Outokumpu cashes in Inmet shares

Finland’s Outokumpu has raised 23 million euros via the sale of about 4 million shares in Inmet Mining (IMN-T).

The shares were issued to Outokumpu as part of Inmet’s acquisition of the Pyhsalmi copper-zinc mine in central Finland in early 2002, and were originally subject to a hold period expiring on March 19, 2005. Outokumpu says the shares were valued at around 13 million euros at the time.

Under a recent amendment, the two companies agreed to waive the restriction on the sale of the shares. In return, Outokumpu has extended the maturity date of a 14-million-euro, 6% promissory note written by Inmet under the Pyhsalmi acquisition. The note will now mature on Oct. 3, 2013, instead of March 19, 2012. Outokumpu has also paid Inmet 600,000 euros in cash.

The life-of-mine concentrate sales agreements between the Pyhsalmi mine and Outokumpu’s Kokkola and Harjavalta smelters remain in effect, as does the technology alliance between the two companies.

During the six months ended June 30, Pyhsalmi milled 666,000 tonnes of ore running 1.2% copper and 3% zinc to produce 7,700 tonnes of copper, 18,700 tonnes of zinc, plus 410,000 tonnes of pyrite. Cash cost came in at US20 per lb. of copper.

Inmet expects zinc grades at Pyhsalmi to decrease over the balance of the year as mining moves to lower-grade stopes. Cash costs for the year are pegged at US36 per lb. of copper. Mill throughput should remain at current levels.

The mine is expected to operate until 2015 by exploiting its new deep deposit, more than 1 km underground, via a newly constructed 1.45-km-deep, automated hoisting shaft.

Paced by higher sales volumes at Pyhasalmi, lower operating costs at the Troilus gold mine in Quebec, and a higher gold price, Inmet posted second-quarter net income of $5.3 million (or 11 per share), compared with year-ago net income of $1.6 million (2 a share). Revenue between the two periods slipped by about $3 million to $57.1 million. The decrease is attributed to the strengthening of the Canadian dollar against the greenback.