recognizing these results in operating earnings and operating cash flow in our consolidated statements. This will be done as of July 1, 2010.
Webcast Conference Call - Las Cruces Update Conference Call
On Friday, July 23, 2010 at 8:30 a.m. Eastern Time, Inmet will hold a live webcast conference call and slide presentation as a follow-up to this press release. The call will be hosted by Jochen Tilk, President and Chief Executive Officer.
You are cordially invited to listen to the audio webcast through:
http://events.digitalmedia.telus.com/inmet/072210/index.php or at www.inmetmining.com.
After the broadcast, an archive of the webcast can be accessed from both websites.
You can also dial in by calling
-- Local or international: +1 416-340-2216
-- Toll-free within North America: +1 866-226-1792
Forward looking information
Securities regulators encourage companies to disclose forward-looking information to help investors understand a company's future prospects. This press release contains forward-looking information. These 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 such as may, expect, anticipate, and believe or other similar words. Capital and operating cost estimates are forward-looking statements, and are based on assumptions that we believe to be reasonable. However, actual events and results could be substantially different because of the risks and uncertainties associated with our respective business or events that happen after the date of this press release. You should not place undue reliance on forward-looking statements.
About Inmet
Inmet is a Canadian-based global mining company that produces copper, zinc and gold. We have interests in five mining operations in locations around the world: Cayeli, Las Cruces, Pyhasalmi, Troilus and Ok Tedi. We also have a 100 percent interest in Cobre Panama, a development property in Panama.
This press release is also available at www.inmetmining.com.
Contacts:
Inmet Mining Corporation
Jochen Tilk
President and Chief Executive Officer
(416) 860-3972
www.inmetmining.com