Facing ground problems at its Cayeli mine in Turkey and difficulties in shipping concentrates from Ok Tedi in Papua New Guinea,
Inmet made $691,000 on revenue of $60.5 million in the quarter, and $7.4 million on revenue of $212 million for the year ended Dec. 31, for earnings of 9 per share. In 2001 the company made $18.9 million, or 44 per share, on revenue of $106.8 million.
The 2002 earnings included a $15-million gain that came from reducing the provision for reclamation costs, which had been a large liability on Inmet’s balance sheet for several years. There was also a $3.4-million charge against earnings to reflect the expense of the company’s stock option program; Inmet simply takes the difference between market value of the stock and the exercise price of outstanding options to calculate the options’ value.
A ground fall in late October at Inmet’s Cayeli copper-zinc mine forced the company to suspend production there to rehabilitate the underground workings, including some areas of the mine’s main ramp. Mining resumed in early December, but Cayeli will not be back at full capacity until late in the second quarter of 2003.
As a result, Cayeli only milled 98,000 tonnes of ore in the last quarter of the year, producing 4,300 tonnes copper and 2,600 tonnes zinc. For the year, Cayeli produced 32,600 tonnes copper and 33,100 tonnes zinc, the copper coming at a cash cost of US$950 per tonne (US43 per lb.).
At Ok Tedi, where Inmet has a minority interest, operations have been hampered by El Nio weather. Specifically, dry conditions in the Asia-Pacific region have caused a reduction in water levels in the Ok Tedi and Fly Rivers, from which concentrates are barged out. The operation cut mill throughput and mined lower-grade parts of the open pit to limit the amount of concentrate that would have to be stored, with the result that Ok Tedi produced 43,000 tonnes copper and 110,300 oz. gold in the last quarter of the year. Cash costs were US$1,100 per tonne copper.
Ok Tedi delivered $6 million in dividends in 2002; Inmet’s present accounting practice is to apply that figure to reduce the carrying value of the Ok Tedi investment.
The brighter lights were the Troilus gold mine in northern Quebec, which met its production targets, and the Pyhasalmi zinc-copper mine in Finland, which exceeded forecasts. Troilus produced 41,600 oz. gold in the quarter, and 164,900 oz. in 2002, at an average cash cost of US$247 per oz. for the year. With mining at Troilus currently going through lower-grade zones, production was only slightly higher than in 2001; lower production of byproduct copper and the need for additional stripping nudged the past year’s cash costs up US$15 compared with the previous year.
Pyhasalmi, whose production Inmet has fully credited to its books since the beginning of April 2002, produced 14,400 tonnes copper and 34,500 tonnes zinc at an average of US$620 per tonne copper (US28 per lb.) over the year. Pyhasalmi’s total costs ran to US$1,040 per tonne (US47 per lb.).
Inmet finished the year with $76.5 million in cash and had an operating cash flow for the year of $67 million. Capital spending, mainly directed to mill upgrades at Cayeli and to the last acquisition payments on Pyhasalmi, came to $28.6 million.
Current assets other than cash came to $79.9 million at year-end, while payables and current debt were $65.4 million. Long-term debt is down to $67.7 million and reclamation liabilities to $43.4 million.
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