Inmet boosts Cayeli stake, closes Pyhasalmi purchase

As expected, Inmet Mining (IMN-T) has increased to 50% its interest in the Cayeli copper-zinc mine in eastern Turkey while completing its purchase of the similar Pyhasalmi mine in central Finland. The polymetallic miner owned 49% of the former mine until the recent transaction.

In 2002, Cayeli produced 33,000 tonnes copper and 25,300 tonnes zinc at a cost of US$1,170 per tonne copper. Production was down and costs up from a year ago.

The mine is expected to process more ore in 2002 than in 2001, when a strike hindered production.

For Pyhasalmi, Inmet paid Outokumpu 45 million euros in cash and has agreed to pay 6% interest on a 10-year promissory note worth $14 million euros. The company also issued 4 million shares at $4.50 apiece to give the Finnish miner a 10.2% equity stake.

Inmet funded the cash component through a US$40-million, 5-year revolving credit facility.

The deal included 3,000 hectares of exploration claims and creates a smelting and refining alliance between the two producers.

Inmet also owns a 100% interest in the Troilus gold mine in north-central Quebec and an 18% stake in the Ok Tedi copper-gold mine in Papua New Guinea. The remaining interest in the latter is divided between a private company, with 52%, and the government, with 30%.

In 2001, Troilus poured 162,600 oz. at a cash production cost of US$232 per oz. Production was up and costs down substantially from the previous year, owing to higher head grades and throughput rates.

Production at Ok Tedi during the final quarter of 2001 fell to 45,300 tonnes copper and 100,700 oz. gold, against 55,900 tonnes copper and 130,300 oz. gold in the corresponding quarter of 2000.