Inmet Announces Second Quarter Earnings from Continuing Operations of $1.36 per Share Compared to $0.83 per Share in the Second Quarter of 2011
TORONTO, CANADA -- (Marketwire) -- 07/30/12 -- All amounts in US dollars unless indicated otherwise
Inmet (TSX: IMN) announces second quarter earnings from continuing operations of $1.36 per share compared to $0.83 per share in the second quarter of 2011.
Second quarter highlights
-- Strong earnings from operations
Earnings from operations were $109 million compared to $85 million in the second quarter of 2011. Significantly higher copper sales volumes increased operating earnings by $83 million - a result of higher production at Las Cruces and Cayeli. Lower realized copper and zinc prices and lower zinc sales volumes compared to the second quarter of 2011 reduced earnings by $43 million.
-- Las Cruces achieved design capacity for each month of the quarter
Las Cruces produced 18,300 tonnes of copper cathode in the quarter compared to 8,500 tonnes produced during the same period of 2011. Plant production exceeded 6,000 tonnes of copper cathode (design capacity) each month this quarter and unit costs decreased to $1.04 per pound of copper cathode produced.
-- Inmet begins reporting financial results in US dollars
Effective June 1, 2012, the US dollar was adopted as Inmet's functional and presentation currencies. We have restated all comparative financial statements from previously reported Canadian dollar amounts to US dollars using the May 31, 2012 transition rate of US$0.97 per Canadian dollar (see page 3 for more details).
-- Foreign exchange gains increased net income from continuing operations
We recognized $40 million in foreign exchange gains this quarter, mainly on the revaluation of our US dollar denominated cash and long-term bonds held in Inmet Mining prior to the change in its functional currency from the Canadian dollar to the US dollar, and US dollar cash held in our euro-based entities.
-- We began full scale construction for Cobre Panama
During May 2012, we announced the completion of basic engineering for Cobre Panama, the launch of a financing plan to fully fund our 80 percent share of the related development costs and issued Full Notice to Proceed (FNTP) to start construction of the project.
-- Issuance of $1.5 billion in senior unsecured notes
On May 18, 2012, we issued $1.5 billion in senior unsecured notes the proceeds of which will be used to fund development of Cobre Panama. The notes bear a coupon rate of interest of 8.75 percent and mature on June 1, 2020.
Key financial data
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FINANCIAL HIGHLIGHTS
Sales
Gross sales $251,395 $214,894 +17% $536,922 $461,085 +16%
Net income
Net income from
continuing operations $ 94,179 $ 54,268 +74% $187,260 $111,783 +68%
Net income from
continuing operations
per share $ 1.36 $ 0.83 +64% $ 2.70 $ 1.76 +53%
Net income from
discontinued operations - - - - 80,786 -100%
Net income from
discontinued operations
per share - - - - $ 1.27 -100%
Net income attributable
to Inmet shareholders $ 94,458 $ 54,268 +74% $187,539 $192,569 -3%
Net income per share $ 1.36 $ 0.83 +64% $ 2.70 $ 3.03 -11%
Cash flow
Cash flow provided by
operating activities $176,333 $ 89,977 +96% $290,845 $204,395 +42%
Cash flow provided by
operating activities
per share (1) $ 2.54 $ 1.38 +84% $ 4.19 $ 3.22 +30%
Capital spending (2) $192,050 $ 50,154 +283% $274,658 $ 89,589 +207%
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OPERATING HIGHLIGHTS
Production
Copper (tonnes) 29,600 19,200 +54% 54,400 36,900 +47%
Zinc (tonnes) 14,700 18,300 -20% 29,800 39,500 -25%
Pyrite (tonnes) 214,700 198,200 +8% 425,900 384,200 +11%
Copper cash cost (US $
per pound)(3) $ 0.86 $ 1.04 -17% $ 0.91 $ 0.99 -8%
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as at June 30 as at December 31
FINANCIAL CONDITION 2012 2011
Current ratio 12.1 to 1 9.3 to 1
Gross debt to total equity 40% 1%
Net working capital balance (millions) $ 2,783 $ 1,263
Cash balance and long-term bonds
(millions) $ 3,276 $ 1,652
Gross debt (millions) $ 1,463 $ 17
Shareholders' equity (millions) $ 3,690 $ 3,306
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(1) Cash flow provided by operating activities divided by average shares
outstanding for the period.
(2) The six months ended June 30, 2012 includes capital spending of $250
million at Cobre Panama. The six months ended June 30, 2011 includes
capital spending of $46 million at Cobre Panama.
(3) Copper cash cost per pound is a non-GAAP financial measure - see
Supplementary financial information on pages 28 to 30.
Second quarter press release
Where to find it
Our financial results 5
Key changes in 2012 5
Understanding our performance 6
Earnings from operations 8
Corporate costs 13
Results of our operations 15
Cayeli 16
Las Cruces 18
Pyhasalmi 20
Status of our development project 22
Cobre Panama 22
Managing Our Liquidity 24
Financial condition 27
Supplementary financial information 28
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 June 30, 2012. Revised objective is as of July 30, 2012.
Change in Inmet's functional and presentation currencies to the US dollar
The decision to proceed with full scale development of Cobre Panama has significantly increased Inmet's exposure to the US dollar. Effective June 1, 2012, the US dollar was adopted as Inmet's functional currency on a prospective basis. We translated Inmet's May 31, 2012 financial statement items from Canadian dollars to US dollars using the May 31, 2012 exchange rate US $0.97 per Canadian dollar (Transition Rate). Our operating entities continue to measure the items in their financial statements using their functional currencies; Cayeli and Cobre Panama use the US dollar, and Pyhasalmi and Las Cruces use the euro.
At the same time we changed our presentation currency from Canadian dollars to US dollars and have reported our results in US dollars for the first time this quarter. We have restated all comparative financial statements from previously reported Canadian dollar amounts to US dollars using the Transition Rate.
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
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except per share
amounts) 2012 2011 change 2012 2011 change
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EARNINGS FROM
OPERATIONS (1)
Cayeli $ 24,202 $ 34,148 -29% $ 90,204 $ 83,985 +7%
Las Cruces 65,103 20,793 +213% 116,722 50,395 +132%
Pyhasalmi 26,678 30,056 -11% 52,808 63,414 -17%
Other (6,895) - - (4,148) - -
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109,088 84,997 +28% 255,586 197,794 +29%
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DEVELOPMENT AND
EXPLORATION
Corporate
development and
exploration (10,290) (4,417) +133% (19,091) (17,401) +10%
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CORPORATE COSTS
General and
administration (15,899) (7,995) +99% (25,644) (16,150) +59%
Investment and other
income 45,103 4,581 +885% 38,840 (1,009) -3,949%
Finance costs (2,379) (2,310) +3% (4,975) (4,567) +9%
Income and capital
taxes (31,444) (20,588) +53% (57,456) (46,884) +23%
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(4,619) (26,312) -82% (49,235) (68,610) -28%
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Net income from
continuing
operations 94,179 54,268 +74% 187,260 111,783 +68%
Income from
discontinued
operation (net of
taxes) - - - - 80,786 -100%
Non-controlling
interest 279 - +100% 279 - +100%
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Net income
attributable to
Inmet shareholders $ 94,458 $ 54,268 +74% $187,539 $192,569 -3%
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Income from
continuing
operations per
common share $ 1.36 $ 0.83 +64% $ 2.70 $ 1.76 +53%
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Diluted income from
continuing
operations per
common share $ 1.35 $ 0.83 +63% $ 2.69 $ 1.75 +54%
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Basic net income per
common share $ 1.36 $ 0.83 +64% $ 2.70 $ 3.03 -11%
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Diluted net income
per common share $ 1.35 $ 0.83 +63% $ 2.69 $ 3.02 -11%
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Weighted average
shares outstanding 69,366 65,393 +6% 69,358 63,483 +9%
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(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
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EARNINGS FROM OPERATIONS
Sales
Lower copper prices $ (32) $ (54) 8
Lower zinc prices (3) (7) 8
Higher copper sales volumes 83 153 8
Lower zinc sales volumes (8) (15) 8
Costs
Lower processing charges and freight 1 2 10
Higher operating costs (5) (12) 11
Charge for mine rehabilitation at
closed properties (7) (4) 11
Higher depreciation (3) (7) 12
Other (2) 2
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Higher earnings from operations
compared to 2011 24 58
CORPORATE COSTS
Higher exploration and administrative
costs (14) (11) 13
Higher taxes from higher income (11) (11) 14
Foreign exchange changes 41 39 13
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Higher net income from continuing
operations compared to 2011 40 75
Lower income from discontinued
operation - Ok Tedi - (81) 14
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Higher (lower) net income attributable
to Inmet shareholders compared to
2011 $ 40 $ (6)
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Understanding our performance
Metal prices
The table below shows the average metal prices we realized this quarter and year to date. The prices we realize include finalization adjustments - see Gross sales on page 8.
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2012 2011 change 2012 2011 change
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Copper (per pound) $ 3.42 $ 4.16 -18% $ 3.65 $ 4.24 -14%
Zinc (per pound) $ 0.86 $ 1.01 -15% $ 0.89 $ 1.03 -14%
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Copper
Copper prices on the London Metals Exchange (LME) averaged $3.57 per pound this quarter, a decrease of 9 percent from the first quarter of 2012 and a 14 percent decrease from the second quarter of 2011.
Zinc
Zinc prices on the LME averaged $0.87 per pound this quarter, a 5 percent decrease from last quarter's average price of $0.92 per pound and a 15 percent decrease from the second quarter of 2011.
Exchange rates
Exchange rates affect our revenue and earnings. The table below shows the average exchange rates we realized this quarter and year to date compared to 2011.
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Exchange rates
1 C$ to US$ $ 0.99 $ 1.03 -4% $ 0.99 $ 1.02 -3%
1 euro to US$ $ 1.28 $ 1.44 -11% $ 1.30 $ 1.44 -10%
1 US$ to Turkish lira TL 1.80 TL 1.56 +15% TL 1.79 TL 1.56 +15%
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Compared to the same quarter last year, the value of the US dollar appreciated 4 percent relative to the Canadian dollar, and appreciated 11 percent relative to the euro.
Our earnings are affected by changes in foreign currency exchange rates when we:
-- translate the results of our euro-based operations from their functional
currency to US dollars
-- revalue US dollars that we hold in cash at our operations whose
functional currency is the euro
-- revalue Canadian dollars and euros that we hold in cash and long-term
bonds corporately at Inmet
-- translate Cayeli's Turkish lira denominated costs into its functional
currency (US dollars).
Prior to the adoption of the US dollar as Inmet's functional currency effective June 1, 2012, our earnings were affected by changes in foreign currency exchange rates when we revalued our US dollar denominated cash, investments in long-term bonds and senior unsecured notes held corporately at Inmet.
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 and year to date. We finalized our terms with zinc smelters this quarter, agreeing on treatment charges for zinc concentrates that are lower than last year, reflecting a tightening zinc concentrate market. Results this quarter include adjustments we've made to first quarter charges, which were at 2011 rates.
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Treatment charges
Copper (per dry
metric tonne of
concentrate) $ 64 $ 57 +12% $ 59 $ 52 +13%
Zinc (per dry metric
tonne of
concentrate) $ 160 $ 197 -19% $ 179 $ 225 -20%
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Price participation
Copper (per pound) $ 0.00 $ 0.02 -100% $ 0.00 $ 0.02 -100%
Zinc (per pound) $ 0.01 $ (0.01) +200% $ 0.00 $ (0.01) +100%
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Freight charges
Copper (per dry
metric tonne of
concentrate) $ 51 $ 52 -2% $ 56 $ 51 +10%
Zinc (per dry metric
tonne of
concentrate) $ 23 $ 23 - $ 26 $ 24 +8%
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Statutory tax rates
The table below shows the statutory tax rates for each of our taxable operating mines.
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2012 2011 change
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Statutory tax rates
Cayeli 24% 24% -
Las Cruces 30% 30% -
Pyhasalmi 24.5% 26% -1.5%
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Earnings from operations
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Gross sales $ 251,395 $ 214,894 +17% $ 536,922 $ 461,085 +16%
Smelter
processing
charges and
freight (28,480) (32,793) -13% (57,818) (63,374) -9%
Cost of sales:
Direct
production
costs (79,282) (74,767) +6% (157,455) (143,924) +9%
Inventory
changes 4,297 5,473 -21% (957) (1,453) -34%
Other non-cash
expenses (9,649) (2,008) +381% (5,846) (2,558) +129%
Depreciation (29,193) (25,802) +13% (59,260) (51,982) +14%
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Earnings from
operations $ 109,088 $ 84,997 +28% $ 255,586 $ 197,794 +29%
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Gross sales were higher
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Gross sales by
operation
Cayeli $ 66,162 $ 79,226 -16% $ 189,533 $ 175,130 +8%
Las Cruces 127,863 76,282 +68% 238,245 164,219 +45%
Pyhasalmi 57,370 59,386 -3% 109,144 121,736 -10%
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$ 251,395 $ 214,894 +17% $ 536,922 $ 461,085 +16%
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Gross sales by
metal
Copper $ 196,094 $ 140,164 +40% $ 432,324 $ 325,776 +33%
Zinc 30,222 48,689 -38% 58,862 92,131 -36%
Other 25,079 26,041 -4% 45,736 43,178 +6%
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$ 251,395 $ 214,894 +17% $ 536,922 $ 461,085 +16%
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Key components of the change in gross sales: increasing sales volumes at Las Cruces, lower realized copper prices
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Lower copper prices $ (32) $ (54)
Lower zinc prices (3) (7)
Higher copper sales volumes at Las
Cruces 72 108
Higher copper sales volumes at our
other mines 16 52
Lower zinc sales volumes (15) (27)
Changes in other metal sales (1) 4
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Higher gross sales, compared to 2011 $ 37 $ 76
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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 $4 million in negative finalization adjustments from first quarter 2012 sales.
At the end of this quarter, the following sales had not been settled:
-- 25 million pounds of copper provisionally priced at $3.49 per pound
-- 17 million pounds of zinc provisionally priced at $0.85 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:
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(millions of pounds) copper zinc
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July 2012 14 17
August 2012 7 -
September 2012 4 -
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Unsettled sales at June 30, 2012 25 17
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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 this quarter and year to
date mainly because of production at Las Cruces and the mining of
higher-grade areas at Cayeli. The timing of shipments resulted in copper
sales volumes lagging production volumes by a combined 3,000 tonnes for
this quarter and a combined 2,900 tonnes in the second quarter of 2011.
-- Zinc production and sales volumes were lower than in 2011 due to lower
zinc grades at Cayeli and Pyhasalmi, which production was consistent
with our objectives.
Sales volumes
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Copper contained in
concentrate (tonnes) 9,600 7,600 +26% 24,600 18,600 +32%
Copper cathode (tonnes) 16,900 8,700 +94% 30,500 18,400 +66%
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Total copper (tonnes) 26,600 16,300 +63% 55,100 37,000 +49%
Zinc (tonnes) 16,100 23,300 -31% 30,600 43,100 -29%
Pyrite (tonnes) 227,000 222,800 +2% 339,300 364,100 -7%
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Production
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Copper
(tonnes)
Cayeli 8,500 7,000 +21% 16,600 13,000 +28% 27,000 -
30,000
Las Cruces 18,300 8,500 +115% 31,600 16,600 +90% 61,700 -
68,600
Pyhasalmi 2,800 3,700 -24% 6,200 7,300 -15% 11,300 -
12,600
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29,600 19,200 +54% 54,400 36,900 +47% 100,000 -
111,200
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Zinc
(tonnes)
Cayeli 8,400 10,500 -20% 18,900 23,000 -18% 36,000 -
39,800
Pyhasalmi 6,300 7,800 -19% 10,900 16,500 -34% 22,800 -
25,200
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14,700 18,300 -20% 29,800 39,500 -25% 58,800 -
65,000
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Pyrite
(tonnes)
Pyhasalmi 214,700 198,200 +8% 425,900 384,200 +11% 800,000
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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 revenues are also affected by the US dollar denominated metal prices we receive.
Zinc smelter processing charges down, copper charges up
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Smelter processing
charges and freight
by operation
Cayeli $ 14,075 $ 17,767 -21% $ 35,544 $ 35,092 +1%
Las Cruces 550 201 +174% 845 461 +83%
Pyhasalmi 13,855 14,825 -7% 21,429 27,821 -23%
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$ 28,480 $ 32,793 -13% $ 57,818 $ 63,374 -9%
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Smelter processing
charges and freight
by metal
Copper $ 9,947 $ 8,159 +22% $ 26,388 19,007 +39%
Zinc 10,865 17,134 -37% 21,830 34,247 -36%
Other 7,668 7,500 +2% 9,600 10,120 -5%
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$ 28,480 $ 32,793 -13% $ 57,818 $ 63,374 -9%
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Smelter processing
charges by type and
freight
Copper treatment and
refining charges $ 3,979 $ 2,733 +46% $ 9,675 $ 6,002 +61%
Zinc treatment charges 5,032 8,569 -41% 10,789 18,064 -40%
Copper price
participation - 316 -100% - 692 -100%
Zinc price
participation 273 (346) -179% 21 (541) -104%
Content losses 7,931 10,725 -26% 18,487 22,060 -16%
Freight 11,113 10,494 +6% 18,288 16,524 +11%
Other 152 302 -50% 558 573 -3%
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$ 28,480 $ 32,793 -13% $ 57,818 $ 63,374 -9%
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Our copper treatment and refining charges were higher than they were in 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 than last year due to lower zinc sales volumes at Cayeli and Pyhasalmi, and because our terms with smelters were lower.
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 agreements we have signed 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
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Direct production
costs by operation
Cayeli $ 22,981 $ 22,161 +4% $ 46,269 $ 44,796 +3%
Las Cruces 41,937 37,992 +10% 81,844 70,415 +16%
Pyhasalmi 14,364 14,614 -2% 29,341 28,713 +2%
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Total direct
production costs 79,282 74,767 +6% 157,454 143,924 +9%
Inventory changes (4,298) (5,474) -21% 957 1,453 -34%
Charges for mine
rehabilitation and
other non-cash
charges 9,650 2,009 +380% 5,847 2,558 +129%
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Total cost of sales
(excluding
depreciation) $ 84,634 $ 71,302 +19% $164,258 $147,935 +11%
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Direct production costs
Direct production costs were higher this year because higher production at Las Cruces increased variable electricity, consumables and royalty costs, somewhat offset by the impact of the weaker euro relative to the US dollar.
Inventory changes
Copper inventories at Cayeli and Las Cruces increased at the end of this quarter, and at Cayeli and Pyhasalmi in the second 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 an increase of $7 million this quarter in post-closure liabilities at our closed properties, and $4 million year to date. This increase was a result of a decrease 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 we expect higher production at Las Cruces to increase total variable costs, primarily electricity and royalties.
Our budget for 2012 continues to assume our costs at Cayeli and Pyhasalmi will be similar to those of 2011.
Certain variable costs may continue to affect our earnings, depending on metal prices:
-- royalties at Cayeli are affected by its net income
-- royalties at Las Cruces are affected by its net sales.
The total amount we report in US dollars will also be affected by the value of the euro relative to the US dollar.
Additionally, changes in market risk-free interest rates could significantly increase or decrease our costs related to mine rehabilitation at our closed properties. At June 30, 2012, the interest rates we used to value our asset retirement obligations at our closed properties ranged from 1.3 percent to 2.3 percent.
Higher depreciation
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Depreciation by
operation
Cayeli $ 5,366 $ 4,868 +10% $ 12,628 $ 9,928 +27%
Las Cruces 21,557 18,670 +15% 42,025 37,604 +12%
Pyhasalmi 2,270 2,264 - 4,607 4,450 +4%
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$ 29,193 $ 25,802 +13% $ 59,260 $ 51,982 +14%
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Depreciation was higher this quarter and for the year to date mainly because of higher copper sales volumes at Las Cruces and Cayeli.
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.
General and administration
General and administration costs were $8 million higher this quarter, and $9 million higher year to date compared to 2011. As a result of the decision to proceed with full construction of Cobre Panama, we recognized a non-cash stock based compensation expense of $7 million this quarter on Long-term Incentive Plan (LTIP) units issued in previous years that relate to the project. This expense represents the cumulative impact from the units' grant dates to June 30, 2012, on a 100 percent award basis, as no value was attributed to these units prior to a positive construction decision for Cobre Panama. See note 22c to the 2011 annual financial statements for more details on these units.
2012 outlook for general and administration
We expect general and administration costs to be higher in 2012 due to increased human resource costs supporting construction activities for Cobre Panama. We expect to recognize an additional expense of $1 million for the LTIP units for the balance of this year.
Investment and other income
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Interest income $ 3,931 $ 4,071 $ 8,183 $ 6,755
Foreign exchange gains (losses) 40,315 (259) 28,244 (10,740)
Dividend and royalty income 976 452 1,460 $ 1,033
Other (119) 317 953 $ 1,943
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$ 45,103 $ 4,581 $ 38,840 $ (1,009)
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Foreign exchange gains and losses
We have foreign exchange gains or losses when we revalue certain foreign denominated assets and liabilities.
Our foreign exchange gains and losses were from:
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Translation of US dollar cash held
in euro-based entities $ 14,791 $ - $ 10,399 $ -
Translation of US dollar cash held
by Corporate prior to June 2012
inclusive of proceeds of notes
offering 27,457 48 27,338 (7,927)
Translation of US dollar senior
unsecured notes prior to June 2012 (16,884) - (16,884) -
Translation of US dollar held-to-
maturity investments prior to June
2012 9,262 (1,354) 4,330 (2,760)
Translation of Cdn dollar cash held
by Corporate subsequent to May 2012 977 - 977 -
Translation of Cdn dollar held-to-
maturity investments subsequent to
May 2012 3,042 - 3,042 -
Translation of other monetary assets
and liabilities 1,670 1,047 (958) (53)
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$ 40,315 $ (259) $ 28,244 $(10,740)
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We recognized net foreign exchange gains of $20 million this quarter, and $15 million year to date, from the revaluation of US dollar denominated cash, held to maturity bonds and the senior unsecured notes held in Inmet prior to the change in its functional currency from the Canadian dollar to the US dollar effective June 1, 2012. As of this date, Inmet's US dollar-denominated monetary assets and liabilities were no longer revalued. Instead we began recognizing foreign exchange impacts on the revaluation of Inmet's Canadian dollar denominated monetary assets and liabilities with a gain of $4 million in June 2012 on Canadian dollar denominated cash and held to maturity bonds.
Additionally, in 2012 we began holding our euro-based operations' excess cash in US dollars. We recognized $15 million in foreign exchange gains this quarter and $10 million year to date on the revaluation of US-denominated cash balances to euros resulting from a weakening in the euro relative to the US dollar.
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 June 30, 2012, we held Cdn $264 million in cash and held to maturity investments subject to translation in our US dollar-denominated accounts and US $404 million in cash subject to translation in our euro accounts.
Income tax expense
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
(US$ thousands) 2012 2011 change 2012 2011 change
----------------------------------------------------------------------------
Cayeli $ 7,888 $ 11,556 $ 17,368 $ 22,842
Las Cruces 17,238 2,360 28,451 9,618
Pyhasalmi 5,732 6,385 10,915 13,940
Corporate and other 586 287 722 484
----------------------------------------------------------------------------
$ 31,444 $ 20,588 $ 57,456 $ 46,884
----------------------------------------------------------------------------
Consolidated
effective tax rate 25% 28% -3% 23% 30% -7%
----------------------------------------------------------------------------
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 Cayeli's taxes were lower as it recognized a foreign exchange loss from its US dollar denominated cash (Cayeli's income taxes are denominated in Turkish lira). Additionally, there was a decrease in the statutory tax rate at Pyhasalmi from 26 percent to 24.5 percent this year.
2012 outlook for income tax expense
Other than the decrease in the statutory tax rate at Pyhasalmi 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 $81 million in 2011 includes net earnings of $17 million in January 2011, before the sale, and a gain on sale of $64 million net of withholding taxes. We paid Papua New Guinea withholding taxes of $27 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 six months of the year:
----------------------------------------------------------------------------
Copper price US $3.65 per pound
Zinc price US $0.90 per pound
euro to US$ exchange rate $1.30
Working capital Assume no changes for the year
----------------------------------------------------------------------------
Cayeli
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
2012 2011 change 2012 2011 change
----------------------------------------------------------------------------
Tonnes of ore milled
(000's) 295 275 +7% 594 568 +5%
Tonnes of ore milled per
day 3,200 3,000 +7% 3,300 3,100 +5%
----------------------------------------------------------------------------
Grades (percent)
copper 3.6 3.3 +9% 3.5 3.1 +13%
zinc 4.5 5.7 -21% 5.0 6.0 -17%
----------------------------------------------------------------------------
Mill recoveries
(percent)
copper 81 77 +5% 80 75 +7%
zinc 63 67 -6% 64 68 -6%
----------------------------------------------------------------------------
Production (tonnes)
copper 8,500 7,000 +21% 16,600 13,000 +28%
zinc 8,400 10,500 -20% 18,900 23,000 -18%
----------------------------------------------------------------------------
Cost per tonne of ore
milled (US$) $ 78 $ 81 -4% $ 78 $ 79 -1%
----------------------------------------------------------------------------
Higher grades and recoveries increased copper production
Copper grades this quarter and year to date were higher than 2011, while zinc grades were lower, because we produced from 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, Cayeli's copper sales volumes lagged production volumes by approximately 1,900 tonnes this quarter and 2,000 tonnes in the second quarter of 2011.
Cost per tonne of ore milled so far this year was slightly lower than last year and our target.
The three-year labour agreement at Cayeli expired in May of this year and the governmental authorities have not yet granted permission to begin the bargaining process as part of a general suspension of bargaining activities. We anticipate this process to begin later this year although we have no certainty on this timing. Once initiated, we will make a strong effort to manage labour cost escalations to maintain our competitiveness.
2012 outlook for production
In 2012, mill throughput should remain at approximately 1.2 million tonnes. We expect lower copper grades for the remainder of 2012 as we produce from lower grade areas of the mine. Zinc grades are expected to increase slightly for the remainder of 2012, however we continue to expect zinc grades to be lower than 2011. 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. In 2012, lower zinc grades, as expected, account for the anticipated decline in zinc production compared to those in recent years. Both copper and zinc recoveries should remain near 2011 levels in 2012.
Financial review
Higher copper sales volumes due to higher copper production volumes and timing of shipments
----------------------------------------------------------------------------
(millions of US dollars three months ended six months ended revised
unless otherwise stated) June 30 June 30 objective
2012 2011 2012 2011 2012
----------------------------------------------------------------------------
Sales analysis
Copper sales (tonnes) 6,600 5,000 17,800 12,500 28,500
Zinc sales (tonnes) 9,800 15,500 20,100 25,500 37,900
---------------------------------------------------
Gross copper sales $ 45 $ 41 $ 139 $ 108 $ 226
Gross zinc sales 18 32 39 55 74
Other metal sales 3 6 12 12 23
---------------------------------------------------
Gross sales $ 66 $ 79 $ 190 $ 175 $ 323
Smelter processing
charges and freight (14) (18) (36) (35) (70)
----------------------------------------------------------------------------
Net sales $ 52 $ 61 $ 154 $ 140 $ 253
----------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled
(thousands) 295 275 594 568 1,200
Direct production costs
($ per tonne) $ 78 $ 80 $ 78 $ 79 $ 80
----------------------------------------------------------------------------
Direct production costs $ 23 $ 22 $ 46 $ 45 $ 96
Change in inventory (2) (1) 2 - -
Depreciation and other
non-cash costs 7 6 16 11 33
----------------------------------------------------------------------------
Operating costs $ 28 $ 27 $ 64 $ 56 $ 129
----------------------------------------------------------------------------
Operating earnings $ 24 $ 34 $ 90 $ 84 $ 124
----------------------------------------------------------------------------
Operating cash flow $ 32 $ 36 $ 62 $ 89 $ 123
----------------------------------------------------------------------------
The objective for 2012 uses the assumptions listed on page 15.
The table below shows what contributed to the change in operating earnings and operating cash flow between 2012 and 2011.
----------------------------------------------------------------------------
three months six months
ended ended
(US$ millions) June 30 June 30
----------------------------------------------------------------------------
Lower copper prices $ (9) $ (14)
Lower zinc prices (2) (5)
Higher copper sales volumes 11 36
Lower zinc sales volumes (6) (6)
Higher depreciation (1) (3)
Other (3) (2)
----------------------------------------------------------------------------
Higher (lower) operating earnings, compared to
2011 (10) 6
Change in cash taxes 1 3
Changes in working capital (see note 14 on
page 50) 4 (39)
Change in depreciation 1 3
----------------------------------------------------------------------------
Lower operating cash flow, compared to 2011 $ (4) $ (27)
----------------------------------------------------------------------------
Lower capital spending due to timing
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30 objective
(US$ thousands) 2012 2011 change 2012 2011 change 2012
----------------------------------------------------------------------------
Capital
spending $ 3,000 $ 5,100 -41% $ 5,200 $ 7,400 -30% $ 20,000
----------------------------------------------------------------------------
2012 outlook for capital spending
We expect to spend $20 million on capital in 2012, including $7 million to upgrade our ore pass system to address deterioration that has accumulated over time from normal abrasion, and to extend the shotcrete slickline and replace certain mobile equipment.
Las Cruces
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
2012 2011 change 2012 2011 change
----------------------------------------------------------------------------
Tonnes of ore processed
(000's) 269 164 +64% 516 336 +54%
----------------------------------------------------------------------------
Copper grades (percent) 7.7 6.3 +22% 7.2 6.2 +16%
----------------------------------------------------------------------------
Plant recoveries
(percent) 86 83 +4% 86 80 +8%
----------------------------------------------------------------------------
Cathode copper
production (tonnes) 18,300 8,500 +115% 31,600 16,600 +90%
----------------------------------------------------------------------------
Cost per pound of
cathode produced (US$) $ 1.04 $ 2.00 -48% $ 1.17 $ 1.93 -39%
----------------------------------------------------------------------------
Plant production exceeded design capacity
Las Cruces production this quarter was significantly higher than the second quarter of 2011, more than doubling from 8,500 tonnes of copper cathode to 18,300 tonnes. Plant production exceeded the design capacity of 6,000 tonnes of copper cathode each month this quarter, including a record 6,191 tonnes in May. The ability to operate above design capacity allows us to offset any downtime that occurs from time to time. Overall recoveries increased to 86 percent this quarter with leach recoveries nearing design levels. The difference from design level recoveries is mostly in copper already leached but retained in the filtration residue. Our focus has shifted to improving recoveries in washing and filtration. Plant feed grades were significantly higher year to date compared to 2011 and we expect grades to gradually decline to approximately 6.5 percent during the remainder of 2012.
Las Cruces' copper sales volumes lagged production volumes by approximately 1,400 tonnes this quarter as a result of the timing of shipments.
Cost per pound of copper produced was significantly lower than in 2011 due to higher production volumes.
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.
Financial review
Higher sales volumes due to higher production
----------------------------------------------------------------------------
(millions of US dollars three months ended six months ended revised
unless otherwise stated) June 30 June 30 objective
--------------------------------------------------
2012 2011 2012 2011 2012
--------------------------------------------------
Sales analysis
Copper sales (tonnes) 16,900 8,700 30,500 18,400 65,200
--------------------------------------------------
Gross copper sales $ 128 $ 76 $ 238 $ 164 $ 523
Freight (1) - (1) - (3)
----------------------------------------------------------------------------
Net sales $ 127 $ 76 $ 237 $ 164 $ 520
----------------------------------------------------------------------------
Cost analysis
Pounds of copper produced
(millions) 40 19 70 37 144
Direct production costs ($
per pound) $ 1.04 $ 2.00 $ 1.17 $ 1.93 $ 1.14
----------------------------------------------------------------------------
Direct production costs $ 42 $ 38 $ 82 $ 70 $ 164
Change in inventory (2) (2) (2) 5 -
Depreciation and other
non-cash costs 22 19 40 39 95
----------------------------------------------------------------------------
Operating costs $ 62 $ 55 $ 120 $ 114 $ 259
----------------------------------------------------------------------------
Operating earnings $ 65 $ 21 $ 117 $ 50 $ 261
----------------------------------------------------------------------------
Operating cash flow $ 88 $ 40 $ 165 $ 96 $ 359
----------------------------------------------------------------------------
The objective for 2012 uses the assumptions listed on page 15.
The table below shows what contributed to the change in operating earnings and operating cash flow between 2012 and 2011.
----------------------------------------------------------------------------
three months six months
ended ended
(US$ millions) June 30 June 30
----------------------------------------------------------------------------
Lower copper prices $ (20) $ (34)
Higher copper sales volume 72 115
Higher production costs denominated in local
currencies (7) (16)
Foreign exchange - decreased costs 3 4
Higher depreciation (2) (4)
Other (2) 2
----------------------------------------------------------------------------
Higher operating earnings, compared to 2011 44 67
Changes in working capital (see note 14 on
page 50) - 1
Change in depreciation 2 4
Other 2 (3)
----------------------------------------------------------------------------
Higher operating cash flow, compared to 2011 $ 48 $ 69
----------------------------------------------------------------------------
Capital spending
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30 objective
(US$ thousands) 2012 2011 change 2012 2011 change 2012
----------------------------------------------------------------------------
Capital spending $ 7,200 $18,600 -61% $13,200 $33,000 -60% $ 48,000
----------------------------------------------------------------------------
Capital expenditures for the quarter were mainly for mine development and the tailings facility expansion.
2012 outlook for capital spending
We expect to spend $48 million on capital projects in 2012. The largest expenditures will come in the areas of mine development, tailings facility expansion and land purchase.
Pyhasalmi
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
2012 2011 change 2012 2011 change
----------------------------------------------------------------------------
Tonnes of ore milled
(000's) 344 352 -2% 686 687 -
Tonnes of ore milled per
day 3,800 3,900 -2% 3,800 3,800 -
----------------------------------------------------------------------------
Grades (percent)
copper 0.9 1.1 -18% 0.9 1.1 -18%
zinc 2.0 2.4 -17% 1.7 2.6 -35%
sulphur 43 41 +5% 43 41 +5%
----------------------------------------------------------------------------
Mill recoveries
(percent)
copper 96 96 - 96 96 -
zinc 93 91 +2% 92 91 +1%
----------------------------------------------------------------------------
Production (tonnes)
copper 2,800 3,700 -24% 6,200 7,300 -15%
zinc 6,300 7,800 -19% 10,900 16,500 -34%
pyrite 214,700 198,200 +8% 425,900 384,200 +11%
----------------------------------------------------------------------------
Cost per tonne of ore
milled (US$) $ 42 $ 42 - $ 43 $ 42 +2%
----------------------------------------------------------------------------
Lower grades in line with annual objectives
Pyhasalmi maintained its strong performance, processing at an annualized rate in-line with its annual objective and achieving copper recoveries of 96 percent and zinc recoveries of 93 percent. Copper and zinc grades this quarter and year to date were lower than the comparative periods of 2011 and consistent with our plan. Copper and zinc production so far this year were therefore lower than in 2011.
Operating costs were in line with 2011 and our target as the impact of higher labour and materials costs was offset by a depreciation in the value of the euro relative to the US dollar.
2012 outlook for production
Pyhasalmi 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.
Pyhasalmi expects to produce 800,000 tonnes of pyrite in 2012 and expects to sell 915,000 tonnes of pyrite due to stronger demand from Asian customers. We are working to recover and filter an additional 60,000 tonnes of pyrite from our tailings pond to meet expected demand.
Financial review
Lower earnings mainly because of lower zinc sales volumes
----------------------------------------------------------------------------
three months ended six months ended revised
June 30 June 30 objective
(millions of US dollars
unless otherwise stated) 2012 2011 2012 2011 2012
----------------------------------------------------------------------------
Sales analysis
Copper sales (tonnes) 3,000 2,600 6,900 6,100 11,900
Zinc sales (tonnes) 6,300 7,900 10,500 17,500 24,000
Pyrite sales (tonnes) 227,000 222,800 339,300 364,100 915,000
---------------------------------------------------
Gross copper sales $ 23 $ 23 $ 55 $ 53 $ 97
Gross zinc sales 12 16 20 37 47
Other metal sales 22 20 34 32 73
---------------------------------------------------
Gross sales $ 57 59 $ 109 122 $ 217
Smelter processing
charges and freight (14) (15) (21) (28) (45)
----------------------------------------------------------------------------
Net sales $ 43 $ 44 $ 88 $ 94 $ 172
----------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled
(thousands) 344 352 686 687 1,370
Direct production costs
($ per tonne) $ 42 $ 42 $ 43 $ 42 $ 43
----------------------------------------------------------------------------
Direct production costs $ 14 $ 15 $ 29 $ 29 $ 59
Change in inventory - (3) 1 (3) -
Depreciation and other
non-cash costs 2 2 5 5 10
----------------------------------------------------------------------------
Operating costs $ 16 $ 14 $ 35 $ 31 $ 69
----------------------------------------------------------------------------
Operating earnings $ 27 $ 30 $ 53 $ 63 $ 103
----------------------------------------------------------------------------
Operating cash flow $ 28 $ 29 $ 53 $ 68 $ 89
----------------------------------------------------------------------------
The objective for 2012 uses the assumptions listed on page 15.
The table below shows what contributed to the change in operating earnings and operating cash flow between 2012 and 2011.
----------------------------------------------------------------------------
three months six months
ended ended
(US$ millions) June 30 June 30
----------------------------------------------------------------------------
Lower copper prices $ (3) $ (5)
Lower zinc prices (1) (2)
Higher other metal sales prices 2 4
Lower zinc sales volumes (2) (9)
Other 1 2
----------------------------------------------------------------------------
Lower operating earnings, compared to 2011 (3) (10)
Change in cash taxes 1 3
Changes in working capital (see note 14 on page
50) - (7)
Other 1 (1)
----------------------------------------------------------------------------
Lower operating cash flow, compared to 2011 $ (1) $ (15)
----------------------------------------------------------------------------
Capital spending
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30 objective
(US$ thousands) 2012 2011 change 2012 2011 change 2012
----------------------------------------------------------------------------
Capital spending $ 2,200 $ 2,400 -8% $ 4,600 $ 2,700 +70% $ 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
During May 2012, we announced the completion of basic engineering for Cobre Panama and issued FNTP to start construction of the project.
Basic engineering
The results of basic engineering indicate a capital cost estimate of $6.2 billion. The table below provides a breakdown of the capital costs estimate by major area:
----------------------------------------------------------------------------
total % of
Area (US$ millions) project
----------------------------------------------------------------------------
Mining 760 12
Process plant 1,184 19
Site and services 550 9
Port site facilities 543 9
Power plant 646 10
----------------------------------------------------------------------------
Total direct costs 3,682 59
----------------------------------------------------------------------------
Construction indirects 844 14
----------------------------------------------------------------------------
Total field costs 4,526 73
----------------------------------------------------------------------------
EPCM services 355 6
Owner costs 885 14
Contingency 415 7
----------------------------------------------------------------------------
Project total costs 6,181 100
----------------------------------------------------------------------------
(1) figure does not sum due to rounding
To reduce exposure to capital cost escalation, our objective is to commit as much of the capital as early as possible. We expect to commit in excess of $4 billion of the estimated capital by the end of 2012.
The power plant has been contracted under a lump sum, turn-key contract to SK Engineering & Construction Co. Ltd. (SKEC), a Korean engineering and construction firm that has already secured suppliers for long-lead items such as boilers, steam turbine generators, and flue gas desulphurization systems.
The detailed engineering and construction for the process plant should be contracted in the third quarter this year and the bidding process is currently underway. The SAG mills, ball mills and wrap-around drives have been ordered, and are currently being fabricated with delivery expected next year.
The balance of project infrastructure is under contract with Joint Venture Panama (JVP), a joint venture led by SNC Lavalin Group Inc. (70 percent), with partners Techint International Construction Corp. (15 percent) and GyM.S.A., a member of Grana y Montero Group (15 percent) under an Engineering, Procurement and Construction Management agreement. JVP's procurement activities are well underway and should result in the award of all major earthworks, site infrastructure, permanent camps and site services packages during the third quarter this year.
Procurement of the initial mine fleet is well underway and we expect to make a commitment by the third quarter this year.
We expect project completion to take approximately 44 months from the point we issued FNTP. The schedule below provides the expected timing of capital spending by year:
----------------------------------------------------------------------------
Total expenditures Inmet's
(US$ millions) (100% basis) 80% share
----------------------------------------------------------------------------
2012 $ 810 $ 648
2013 2,136 1,709
2014 2,080 1,664
2015 1,155 924
----------------------------------------------------------------------------
Total direct costs $ 6,181 $ 4,945
----------------------------------------------------------------------------
Other progress
Detailed engineering and the construction of the power plant are proceeding, and a deposit payment of $99 million was made this quarter representing 15 percent of the power plant's total contract cost. Additionally, permitting has progressed allowing us to begin site capture at the port and mine sites. We also continued with progress on roadwork and bypasses that will advance access to the project site. Survey and property acquisition for the transmission line continued as planned and we expect to start construction of the transmission line in late 2012.
As we began full-scale construction, we implemented our intensive flora and fauna rescue program to ensure the protection of the biodiversity of the area. Additionally, we continued to progress in resettling the people who will be physically and economically displaced by the project. We began clearing land for the two new indigenous communities and finalized housing designs jointly with the affected families.
Capital spending
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30 objective
(US$ millions) 2012 2011 change 2012 2011 change 2012
----------------------------------------------------------------------------
Capital
spending $ 179 $ 24 +646% $ 250 $ 46 +443% $ 975
----------------------------------------------------------------------------
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 with mobilization of major contractors for site capture and
bulk earthworks
-- progress with detailed engineering and procurement for the power plant
-- award the EPC contract for the process plant and begin detailed
engineering and procurement
-- 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 procurement of mobile mining equipment
-- 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.
Total capital expenditures for 2012 on a 100 percent basis are expected to be $975 million, including spending prior to FNTP of $94 million, changes in net working capital and interest on the senior unsecured notes.
Managing Our Liquidity
We develop our financing strategy by looking at our long-term capital requirements and deciding on the optimal mix of cash, future operating cash flow, credit facilities and project financing.
Our capital structure includes a liquidity cushion that gives us the flexibility to deal with operational disruptions or general market downturns.
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
(US$ millions) 2012 2011 2012 2011
----------------------------------------------------------------------------
CASH FROM OPERATING ACTIVITIES
Cayeli $ 32 $ 36 $ 62 $ 89
Las Cruces 88 40 165 96
Pyhasalmi 27 29 53 68
Corporate development and
exploration not incurred by
operations (5) (3) (11) (13)
General and administration (9) (8) (26) (16)
Realized foreign exchange gains
(losses) on cash 43 - 38 (8)
Other - (4) 10 (12)
----------------------------------------------------------------------------
176 90 291 204
----------------------------------------------------------------------------
CASH FROM INVESTING AND FINANCING
Purchase of property, plant and
equipment (192) (50) (275) (90)
Purchase and maturity of long-term
investments, net 25 13 72 (246)
Issuance of common shares - 486 - 486
Sale of 20 percent interest in Cobre
Panama 161 - 161 -
Long-term debt borrowing 1,429 - 1,429 -
Other 12 - 7 2
----------------------------------------------------------------------------
1,435 449 1,394 152
----------------------------------------------------------------------------
CASH FROM DISCONTINUED OPERATION (OK
TEDI) - - - 297
----------------------------------------------------------------------------
Increase in cash 1,611 539 1,685 653
Cash and short-term investments
Beginning of period 1,122 430 1,048 316
----------------------------------------------------------------------------
End of period $ 2,733 $ 969 $ 2,733 $ 969
----------------------------------------------------------------------------
Our available liquidity also includes $543 million of held to maturity investments ($604 million at December 31, 2011), providing a total of $3.3 billion in capital available to finance our growth strategy as at June 30, 2012.
OPERATING ACTIVITIES
Key components of the change in operating cash flows
----------------------------------------------------------------------------
three months six months
ended ended
(US$ millions) June 30 June 30
----------------------------------------------------------------------------
Higher earnings from operations (see page 5) $ 24 $ 58
Add back higher depreciation and other non-cash
charges included in earnings from operations 10 11
Lower cash taxes 2 6
Changes in working capital (see note 14 on page
50) 9 (38)
Realized foreign exchange changes - cash 43 47
Higher exploration and administration costs (7) (4)
Other 5 7
----------------------------------------------------------------------------
Change in operating cash flow, compared to 2011 $ 86 $ 87
----------------------------------------------------------------------------
Operating cash flows this quarter were higher than the second quarter of 2011 primarily due to higher earnings from operations before non-cash charges and realized foreign exchange gains on our cash. Year to date, this impact was somewhat offset by an increase in net working capital, mainly reflecting higher accounts receivable at Cayeli and Pyhasalmi due to the timing of shipments and 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 15), and the assumptions in Results of our operations (starting on page 15).
2012 estimated operating cash flow by operation
----------------------------------------------------------------------------
(US$ millions)
----------------------------------------------------------------------------
Cayeli $ 123
Las Cruces 359
Pyhasalmi 89
----------------------------------------------------------------------------
$ 571
----------------------------------------------------------------------------
INVESTING AND FINANCING
Capital spending
----------------------------------------------------------------------------
three months ended six months ended revised
June 30 June 30 objective
(US$ millions) 2012 2011 2012 2011 2012
----------------------------------------------------------------------------
Cayeli $ 3 $ 5 $ 5 $ 8 $ 20
Las Cruces 7 19 13 33 48
Pyhasalmi 2 2 5 3 10
Cobre Panama 178 24 250 46 975
----------------------------------------------------------------------------
$ 190 $ 50 $ 273 $ 90 $ 1,053
----------------------------------------------------------------------------
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.
Issuance of $1.5 billion in senior unsecured notes
On May 18, 2012, we issued $1.5 billion in senior unsecured notes, bearing a coupon rate of interest of 8.75 percent and maturing on June 1, 2020. The notes were priced at 98.584 percent of their face value, yielding proceeds of $1.43 billion net of the discount and transaction fees. Interest is payable on the notes semi-annually on December 1 and June 1 of each year. As the proceeds will be used to fund the development of Cobre Panama, interest costs will be capitalized to project assets during the construction period.
These notes are unconditionally guaranteed on a senior unsecured basis by certain Inmet subsidiaries. The notes contain certain customary covenants and restrictions for a financing instrument of this type.
Purchase and maturing of long-term investments
This quarter, $78 million of our bond portfolio matured and $53 million was reinvested in new held-to-maturity bonds. The remaining $25 million of matured bonds was converted into cash.
Sale of 20 percent interest in Cobre Panama
On April 25, 2012, Korea Panama Mining Corporation (KPMC) completed its acquisition of a 20 percent interest in Minera Panama, owner and developer of Cobre Panama. KPMC acquired its interest for $161 million in cash, representing, together with US $30 million it already paid, its 20 percent share of development costs to closing. Together with the 20 percent of funding of the development costs of Cobre Panama it will provide, this amounts to funding of $1.4 billion.
Issuance of common shares - 2011
In May 2011, a subsidiary of Temasek Holdings (Private) Ltd. exchanged its subscriptions receipts for 7.78 million Inmet common shares and we received cash of $486 million.
Cash from discontinued operation - 2011
In January 2011, we sold our 18 percent equity interest in Ok Tedi for net proceeds of $297 million (after Papua New Guinea withholding taxes).
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 expect to spend $975 million on the construction and development of Cobre Panama this year.
Financing Cobre Panama construction costs
The senior unsecured notes issuance and the sale of a 20 percent interest in Cobre Panama to KPMC, together with pre-existing cash, represent a significant portion of the development costs for this project. We also continue to engage in discussions with interested parties to sell a portion of future gold and silver production attributable to our 80 percent interest in Cobre Panama. Our estimated timeframe to conclude this transaction is within the third quarter of this year. We are working to create additional financial flexibility and to further mitigate financial risk.
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 June 30, 2012, we had $3,276 million in total funds, including $2,733 million of cash and short-term investments and $543 million invested in long-term bonds.
Cash
At June 30, 2012 our cash and short-term investments of $2,733 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 June 30, 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 4 on page 44 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 June 30, 2012, the portfolio was $543 million and included:
-- 59 percent US Treasury bonds
-- 4 percent Government of Canada bonds
-- 28 percent Canadian Provincial Government bonds
-- 9 percent corporate bonds.
The bonds mature between June 2012 and May 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 $75 million as at June 30, 2012 included:
-- $19 million in cash collateralized letters of credit for Inmet
-- $54 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 Pyhasalmi.
COMMON SHARES
----------------------------------------------------------------------------
Common shares outstanding as of June 30, 2012 69,365,748
----------------------------------------------------------------------------
Deferred share units outstanding as of June 30, 2012 (redeemable
on a one-for-one basis for common shares) 98,109
----------------------------------------------------------------------------
Additional risk factor
We have significantly increased our cash balance following the issuance of our senior unsecured notes for the construction of Cobre Panama. Based on our analysis, we do not believe that we are a "passive foreign investment company" (PFIC) for the current tax year. For U.S. federal income tax purposes a non-U.S. corporation may be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75 percent of its gross income is passive income, or (2) on average at least 50 percent of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income. If we were classified as a PFIC, U.S. taxpayers that hold our common shares could be subject to adverse U.S. federal income tax consequences, including increased tax liabilities and possible additional reporting requirements. As the determination of PFIC status is made annually at the close of each tax year and is dependent in part on factors beyond our control (such as changes in the relative values of our assets), there can be no assurance that Inmet will not become a PFIC in the current or any future tax year. U.S. taxpayers that hold our common shares are urged to consult their tax advisors concerning the potential U.S. federal income tax consequences of holding common shares if Inmet were considered a PFIC in any year.
Supplementary financial information
Pages 29 and 30 include 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: Cayeli (Turkey), Las Cruces (Spain) and Pyhasalmi (Finland), and have an 80 percent interest in the Cobre Panama development project, currently in construction.
This press release is also available at www.inmetmining.com.
Second quarter conference call
Will be held on
-- Tuesday, July 31, 2012
-- 8:30 a.m. Eastern Time
-- webcast available at
http://events.digitalmedia.telus.com/inmet/073112/index.php or
www.inmetmining.com
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) Tuesday, July 31, 2012, a conference call replay will be available
-- Local or international: +1.905.694.9451 passcode 2397202
-- Toll-free within North America: +1.800.408.3053 passcode 2397202
INMET MINING CORPORATION
Supplementary financial information
Cash costs
2012 For the six months ended June 30
per pound of copper
---------------------------------------------------
CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
(US dollars)
Direct production costs $ 1.18 $ 1.14 $ 2.19 $ 1.27
Royalties and variable
compensation 0.12 0.06 - 0.07
Smelter processing
charges and freight 0.91 0.01 0.88 0.38
Metal credits (1.33) - (3.57) (0.81)
---------------------------------------------------
Cash cost $ 0.88 $ 1.21 $ (0.50) $ 0.91
---------------------------------------------------
---------------------------------------------------
2011 For the six months ended June 30
per pound of copper
---------------------------------------------------
CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
(US dollars)
Direct production costs $ 1.49 $ 1.95 $ 1.90 $ 1.78
Royalties and variable
compensation $ 0.17 0.08 - 0.10
Smelter processing
charges and freight $ 1.60 0.01 1.19 0.80
Metal credits (2.65) - (3.81) (1.69)
---------------------------------------------------
Cash cost $ 0.61 $ 2.04 $ (0.72) $ 0.99
---------------------------------------------------
---------------------------------------------------
----------------------------------------------------------------------------
Reconciliation of cash costs to statements of earnings
2012 For the six months ended June 30
per pound of copper
---------------------------------------------------
(millions of US dollars,
except where otherwise
noted) CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
GAAP reference page 17 page 19 page 21
Direct production costs $ 46 $ 82 $ 29 $ 157
Smelter processing
charges and freight 36 1 21 58
By product sales (51) - (54) (105)
Adjust smelter processing
and freight, and sales
to production basis 1 - (3) (2)
---------------------------------------------------
Operating costs net of
metal credits $ 32 $ 83 $ (7) $ 108
Inmet's share of
production (000's) 36,600 69,700 13,700 120,000
---------------------------------------------------
Cash cost (US dollars) $ 0.88 $ 1.21 $ (0.50) $ 0.91
---------------------------------------------------
---------------------------------------------------
2011 For the six months ended June 30
per pound of copper
---------------------------------------------------
(millions of US dollars,
except where otherwise
noted) CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
GAAP reference page 17 page 19 page 21
Direct production costs $ 45 $ 70 $ 29 $ 144
Smelter processing
charges and freight 35 - 28 63
By product sales (67) - (69) (136)
Adjust smelter processing
and freight, and sales
to production basis 4 - - 4
---------------------------------------------------
Operating costs net of
metal credits $ 17 $ 70 $ (12) $ 75
Inmet's share of
production (000's) 28,600 36,600 16,100 81,300
---------------------------------------------------
Cash cost (US dollars) $ 0.61 $ 2.04 $ (0.72) $ 0.99
---------------------------------------------------
---------------------------------------------------
INMET MINING CORPORATION
Supplementary financial information
Cash costs
2012 For the three months ended June 30
per pound of copper
---------------------------------------------------
CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
(US dollars)
Direct production costs $ 1.10 $ 0.98 $ 2.28 $ 1.14
Royalties and variable
compensation 0.13 0.05 - 0.07
Smelter processing
charges and freight 0.82 0.01 0.99 0.34
Metal credits (1.05) - (4.12) (0.69)
---------------------------------------------------
Cash cost $ 1.00 $ 1.04 $ (0.85) $ 0.86
---------------------------------------------------
---------------------------------------------------
2011 For the three months ended June 30
per pound of copper
---------------------------------------------------
CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
(US dollars)
Direct production costs $ 1.38 $ 2.07 $ 1.94 $ 1.79
Royalties and variable
compensation 0.15 0.08 - 0.09
Smelter processing
charges and freight 1.44 0.01 1.08 0.74
Metal credits (2.38) - (3.75) (1.58)
---------------------------------------------------
Cash cost $ 0.59 $ 2.16 $ (0.73) $ 1.04
---------------------------------------------------
---------------------------------------------------
----------------------------------------------------------------------------
Reconciliation of cash costs to statements of earnings
2012 For the three months ended June 30
per pound of copper
---------------------------------------------------
(millions of US dollars,
except where otherwise
noted) CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
GAAP reference page 17 page 19 page 21
Direct production costs $ 23 $ 42 $ 14 $ 79
Smelter processing
charges and freight 14 1 14 29
By product sales (21) - (34) (55)
Adjust smelter processing
and freight, and sales
to production basis 2 - 1 3
---------------------------------------------------
Operating costs net of
metal credits $ 18 $ 43 $ (5) $ 56
Inmet's share of
production (000's) $ 18,800 $ 40,300 $ 6,200 65,300
---------------------------------------------------
Cash cost (US dollars) $ 1.00 $ 1.04 $ (0.85) $ 0.86
---------------------------------------------------
---------------------------------------------------
2011 For the three months ended June 30
per pound of copper
---------------------------------------------------
(millions of US dollars,
except where otherwise
noted) CAYELI LAS CRUCES PYHASALMI TOTAL
----------------------------------------------------------------------------
GAAP reference page 17 page 19 page 21
Direct production costs $ 23 $ 38 $ 15 $ 76
Smelter processing
charges and freight 18 - 15 33
By product sales (38) - (36) (74)
Adjust smelter processing
and freight, and sales
to production basis 6 - - 6
---------------------------------------------------
Operating costs net of
metal credits $ 9 $ 38 $ (6) $ 41
Inmet's share of
production (000's) 15,400 18,800 8,100 42,300
---------------------------------------------------
Cash cost (US dollars) $ 0.59 $ 2.16 $ (0.73) $ 1.04
---------------------------------------------------
---------------------------------------------------
INMET MINING CORPORATION
Quarterly review
(unaudited)
Latest Four Quarters
----------------------------------------------------------------------------
2012 2012(1) 2011(1) 2011(1)
(thousands of US dollars, Second First Fourth Third
except per share amounts) quarter quarter quarter quarter
----------------------------------------------------------------------------
STATEMENTS OF EARNINGS
Gross sales $ 251,395 $ 285,527 $ 233,392 $ 253,432
Smelter processing charges
and freight (28,480) (29,338) (27,330) (35,865)
Cost of sales (excluding
depreciation) (84,634) (79,624) (90,176) (78,563)
Depreciation (29,193) (30,067) (26,834) (26,452)
------------------------------------------------
109,088 146,498 89,052 112,552
Corporate development and
exploration (10,290) (8,801) (6,333) (4,539)
General and administration (15,899) (9,745) (7,488) (9,669)
Investment and other income 45,103 (6,263) (3,883) 34,640
Finance costs (2,379) (2,596) (2,314) (2,301)
Income tax expense (31,444) (26,012) (22,490) (32,696)
------------------------------------------------
Net income $ 94,179 $ 93,081 $ 46,544 $ 97,987
------------------------------------------------
Net income attributable to:
Inmet equity holders $ 94,458 $ 93,081 $ 46,544 $ 97,987
Non-controlling interest (279) - - -
------------------------------------------------
$ 94,179 $ 93,081 $ 46,544 $ 97,987
------------------------------------------------
Net Income per share
Basic $ 1.36 $ 1.35 $ 0.67 $ 1.41
Diluted $ 1.35 $ 1.34 $ 0.67 $ 1.41
(1) Information restated from previously reported Canadian dollar amounts
to US dollar amounts at May 31, 2012 exchange rate of US $0.97 per
Canadian dollar.
INMET MINING CORPORATION
Quarterly review (continued)
(unaudited)
Previous Four Quarters
----------------------------------------------------------------------------
2011 2011(1) 2010(1) 2010(1)(2)
(thousands of US dollars, Second First Fourth Third
except per share amounts) quarter quarter quarter quarter
----------------------------------------------------------------------------
STATEMENTS OF EARNINGS
Gross sales $ 214,894 $ 246,191 $ 222,945 $ 218,773
Smelter processing charges
and freight (32,793) (30,581) (34,597) (33,265)
Cost of sales (excluding
depreciation) (71,302) (76,633) (80,328) (68,261)
Depreciation (25,802) (26,180) (18,281) (18,456)
------------------------------------------------
84,997 112,797 89,739 98,791
Corporate development and
exploration (4,417) (12,984) (5,261) (2,670)
General and administration (7,995) (8,155) (4,607) (3,858)
Investment and other income 4,581 (5,590) 49,012 3,095
Finance costs (2,310) (2,257) (4,157) (5,072)
Income tax expense (20,588) (26,296) (30,944) (24,462)
------------------------------------------------
Income from continuing
operations 54,268 57,515 93,782 65,824
Income from discontinued
operation (net of taxes) - 80,786 46,467 32,501
------------------------------------------------
$ 54,268 $ 138,301 $ 140,249 $ 98,325
------------------------------------------------
Net income attributable to:
Inmet equity holders $ 54,268 $ 138,301 $ 142,259 $ 88,762
Non-controlling interest - - (2,010) 9,563
------------------------------------------------
$ 54,268 $ 138,301 $ 140,249 $ 98,325
------------------------------------------------
Income from continuing
operations per share
Basic $ 0.83 $ 0.94 $ 1.67 $ 1.01
Diluted $ 0.83 $ 0.93 $ 1.67 $ 1.01
Income from discontinuing
operations per share
Basic $ - $ 1.32 $ 0.81 $ 0.58
Diluted $ - $ 1.31 $ 0.81 $ 0.58
Net Income per share
Basic $ 0.83 $ 2.26 $ 2.49 $ 1.59
Diluted $ 0.83 $ 2.24 $ 2.49 $ 1.59
(1) Information restated from previously reported Canadian dollar amounts
to US dollar amounts at May 31, 2012 exchange rate of US $0.97 per
Canadian dollar.
(2) 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
(Unaudited)
(thousands of US Note June 30, December 31, December 31,
dollars) reference 2012 2011(1) 2010(1)
----------------------------------------------------------------------------
Assets
Current assets:
Cash and short
term investments 4 $ 2,733,063 $ 1,048,457 $ 316,045
Restricted cash 5 920 784 597
Accounts
receivable 114,071 101,867 115,628
Inventories 91,562 87,654 69,860
Current portion of
held to maturity
investments 94,919 175,921 52,201
Assets held for
sale - - 308,935
---------------------------------------------
3,034,535 1,414,683 863,266
Restricted cash 5 74,205 69,538 67,831
Property, plant and
equipment 2,095,075 1,772,766 1,680,858
Investments in
equity securities 2,706 3,060 2,608
Held to maturity
investments 448,025 427,727 308,483
Deferred income tax
assets 1,574 317 8,444
Other assets 1,511 1,380 2,261
---------------------------------------------
Total assets $ 5,657,631 $ 3,689,471 $ 2,933,751
----------------------------------------------------------------------------
Liabilities
Current liabilities:
Accounts payable
and accrued
liabilities $ 237,618 $ 138,596 $ 132,009
Provisions 13,894 13,087 17,106
Liabilities
associated with
assets held for
sale - - 108,338
---------------------------------------------
251,512 151,683 257,453
Long-term debt 6 1,463,268 16,581 16,091
Provisions 178,803 170,025 157,235
Other liabilities 17,242 17,156 17,541
Deferred income tax
liabilities 56,487 28,351 12,127
---------------------------------------------
Total liabilities 1,967,312 383,796 460,447
---------------------------------------------
Commitments and
contingencies 15
Equity
Share capital 1,541,773 1,541,324 1,054,927
Contributed surplus 64,725 64,629 64,028
Share based
compensation 7 17,964 8,256 6,334
Retained earnings 2,039,382 1,851,010 1,527,342
Accumulated other
comprehensive loss 8 (146,899) (159,544) (179,327)
---------------------------------------------
Total equity
attributable to
Inmet equity
holders 3,516,945 3,305,675 2,473,304
---------------------------------------------
Non-controlling
interest 9 173,374 - -
---------------------------------------------
Total equity 3,690,319 3,305,675 2,473,304
---------------------------------------------
Total liabilities
and equity $ 5,657,631 3,689,471 $ 2,933,751
----------------------------------------------------------------------------
(1) refer to note 3 for effect of change in presentation currency to the US
dollar.
(See accompanying notes)
INMET MINING CORPORATION
Segmented statements of financial position
(Unaudited)
CORPORATE LAS
2012 As at June 30 & OTHER CAYELI CRUCES PYHASALMI
----------------------------------------------------------------------------
(thousands of US
dollars) (Turkey) (Spain) (Finland)
Assets
Cash and short-term
investments $ 2,390,279 $ 51,822 $ 165,880 $ 43,358
Other current assets 102,860 60,496 89,847 46,115
Restricted cash 19,312 - 53,343 1,550
Property, plant and
equipment 2,284 132,631 833,601 65,468
Investments in equity
securities 2,706 - - -
Held to maturity
investments 347,583 100,442 - -
Other non-current assets 1,387 1,698 - -
----------------------------------------------------
$ 2,866,411 $ 347,089 $ 1,142,671 $ 156,491
----------------------------------------------------
Liabilities
Current liabilities $ 37,506 $ 36,257 $ 60,693 $ 18,593
Long-term debt 1,463,268 - - -
Provisions 70,181 18,878 59,760 29,984
Other liabilities 664 - 16,578 -
Deferred income tax
liabilities - - 45,491 10,996
----------------------------------------------------
$ 1,571,619 $ 55,135 $ 182,522 $ 59,573
----------------------------------------------------
CORPORATE LAS
2011 As at December 31 & OTHER CAYELI CRUCES PYHASALMI
----------------------------------------------------------------------------
(thousands of US
dollars) (Turkey) (Spain) (Finland)
Assets
Cash and short-term
investments $ 711,427 $ 133,215 $ 131,799 $ 46,109
Other current assets 183,715 44,728 83,926 51,893
Restricted cash 16,306 - 51,667 1,565
Property, plant and
equipment 1,196 137,736 869,308 66,103
Investments in equity
securities 3,060 - - -
Held to maturity
investments 348,022 79,705 - -
Other non-current assets 1,262 435 - -
----------------------------------------------------
$ 1,264,988 $ 395,819 $ 1,136,700 $ 165,670
----------------------------------------------------
Liabilities
Current liabilities $ 21,305 $ 41,460 $ 53,152 $ 16,418
Long-term debt 16,581 - - -
Provisions 68,823 17,450 53,857 29,895
Other liabilities 655 - 16,501 -
Deferred income tax
liabilities - - 17,095 11,256
----------------------------------------------------
$ 107,364 $ 58,910 $ 140,605 $ 57,569
----------------------------------------------------
CORPORATE LAS
2010 As at December 31 & OTHER CAYELI CRUCES PYHASALMI
----------------------------------------------------------------------------
(thousands of US
dollars) (Turkey) (Spain) (Finland)
Assets
Cash and short-term
investments $ 51,493 $ 104,324 $ 57,961 $ 93,970
Other current assets 58,851 57,084 57,708 64,088
Restricted cash 16,368 - 49,883 1,580
Property, plant and
equipment 754 147,799 911,496 64,854
Investments in equity
securities 2,608 - - -
Held to maturity
investments 245,680 62,803 - -
Other non-current assets 922 5,571 4,212 -
----------------------------------------------------
$ 376,676 $ 377,581 $ 1,081,260 $ 224,492
----------------------------------------------------
Liabilities
Current liabilities $ 29,322 $ 38,393 $ 45,718 $ 27,994
Long-term debt 16,091 - - -
Provisions 55,707 20,920 54,644 25,964
Other liabilities 655 - 16,886 -
Deferred income tax
liabilities 171 - - 11,956
----------------------------------------------------
$ 101,946 $ 59,313 $ 117,248 $ 65,914
----------------------------------------------------
DISCONTINUED
COBRE OPERATIONS -
2012 As at June 30 PANAMA OK TEDI TOTAL
---------------------------------------------------------------
(thousands of US (Papua
dollars) (Panama) New Guinea)
Assets
Cash and short-term
investments $ 81,724 $ - $ 2,733,063
Other current assets 2,154 - 301,472
Restricted cash - - 74,205
Property, plant and
equipment 1,061,091 - 2,095,075
Investments in equity
securities - - 2,706
Held to maturity
investments - - 448,025
Other non-current assets - - 3,085
---------------------------------------
$ 1,144,969 $ - $ 5,657,631
---------------------------------------
Liabilities
Current liabilities $ 98,463 $ - $ 251,512
Long-term debt - - 1,463,268
Provisions - - 178,803
Other liabilities - - 17,242
Deferred income tax
liabilities - - 56,487
---------------------------------------
$ 98,463 $ - $ 1,967,312
---------------------------------------
DISCONTINUED
COBRE OPERATIONS -
2011 As at December 31 PANAMA OK TEDI TOTAL
---------------------------------------------------------------
(thousands of US (Papua
dollars) (Panama) New Guinea)
Assets
Cash and short-term
investments $ 25,907 $ - $ 1,048,457
Other current assets 1,964 - 366,226
Restricted cash - - 69,538
Property, plant and
equipment 698,423 - 1,772,766
Investments in equity
securities - - 3,060
Held to maturity
investments - - 427,727
Other non-current assets - - 1,697
---------------------------------------
$ 726,294 $ - $ 3,689,471
---------------------------------------
Liabilities
Current liabilities $ 19,348 $ - $ 151,683
Long-term debt - - 16,581
Provisions - - 170,025
Other liabilities - - 17,156
Deferred income tax
liabilities - - 28,351
---------------------------------------
$ 19,348 $ - $ 383,796
---------------------------------------
DISCONTINUED
COBRE OPERATIONS -
2010 As at December 31 PANAMA OK TEDI TOTAL
---------------------------------------------------------------
(thousands of US (Papua
dollars) (Panama) New Guinea)
Assets
Cash and short-term
investments $ 8,297 $ - $ 316,045
Other current assets 664 308,826 547,221
Restricted cash - - 67,831
Property, plant and
equipment 555,955 - 1,680,858
Investments in equity
securities - - 2,608
Held to maturity
investments - - 308,483
Other non-current assets - - 10,705
---------------------------------------
$ 564,916 $ 308,826 $ 2,933,751
---------------------------------------
Liabilities
Current liabilities $ 7,688 $ 108,338 $ 257,453
Long-term debt - - 16,091
Provisions - - 157,235
Other liabilities - - 17,541
Deferred income tax
liabilities - - 12,127
---------------------------------------
$ 7,688 $ 108,338 $ 460,447
---------------------------------------
INMET MINING CORPORATION
Consolidated statements of changes in equity
(unaudited)
----------------------------------------------------------------------------
Attributable to Inmet equity holders
----------------------------------------------------------------------------
(thousands of Note Share Retained Contributed Share based
US dollars) Reference Capital earnings surplus compensation
----------------------------------------------------------------------------
Balance as at
December 31,
2010(1) $ 1,054,927 $ 1,527,342 $ 64,028 $ 6,334
Comprehensive
income - 192,569 - -
Equity
settled
share-based
compensation
plans - - 292 (1,087)
Dividends - (6,713) - -
Issuance of
share
capital 486,199 - - -
----------------------------------------------------
Balance as at
June 30,
2011(1) $ 1,541,126 $ 1,713,198 $ 64,320 $ 5,247
----------------------------------------------------
Comprehensive
income - 144,531 - -
Equity
settled
share-based
compensation
plans 198 - 309 3,009
Dividends - (6,719) - -
Balance as at
December 31,
2011(1) $ 1,541,324 $ 1,851,010 $ 64,629 $ 8,256
----------------------------------------------------
Comprehensive
income
(loss) - 187,539 - -
Equity
settled
share-based
compensation
plans 449 - 96 9,708
Dividends on
common
shares - (6,759) - -
Equity
funding from
non-
controlling
shareholder - - - -
Sale of 20
percent
interest in
Cobre Panama 9 - 7,592 - -
----------------------------------------------------
Balance as at
June 30,
2012 $ 1,541,773 $ 2,039,382 $ 64,725 $ 17,964
----------------------------------------------------
------------------------------------------------------------------
Attributable to Inmet equity holders
------------------------------------------------------------------
Accumulated
other
comprehensive
income Non-
(thousands of (loss) controlling Total
US dollars) (note 7) Total interest equity
------------------------------------------------------------------
Balance as at
December 31,
2010(1) $ (179,327) $ 2,473,304 - $ 2,473,304
Comprehensive
income 41,793 234,362 - 234,362
Equity
settled
share-based
compensation
plans - (795) - (795)
Dividends - (6,713) - (6,713)
Issuance of
share
capital - 486,199 - 486,199
-----------------------------------------------------
Balance as at
June 30,
2011(1) $ (137,534) $ 3,186,357 $ - $ 3,186,357
-----------------------------------------------------
Comprehensive
income (22,010) 122,521 - 122,521
Equity
settled
share-based
compensation
plans - 3,516 - 3,516
Dividends - (6,719) - (6,719)
--------------------------------------
Balance as at
December 31,
2011(1) $ (159,544) $ 3,305,675 $ - $ 3,305,675
-----------------------------------------------------
Comprehensive
income
(loss) 6,872 194,411 5,715 200,126
Equity
settled
share-based
compensation
plans - 10,253 - 10,253
Dividends on
common
shares - (6,759) - (6,759)
Equity
funding from
non-
controlling
shareholder - - 20,000 20,000
Sale of 20
percent
interest in
Cobre Panama 5,773 13,365 147,659 161,024
-----------------------------------------------------
Balance as at
June 30,
2012 $ (146,899) $ 3,516,945 $ 173,374 $ 3,690,319
-----------------------------------------------------
(1) refer to note 3 for effect of change in presentation currency to the US
dollar.
(See accompanying notes)
INMET MINING CORPORATION
Consolidated statements of earnings
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
(thousands of US
dollars except
per share Note
amounts) reference 2012 2011(1) 2012 2011(1)
----------------------------------------------------------------------------
Gross sales $ 251,395 $ 214,894 $ 536,922 $ 461,085
Smelter
processing
charges and
freight (28,480) (32,793) (57,818) (63,374)
Cost of sales
(excluding
depreciation) (84,634) (71,302) (164,258) (147,935)
Depreciation (29,193) (25,802) (59,260) (51,982)
----------------------------------------------------------------------------
Earnings from
operations 109,088 84,997 255,586 197,794
Corporate
development and
exploration (10,290) (4,417) (19,091) (17,401)
General and
administration (15,899) (7,995) (25,644) (16,150)
Investment and
other income 10 45,103 4,581 38,840 (1,009)
Finance costs 11 (2,379) (2,310) (4,975) (4,567)
----------------------------------------------------------------------------
Income before
taxation 125,623 74,856 244,716 158,667
Income tax
expense 12 (31,444) (20,588) (57,456) (46,884)
----------------------------------------------------------------------------
Income from
continuing
operations $ 94,179 $ 54,268 $ 187,260 $ 111,783
Income from
discontinued
operation (net
of taxes) - - - 80,786
----------------------------------------------------------------------------
Net income $ 94,179 $ 54,268 $ 187,260 $ 192,569
----------------------------------------------------------------------------
Net income
attributable to:
Inmet equity
holders $ 94,458 $ 54,268 $ 187,539 $ 192,569
Non-controlling
interest (279) - (279) -
----------------------------------------------------------------------------
$ 94,179 $ 54,268 $ 187,260 $ 192,569
----------------------------------------------------------------------------
Earnings per
common share 13
Income from
continuing
operations
Basic $ 1.36 $ 0.83 $ 2.70 $ 1.76
Diluted $ 1.35 $ 0.83 $ 2.69 $ 1.75
----------------------------------------------------------------------------
Income from
discontinued
operation
Basic - - - $ 1.27
Diluted - - - $ 1.27
----------------------------------------------------------------------------
Net income
Basic $ 1.36 $ 0.83 $ 2.70 $ 3.03
Diluted $ 1.35 $ 0.83 $ 2.69 $ 3.02
----------------------------------------------------------------------------
(1) refer to note 3 for effect of change in presentation currency to the US
dollar.
(See accompanying notes)
INMET MINING CORPORATION
Segmented statements of earnings
(unaudited)
2012 For the six
months ended June CORPORATE LAS
30 & OTHER CAYELI CRUCES PYHASALMI
----------------------------------------------------------------------------
(thousands of US
dollars) (Turkey) (Spain) (Finland)
Gross sales $ - $ 189,533 $ 238,245 $ 109,144
Smelter processing
charges and freight - (35,544) (845) (21,429)
Cost of sales
(excluding
depreciation) (4,148) (51,157) (78,653) (30,300)
Depreciation - (12,628) (42,025) (4,607)
--------------------------------------------------------
Earnings from
operations (4,148) 90,204 116,722 52,808
Corporate
development and
exploration (10,889) (769) (1,560) (2,282)
General and
administration (25,644) - - -
Investment and other
income 36,927 (1,033) 2,083 756
Finance costs (1,634) (570) (2,410) (361)
Income tax expense (722) (17,368) (28,451) (10,915)
--------------------------------------------------------
Net income (loss) $ (6,110) $ 70,464 $ 86,384 $ 40,006
--------------------------------------------------------
2011 For the six CORPORATE LAS
months ended June 30 & OTHER CAYELI CRUCES PYHASALMI
----------------------------------------------------------------------------
(thousands of US
dollars) (Turkey) (Spain) (Finland)
Gross sales $ - $ 175,130 $ 164,219 $ 121,736
Smelter processing
charges and freight - (35,092) (461) (27,821)
Cost of sales
(excluding
depreciation) - (46,125) (75,759) (26,051)
Depreciation - (9,928) (37,604) (4,450)
--------------------------------------------------------
Earnings from
operations - 83,985 50,395 63,414
Corporate
development and
exploration (12,725) (901) (5) (1,612)
General and
administration (16,150) - - -
Investment and other
income (3,443) 2,263 87 194
Finance costs (1,843) (281) (2,011) (432)
Income tax expense (484) (22,842) (9,618) (13,940)
--------------------------------------------------------
Net income (loss)
from continuing
operations $ (34,645) $ 62,224 $ 38,848 $ 47,624
--------------------------------------------------------
Income from
discontinued
operation (net of
taxes) - - - -
--------------------------------------------------------
Net income (loss) $ (34,645) $ 62,224 $ 38,848 $ 47,624
--------------------------------------------------------
2012 For the six DISCONTINUED
months ended June COBRE OPERATIONS -
30 PANAMA OK TEDI TOTAL
-------------------------------------------------------------
(thousands of US (Papua
dollars) (Panama) New Guinea)
Gross sales $ - $ - $ 536,922
Smelter processing
charges and freight - - (57,818)
Cost of sales
(excluding
depreciation) - - (164,258)
Depreciation - - (59,260)
-----------------------------------------
Earnings from
operations - - 255,586
Corporate
development and
exploration (3,591) - (19,091)
General and
administration - - (25,644)
Investment and other
income 107 - 38,840
Finance costs - - (4,975)
Income tax expense - - (57,456)
-----------------------------------------
Net income (loss) $ (3,484) $ - $ 187,260
-----------------------------------------
DISCONTINUED
2011 For the six COBRE OPERATIONS -
months ended June 30 PANAMA OK TEDI TOTAL
-------------------------------------------------------------
(thousands of US (Papua
dollars) (Panama) New Guinea)
Gross sales $ - $ - $ 461,085
Smelter processing
charges and freight - - (63,374)
Cost of sales
(excluding
depreciation) - - (147,935)
Depreciation - - (51,982)
-----------------------------------------
Earnings from
operations - - 197,794
Corporate
development and
exploration (2,158) - (17,401)
General and
administration - - (16,150)
Investment and other
income (110) - (1,009)
Finance costs - - (4,567)
Income tax expense - - (46,884)
-----------------------------------------
Net income (loss)
from continuing
operations $ (2,268) $ - $ 111,783
-----------------------------------------
Income from
discontinued
operation (net of
taxes) - 80,786 80,786
-----------------------------------------
Net income (loss) $ (2,268) $ 80,786 $ 192,569
-----------------------------------------
INMET MINING CORPORATION
Segmented statements of earnings
(unaudited)
2012 For the three months ended CORPORATE LAS
June 30 & OTHER CAYELI CRUCES
----------------------------------------------------------------------------
(thousands of US dollars) (Turkey) (Spain)
Gross sales $ - $ 66,162 $ 127,863
Smelter processing charges and
freight - (14,075) (550)
Cost of sales (excluding
depreciation) (6,895) (22,519) (40,653)
Depreciation - (5,366) (21,557)
------------------------------------------
Earnings from operations (6,895) 24,202 65,103
Corporate development and
exploration (5,368) (388) (642)
General and administration (15,899) - -
Investment and other income 41,066 820 2,191
Finance costs (820) (233) (1,147)
Income tax expense (586) (7,888) (17,238)
------------------------------------------
Net income (loss) $ 11,498 $ 16,513 $ 48,267
------------------------------------------
2011 For the three months ended CORPORATE LAS
June 30 & OTHER CAYELI CRUCES
----------------------------------------------------------------------------
(thousands of US dollars) (Turkey) (Spain)
Gross sales $ - $ 79,226 $ 76,282
Smelter processing charges and
freight - (17,767) (201)
Cost of sales (excluding
depreciation) - (22,443) (36,618)
Depreciation - (4,868) (18,670)
------------------------------------------
Earnings from operations - 34,148 20,793
Corporate development and
exploration (3,073) (439) -
General and administration (7,995) - -
Investment and other income 3,331 1,439 (153)
Finance costs (932) (138) (1,020)
Income tax expense (287) (11,556) (2,360)
------------------------------------------
Net income (loss) $ (8,956) $ 23,454 $ 17,260
------------------------------------------
2012 For the three months ended COBRE
June 30 PYHASALMI PANAMA TOTAL
----------------------------------------------------------------------------
(thousands of US dollars) (Finland) (Panama)
Gross sales $ 57,370 $ - $ 251,395
Smelter processing charges and
freight (13,855) - (28,480)
Cost of sales (excluding
depreciation) (14,567) - (84,634)
Depreciation (2,270) - (29,193)
------------------------------------------
Earnings from operations 26,678 - 109,088
Corporate development and
exploration (1,507) (2,385) (10,290)
General and administration - - (15,899)
Investment and other income 919 107 45,103
Finance costs (179) - (2,379)
Income tax expense (5,732) - (31,444)
------------------------------------------
Net income (loss) $ 20,179 $ (2,278) $ 94,179
------------------------------------------
2011 For the three months ended COBRE
June 30 PYHASALMI PANAMA TOTAL
----------------------------------------------------------------------------
(thousands of US dollars) (Finland) (Panama)
Gross sales $ 59,386 $ - $ 214,894
Smelter processing charges and
freight (14,825) - (32,793)
Cost of sales (excluding
depreciation) (12,241) - (71,302)
Depreciation (2,264) - (25,802)
------------------------------------------
Earnings from operations 30,056 - 84,997
Corporate development and
exploration (905) - (4,417)
General and administration - - (7,995)
Investment and other income 74 (110) 4,581
Finance costs (220) - (2,310)
Income tax expense (6,385) - (20,588)
------------------------------------------
Net income (loss) $ 22,620 $ (110) $ 54,268
------------------------------------------
INMET MINING CORPORATION
Consolidated statements of comprehensive income
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
Note
(thousands of US dollars) reference 2012 2011(1) 2012 2011(1)
----------------------------------------------------------------------------
Net income $ 94,179 $ 54,268 $187,260 $192,569
----------------------------------------
Other comprehensive
income for the period:
Continuing operations
Changes in fair value of
investments (509) (2,029) (409) (2,552)
Currency translation
adjustments 19,978 11,103 13,271 28,488
Income tax recovery
related to investments -
other comprehensive
income 2 (72) 4 3
----------------------------------------
19,471 9,002 12,866 25,939
----------------------------------------
Other comprehensive
income from discontinued
operation (net of taxes) - - - 15,854
----------------------------------------
Comprehensive income $113,650 $ 63,270 $200,126 $234,362
----------------------------------------------------------------------------
Comprehensive income
(loss) attributable to:
Inmet equity holders $107,935 $ 63,270 $194,411 $234,362
Non-controlling
interests 5,715 - 5,715 -
----------------------------------------
$113,650 $ 63,270 $200,126 $234,362
----------------------------------------------------------------------------
(1) refer to note 3 for effect of change in presentation currency to the US
dollar.
(See accompanying notes)
INMET MINING CORPORATION
Consolidated statements of cash flows
(unaudited)
Three Months Ended Six Months Ended
June 30 June 30
(thousands of US Note
dollars) reference 2012 2011(1) 2012 2011(1)
----------------------------------------------------------------------------
Cash provided by
(used in)
operating
activities(1)
Net income from
continuing
operations $ 94,179 $ 54,268 $ 187,260 $ 111,783
Add (deduct) items
not affecting
cash:
Depreciation 29,193 25,802 59,260 51,982
Deferred income
taxes 15,105 2,305 27,058 10,428
Accretion expense
on provisions and
capital leases 1,942 1,860 4,105 3,691
Change in asset
retirement
obligations at
closed sites 6,895 - 4,148 -
Foreign exchange
loss 2,260 524 9,660 4,614
Other 9,125 (2,513) 11,036 (2,917)
Settlement of asset
retirement
obligations (1,255) (1,728) (2,137) (3,341)
Net change in non-
cash working
capital 14 18,889 9,459 (9,545) 28,155
----------------------------------------------
176,333 89,977 290,845 204,395
----------------------------------------------
Cash provided by
(used in)
investing
activities
Purchase of
property, plant
and equipment (192,050) (50,154) (274,658) (89,589)
Acquisition of held
to maturity
investments (52,970) (21,936) (54,094) (288,632)
Maturing of held to
maturity
investments 78,276 35,114 125,652 42,859
Funding received
under Cobre Panama
option agreement - 4,694 - 8,512
Sale of 20 percent
interest in Cobre
Panama 9 160,952 - 160,952 -
Purchase of equity
securities - (624) - (4,006)
Sale (purchase) of
short-term
investments, net - (24,126) 258,459 (17,079)
Other - 2,615 - 2,737
----------------------------------------------
(5,792) (54,417) 216,311 (345,198)
----------------------------------------------
Cash provided by
(used in)
financing
activities
Issuance of common
shares - 486,199 - 486,199
Long-term debt
borrowing, net of
transaction costs 6 1,429,031 - 1,429,031 -
Dividends on common
shares (6,759) (6,713) (6,759) (6,713)
Financial assurance
payments (150) - (5,059) -
Funding by non-
controlling
shareholder 20,000 - 20,000 -
Other (853) (846) (1,330) (3,592)
----------------------------------------------
1,441,269 478,640 1,435,883 475,894
----------------------------------------------
Foreign exchange on
cash held in
foreign currencies (1,263) 730 26 3,770
----------------------------------------------
Cash provided by
discontinued
operation - - - 297,220
----------------------------------------------
Increase in cash: 1,610,547 514,930 1,943,065 636,081
Cash:
Beginning of
period 1,122,516 430,132 789,998 308,981
----------------------------------------------
End of period $2,733,063 $ 945,062 $2,733,063 $ 945,062
Short term
investments - 24,126 - 24,126
----------------------------------------------
Cash and short-term
investments $2,733,063 $ 969,188 $2,733,063 $ 969,188
----------------------------------------------------------------------------
(See accompanying
notes)
(1) Supplementary
cash flow
information:
Cash interest
paid $ - $ - $ 532 $ 544
Cash taxes paid $ 24,432 $ 24,218 $ 37,759 $ 41,170
----------------------------------------------------------------------------
(1) refer to note 3 for effect of change in presentation currency to the US
dollar.
(See accompanying notes)
INMET MINING CORPORATION
Segmented statements of cash flows
(unaudited)
2012 For the six months ended June CORPORATE LAS
30 & OTHER CAYELI CRUCES
----------------------------------------------------------------------------
(thousands of US dollars) (Turkey) (Spain)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ 12,598 $ 85,663 $ 159,295
Net change in non-cash working
capital 593 (23,546) 5,755
------------------------------------------
13,191 62,117 165,050
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (1,491) (5,239) (13,200)
Acquisition of held to maturity
investments (35,142) (18,952) -
Maturing of held to maturity
investments 125,652 - -
Funding received under Cobre
Panama option agreement - - -
Sale of short-term investments 258,459 - -
------------------------------------------
347,478 (24,191) (13,200)
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities 1,419,339 - (3,527)
------------------------------------------
Foreign exchange on cash held in
foreign currencies (1,067) (1,096) (458)
------------------------------------------
Intergroup funding (distributions) 158,370 (118,223) (113,784)
------------------------------------------
Increase (decrease) in cash 1,937,311 (81,393) 34,081
Cash:
Beginning of year 452,968 133,215 131,799
------------------------------------------
End of period 2,390,279 51,822 165,880
Short term investments - - -
------------------------------------------
Cash and short-term investments $ 2,390,279 $ 51,822 $ 165,880
------------------------------------------
------------------------------------------
2011 For the six months ended June CORPORATE LAS
30 & OTHER CAYELI CRUCES
----------------------------------------------------------------------------
(thousands of US dollars) (Turkey) (Spain)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ (38,454) $ 73,541 $ 90,801
Net change in non-cash working
capital (6,582) 15,002 4,828
------------------------------------------
(45,036) 88,543 95,629
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (364) (7,418) (32,974)
Acquisition of held to maturity
investments (274,237) (14,395) -
Maturing of held to maturity
investments 42,859 - -
Funding received under Cobre
Panama option agreement - - -
Purchase of equity investments (4,006) - -
Sale (purchase) of short-term
investments, net (24,126) - 7,047
Other 2,258 479 -
------------------------------------------
(257,616) (21,334) (25,927)
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities 479,492 - (3,598)
------------------------------------------
Foreign exchange on cash held in
foreign currencies - (3,832) 3,837
------------------------------------------
Cash provided by discontinued
operation 297,220 - -
------------------------------------------
Intergroup funding (distributions) 147,992 (95,550) (28,156)
------------------------------------------
Increase (decrease) in cash 622,052 (32,173) 41,785
Cash:
Beginning of year 51,493 104,324 50,897
------------------------------------------
End of period 673,545 72,151 92,682
Short term investments 24,126 - -
------------------------------------------
Cash and short-term investments $ 697,671 $ 72,151 $ 92,682
------------------------------------------
------------------------------------------
2012 For the six months ended June COBRE
30 PYHASALMI PANAMA TOTAL
----------------------------------------------------------------------------
(thousands of US dollars) (Finland) (Panama)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ 45,160 $ (2,326) $ 300,390
Net change in non-cash working
capital 7,653 - (9,545)
------------------------------------------
52,813 (2,326) 290,845
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (4,575) (250,153) (274,658)
Acquisition of held to maturity
investments - - (54,094)
Maturing of held to maturity
investments - - 125,652
Funding received under Cobre
Panama option agreement - 160,952 160,952
Sale of short-term investments - - 258,459
------------------------------------------
(4,575) (89,201) 216,311
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities - 20,071 1,435,883
------------------------------------------
Foreign exchange on cash held in
foreign currencies (1,925) 4,572 26
------------------------------------------
Intergroup funding (distributions) (49,064) 122,701 -
------------------------------------------
Increase (decrease) in cash (2,751) 55,817 1,943,065
Cash:
Beginning of year 46,109 25,907 789,998
------------------------------------------
End of period 43,358 81,724 2,733,063
Short term investments - - -
------------------------------------------
Cash and short-term investments $ 43,358 $ 81,724 $ 2,733,063
------------------------------------------
------------------------------------------
2011 For the six months ended June COBRE
30 PYHASALMI PANAMA TOTAL
----------------------------------------------------------------------------
(thousands of US dollars) (Finland) (Panama)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ 52,620 $ (2,268) $ 176,240
Net change in non-cash working
capital 14,907 - 28,155
------------------------------------------
67,527 (2,268) 204,395
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (2,698) (46,135) (89,589)
Acquisition of held to maturity
investments - - (288,632)
Maturing of held to maturity
investments - - 42,859
Funding received under Cobre
Panama option agreement - 8,512 8,512
Purchase of equity investments - - (4,006)
Sale (purchase) of short-term
investments, net - - (17,079)
Other - - 2,737
------------------------------------------
(2,698) (37,623) (345,198)
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities - - 475,894
------------------------------------------
Foreign exchange on cash held in
foreign currencies 4,063 (298) 3,770
------------------------------------------
Cash provided by discontinued
operation - - 297,220
------------------------------------------
Intergroup funding (distributions) (70,970) 46,684 -
------------------------------------------
Increase (decrease) in cash (2,078) 6,495 636,081
Cash:
Beginning of year 93,970 8,297 308,981
------------------------------------------
End of period 91,892 14,792 945,062
Short term investments - - 24,126
------------------------------------------
Cash and short-term investments $ 91,892 $ 14,792 $ 969,188
------------------------------------------
------------------------------------------
INMET MINING CORPORATION
Segmented statements of cash flows
(unaudited)
2012 For the three months ended CORPORATE LAS
June 30 & OTHER CAYELI CRUCES
----------------------------------------------------------------------------
(thousands of US dollars) (Turkey) (Spain)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ 25,990 $ 20,603 $ 87,989
Net change in non-cash working
capital 3,651 11,670 (428)
------------------------------------------
29,641 32,273 87,561
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (922) (2,989) (7,215)
Acquisition of held to maturity
investments (34,462) (18,508) -
Maturing of held to maturity
investments 78,276 - -
Sale of 20 percent interest in
Cobre Panama - - -
------------------------------------------
42,892 (21,497) (7,215)
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities 1,422,003 - (805)
------------------------------------------
Foreign exchange on cash held in
foreign currencies (3,236) 1,283 (1,128)
------------------------------------------
Intergroup funding (distributions) 161,662 (118,336) (11,864)
------------------------------------------
Increase (decrease) in cash 1,652,962 (106,277) 66,549
Cash:
Beginning of period 737,317 158,099 99,331
------------------------------------------
End of period 2,390,279 51,822 165,880
Short term investments - - -
------------------------------------------
Cash and short-term investments $ 2,390,279 $ 51,822 $ 165,880
------------------------------------------
------------------------------------------
2011 For the three months ended CORPORATE LAS
June 30 & OTHER CAYELI CRUCES
----------------------------------------------------------------------------
(thousands of US dollars) (Turkey) (Spain)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ (12,913) $ 28,150 $ 40,199
Net change in non-cash working
capital (1,895) 8,112 (425)
------------------------------------------
(14,808) 36,262 39,774
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (188) (5,078) (18,612)
Acquisition of held to maturity
investments (8,002) (13,934) -
Maturing of held to maturity
investments 35,114 - -
Funding received under Cobre
Panama option agreement - - -
Purchase of equity investments (624) - -
Purchase of short-term investments (24,126) - -
Other 2,136 479 -
------------------------------------------
4,310 (18,533) (18,612)
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities 479,358 - (718)
------------------------------------------
Foreign exchange on cash held in
foreign currencies - (423) 1,481
------------------------------------------
Intergroup funding (distributions) 152,237 (95,474) (14,030)
------------------------------------------
Increase (decrease) in cash 621,097 (78,168) 7,895
Cash:
Beginning of period 52,449 150,318 84,787
------------------------------------------
End of period 673,546 72,150 92,682
Short term investments 24,126 - -
------------------------------------------
Cash and short-term investments $ 697,672 $ 72,150 $ 92,682
------------------------------------------
------------------------------------------
2012 For the three months ended COBRE
June 30 PYHASALMI PANAMA TOTAL
----------------------------------------------------------------------------
(thousands of US dollars) (Finland) (Panama)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ 22,732 $ 130 $ 157,444
Net change in non-cash working
capital 3,996 - 18,889
------------------------------------------
26,728 130 176,333
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (2,191) (178,733) (192,050)
Acquisition of held to maturity
investments - - (52,970)
Maturing of held to maturity
investments - - 78,276
Sale of 20 percent interest in
Cobre Panama - 160,952 160,952
------------------------------------------
(2,191) (17,781) (5,792)
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities - 20,071 1,441,269
------------------------------------------
Foreign exchange on cash held in
foreign currencies (2,627) 4,445 (1,263)
------------------------------------------
Intergroup funding (distributions) (45,102) 13,640 -
------------------------------------------
Increase (decrease) in cash (23,192) 20,505 1,610,547
Cash:
Beginning of period 66,550 61,219 1,122,516
------------------------------------------
End of period 43,358 81,724 2,733,063
Short term investments - - -
------------------------------------------
Cash and short-term investments $ 43,358 $ 81,724 $ 2,733,063
------------------------------------------
------------------------------------------
2011 For the three months ended COBRE
June 30 PYHASALMI PANAMA TOTAL
----------------------------------------------------------------------------
(thousands of US dollars) (Finland) (Panama)
Cash provided by (used in)
operating activities
Before net change in non-cash
working capital $ 25,192 $ (110) $ 80,518
Net change in non-cash working
capital 3,667 - 9,459
------------------------------------------
28,859 (110) 89,977
------------------------------------------
Cash provided by (used in)
investing activities
Purchase of property, plant and
equipment (2,383) (23,893) (50,154)
Acquisition of held to maturity
investments - - (21,936)
Maturing of held to maturity
investments - - 35,114
Funding received under Cobre
Panama option agreement - 4,694 4,694
Purchase of equity investments - - (624)
Purchase of short-term investments - - (24,126)
Other - - 2,615
------------------------------------------
(2,383) (19,199) (54,417)
------------------------------------------
------------------------------------------
Cash provided by (used in)
financing activities - - 478,640
------------------------------------------
Foreign exchange on cash held in
foreign currencies (120) (208) 730
------------------------------------------
Intergroup funding (distributions) (72,819) 30,086 -
------------------------------------------
Increase (decrease) in cash (46,463) 10,569 514,930
Cash:
Beginning of period 138,355 4,223 430,132
------------------------------------------
End of period 91,892 14,792 945,062
Short term investments - - 24,126
------------------------------------------
Cash and short-term investments $ 91,892 $ 14,792 $ 969,188
------------------------------------------
------------------------------------------
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, except as described in note 3. 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. Change in functional and presentation currencies to the US dollar
Prior to June 1, 2012, Inmet's functional and presentation currencies were the Canadian dollar. The decision to proceed with full scale development of Cobre Panama has significantly increased Inmet's exposure to the US dollar considering:
-- Inmet's share of the development costs for the project, the vast
majority of which are denominated in US dollars; and
-- our issuance of US $1.5 billion of senior unsecured notes
Consequently, effective June 1, 2012, the US dollar was adopted as Inmet's functional currency. IFRS requires a change in functional currency to be accounted for prospectively. We therefore translated Inmet's May 31, 2012 financial statement items from Canadian dollars to US dollars using the May 31, 2012 exchange rate US $0.97 per Canadian dollar (Transition Rate). The resulting translated amounts for non-monetary items are treated as their historical cost. Our operating entities continue to measure the items in their financial statements using their functional currencies; Cayeli and Cobre Panama use the US dollar, and Pyhasalmi and Las Cruces use the euro.
Following the change in Inmet's functional currency, we elected to change our presentation currency from Canadian dollars to US dollars as we believe that changing the presentation currency to US dollars will provide shareholders with a more accurate reflection of our underlying financial performance and position. We therefore began to report our consolidated financial statements in US dollars with our June 30, 2012 interim financial statements. The change in presentation currency represents a voluntary change in accounting policy. We have restated all comparative financial statements from previously reported Canadian dollar amounts to US dollars using the Transition Rate.
4. Cash and short-term investments
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, December 31, December 31,
2012 2011 2010
----------------------------------------------------------------------------
Cash and cash equivalents:
Liquidity funds $ 2,505,158 $ 375,523 $ 188,415
Term deposits 8,626 6,548 51,306
Overnight deposits 99,414 70,389 4,182
Bankers acceptances - 891 -
Money market funds 33,910 126,336 38,774
Corporate - 11,593 -
Bank deposits 85,955 31,722 26,304
Provincial short-term notes - 166,996 -
----------------------------------------------------------------------------
2,733,063 789,998 308,981
----------------------------------------------------------------------------
Short-term investments:
Corporate - 48,588 -
Term deposits - - 7,064
Provincial short term notes - 187,191 -
Bankers acceptances - 22,680 -
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- 258,459 7,064
----------------------------------------------------------------------------
Total cash and short-term
instruments $ 2,733,063 $ 1,048,457 $ 316,045
----------------------------------------------------------------------------
----------------------------------------------------------------------------
5. Restricted cash
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, December 31, December 31,
2012 2011 2010
----------------------------------------------------------------------------
Collateralized cash for letter
of credit facility - Inmet
Mining $ 19,312 $ 16,306 $ 16,368
Collateralized cash for letters
of credit - Las Cruces 54,263 52,451 50,480
Collateralized cash for
Pyhasalmi reclamation 1,550 1,565 1,580
---------------------------------------------
75,125 70,322 68,428
Less current portion:
Collateralized cash for
letters of credit - Las
Cruces (920) (784) (597)
----------------------------------------------------------------------------
$ 74,205 $ 69,538 $ 67,831
----------------------------------------------------------------------------
6. Long-term debt
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, December 31, December 31,
2012 2011 2010
----------------------------------------------------------------------------
Senior unsecured notes(a):
Principal $ 1,500,000 $ - $ -
Transaction costs (54,085) - -
Cumulative accretion of
transaction costs 581 - -
-------------------------------------------
1,446,496 - -
-------------------------------------------
Promissory note 16,772 16,581 16,091
----------------------------------------------------------------------------
Total long-term debt $ 1,463,268 $ 16,581 $ 16,091
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(a) On May 18, 2012, we issued $1,500 million aggregate principal amount of 8.75 percent senior unsecured notes (Notes) due 2020. The Notes were priced at 98.584 percent of their face value, yielding proceeds of $1,445 million net of the discount and directly attributable transaction costs. The Notes have been designated as Other liabilities and accounted for initially at fair value and subsequently at amortized cost using the effective interest rate method with a yield to maturity of 9.4 percent. Interest is payable on the notes semi-annually on December 1 and June 1 of each year. As the proceeds will be used to fund the development of Cobre Panama, interest costs will be capitalized to project assets during the construction period of this project.
These notes are unconditionally guaranteed on a senior unsecured basis by certain Inmet subsidiaries. The notes contain certain customary covenants and restrictions for a financing instrument of this type.
We may redeem, prior to June 1, 2015, up to 35 percent of the Notes with the net proceeds of certain equity offerings at a redemption price equal to 108.75 percent of the principal amount plus accrued interest. Prior to June 1, 2016, we may redeem the Notes in whole or in part at 100 percent of their principal amount, plus accrued interest, plus an amount equal to the greater of 1.0 percent of the principal amount of the note to be redeemed and the excess, if any, of the present value of the June 1, 2016 redemption price plus required interest payments through June 1, 2016 over the principal amount of the note. We may redeem the Notes at any time on or after June 1, 2016 at the redemption prices and periods set forth below, plus accrued and unpaid interest:
June 1, 2016 104.375 percent
June 1, 2017 102.188 percent
June 1, 2018 and thereafter 100.000 percent
7. Stock-based compensation
During 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 Cdn $64.17, graded vesting and an expiry date of February 21, 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 per option of Cdn $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 21, 2012, the Board granted 36,580 PSUs to senior executives based on a 5 day Volume Weighted Average Price prior to the grant date of Cdn $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 1.0%, resulting in a June 30, 2012 fair value per PSU of Cdn $41.73.
We recognized the following share-based compensation expense in general and administration relating to all outstanding equity-based awards:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
2012 2011 2012 2011
----------------------------------------------------------------------------
Stock option plan $ 1,252 $ 922 $ 2,941 $ 922
Performance share unit plan (182) 183 63 183
Long-term incentive plan
(LTIP) 0 6,759 - 6,759 735
Deferred share unit plan 255 217 471 556
Share award plan 48 147 95 292
----------------------------------------------------------------------------
$ 8,132 $ 1,469 10,329 $ 2,688
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(a) As a result of the decision to proceed with full construction of Cobre Panama, we recognized a stock based compensation expense of $ 7 million this quarter on the LTIP units issued in previous years that relate to the project. This expense represents the cumulative impact from the units' grant dates to June 30, 2012 on a 100 percent award basis as no value was attributed to these units prior to a positive construction decision for Cobre Panama.
8. Accumulated other comprehensive loss
Accumulated other comprehensive loss includes:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, December 31, December 31,
2012 2011 2010
----------------------------------------------------------------------------
Unrealized losses on gold
forward contract sales $ - $ - $ (5,481)
Unrealized losses on
investments (net of tax of
$95) (December 31, 2011 - $94,
December 31, 2010 - $76) (939) (534) (438)
Currency translation adjustment (145,960) (159,010) (173,408)
----------------------------------------------------------------------------
Accumulated other comprehensive
income loss $ (146,899) $ (159,544) $ (179,327)
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----------------------------------------------------------------------------
Currency translation adjustments
The table below is breakdown of our currency translation adjustments.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
June 30, December 31, December 31,
2012 2011 2010
----------------------------------------------------------------------------
Pyhasalmi (euro functional
currency) $ (29,612) $ (27,378) $ (23,580)
Las Cruces (euro functional
currency) (112,711) (103,071) (90,456)
Cayeli (US dollar functional
currency) (12,344) (15,068) (20,243)
Cobre Panama (US dollar
functional currency) 8,707 (13,493) (28,757)
Ok Tedi (US dollar functional
currency) - - (10,372)
----------------------------------------------------------------------------
$ (145,960) $ (159,010) $ (173,408)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
9. Sale of 20 percent interest in Cobre Panama
On April 25, 2012, Korea Panama Mining Corporation (KPMC) completed its acquisition of a 20 percent interest in Minera Panama, owner and developer of Cobre Panama. KPMC acquired its interest for $161 million in cash, representing, together with US $30 million it already paid, its 20 percent share of development costs to that date. As we continued to control Minera Panama after the closing of this transaction, it is treated as a capital transaction with the $8 million difference between 20 percent of our book value of Cobre Panama and the consideration received recognized in retained earnings.
10. Investment and other income
----------------------------------------------------------------------------
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
2012 2011 2012 2011
----------------------------------------------------------------------------
Interest income $ 3,931 $ 4,071 $ 8,183 $ 6,755
Dividend and royalty income 976 452 1,460 1,033
Foreign exchange gain (loss) 40,315 (259) 28,244 (10,740)
Other (119) 317 953 1,943
----------------------------------------------------------------------------
$ 45,103 $ 4,581 $ 38,840 $ (1,009)
----------------------------------------------------------------------------
Foreign exchange loss is a result of:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
2012 2011 2012 2011
----------------------------------------------------------------------------
Translation of US dollar cash held
in euro based entities $ 14,791 $ - $ 10,399 $ -
Translation of US dollar cash held
by Corporate prior to June 2012 27,457 48 27,338 $ (7,927)
Translation of US dollar senior
unsecured notes prior to June 2012 (16,884) - (16,884) -
Translation of US dollar held-to-
maturity investments prior to June
2012 9,262 - 4,330 (2,760)
Translation of Cdn dollar cash held
by Corporate subsequent to May 2012 977 (1,354) 977 -
Translation of Cdn dollar held-to-
maturity investments subsequent to
May 2012 3,042 - 3,042 -
Translation of other monetary assets
and liabilities 1,670 1,047 (958) (53)
----------------------------------------------------------------------------
$ 40,315 $ (259) $ 28,244 $(10,740)
----------------------------------------------------------------------------
11. Finance costs
----------------------------------------------------------------------------
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
2012 2011 2012 2011
----------------------------------------------------------------------------
Interest on note payable $ 263 $ 284 $ 528 $ 554
Accretion on note payable 174 167 342 322
Accretion on provisions and
capital lease obligations 1,942 1,859 4,105 3,691
----------------------------------------------------------------------------
$ 2,379 $ 2,310 $ 4,975 $ 4,567
----------------------------------------------------------------------------
12. Income tax
For the three months ended June 30, 2012:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Current income
taxes $ 586 $ 9,948 $ - $ 5,805 $ 16,339
Deferred
income taxes - (2,060) 17,238 (73) 15,105
----------------------------------------------------------------------------
Income tax
expense $ 586 $ 7,888 $ 17,238 $ 5,732 $ 31,444
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the three months ended June 30, 2011:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Current income
taxes $ 316 $ 11,030 $ 462 $ 6,475 $ 18,283
Deferred
income taxes (29) 526 1,898 (90) 2,305
----------------------------------------------------------------------------
Income tax
expense $ 287 $ 11,556 $ 2,360 $ 6,385 $ 20,588
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2012:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Current income
taxes $ 728 $ 18,597 $ - $ 11,073 $ 30,398
Deferred
income taxes (6) (1,229) 28,451 (158) 27,058
----------------------------------------------------------------------------
Income tax
expense $ 722 $ 17,368 $ 28,451 $ 10,915 $ 57,456
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2011:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Current income
taxes $ 556 $ 21,283 $ 462 $ 14,155 $ 36,456
Deferred
income taxes (72) 1,559 9,156 (215) 10,428
----------------------------------------------------------------------------
Income tax
expense $ 484 $ 22,842 $ 9,618 $ 13,940 $ 46,884
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----------------------------------------------------------------------------
13. Net income per share
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
(thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Income from continuing
operations available to
common shareholders $ 94,458 $ 54,268 $ 187,539 $ 111,783
Income from discontinued
operations available to
common shareholders - - - 80,786
----------------------------------------------------------------------------
Net income available to
common shareholders $ 94,458 $ 54,268 $ 187,539 $ 192,569
----------------------------------------------------------------------------
----------------------------------------------------------------------------
three months ended six months ended
June 30 June 30
(thousands) 2012 2011 2012 2011
----------------------------------------------------------------------------
Weighted average common shares
outstanding 69,366 65,393 69,358 63,483
Plus incremental shares from assumed
conversions:
Deferred share units 98 117 98 117
Long term incentive plan units 312 22 312 37
Stock options - 1 - -
----------------------------------------------------------------------------
Diluted weighted average common
shares outstanding 69,776 65,533 69,768 63,637
----------------------------------------------------------------------------
The table below shows our earnings per common share for the three months ended June 30.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
three months ended June 30
(US dollars per share) 2012 2011
----------------------------------------------------------------------------
Basic Diluted Basic Diluted
Net income from continuing
operations per share $ 1.36 $ 1.35 $ 0.83 $ 0.83
Income from discontinued operations
per share - - - -
----------------------------------------------------------------------------
Net income per share $ 1.36 $ 1.35 $ 0.83 $ 0.83
----------------------------------------------------------------------------
----------------------------------------------------------------------------
The table below shows our earnings per common share for the six months ended June 30.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
six months ended June 30
(US dollars per share) 2012 2011
----------------------------------------------------------------------------
Basic Diluted Basic Diluted
Net income from continuing
operations per share $ 2.70 $ 2.69 $ 1.76 $ 1.75
Income from discontinued operations
per share - - 1.27 1.27
----------------------------------------------------------------------------
Net income per share $ 2.70 $ 2.69 $ 3.03 $ 3.02
----------------------------------------------------------------------------
----------------------------------------------------------------------------
14. 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 June 30, 2012:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Accounts
receivable $ (1,914) $ 19,563 $ (4,464) $ 3,139 $ 16,324
Inventories - (2,335) (2,536) 21 (4,850)
Accounts payable
and accrued
liabilities 4,485 (2,023) 6,647 2,681 11,790
Taxes payable 1,078 (3,453) (75) (1,843) (4,293)
Other 2 (82) - (2) (82)
----------------------------------------------------------------------------
$ 3,651 $ 11,670 $ (428) $ 3,996 $ 18,889
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the three months ended June 30, 2011:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Accounts
receivable $ (364) $ 13,127 $ (1,970) $ 12,281 $ 23,074
Inventories - (1,544) (2,702) (2,813) (7,059)
Accounts payable
and accrued
liabilities (936) (1,485) 3,785 671 2,035
Taxes payable (571) (2,067) 462 (6,472) (8,648)
Other (24) 81 - - 57
----------------------------------------------------------------------------
$ (1,895) $ 8,112 $ (425) $ 3,667 $ 9,459
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2012:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Accounts
receivable $ (811) $ (14,979) $ 1,296 $ 6,641 $ (7,853)
Inventories - 1,987 (4,479) 1,245 (1,247)
Accounts payable
and accrued
liabilities (55) (8,726) 9,013 2,327 2,559
Taxes payable 1,742 (1,744) (75) (2,558) (2,635)
Other (283) (84) - (2) (369)
----------------------------------------------------------------------------
$ 593 $ (23,546) $ 5,755 $ 7,653 $ (9,545)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2011:
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Corporate Cayeli Las Cruces Pyhasalmi
and other (Turkey) (Spain) (Finland) Total
----------------------------------------------------------------------------
Accounts
receivable $ (1,099) $ 20,473 $ (7,049) $ 21,069 $ 33,394
Inventories - (856) 3,079 (2,877) (654)
Accounts payable
and accrued
liabilities (3,036) (699) 8,336 (1,653) 2,948
Taxes payable (1,929) (3,994) 462 (1,632) (7,093)
Other (518) 78 - - (440)
----------------------------------------------------------------------------
$ (6,582) $ 15,002 $ 4,828 $ 14,907 $ 28,155
----------------------------------------------------------------------------
----------------------------------------------------------------------------
15. Capital commitments
As at June 30, 2012, Cobre Panama had committed $1,226 million on a 100 percent basis for the design and supply of the coal-fired power plant, two SAG mills, four ball mills and the related gearless drives, engineering, and other construction activities.
Contacts:
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