Cayeli strike hits Inmet

Recovering from a 3-month strike at the Cayeli base metal mine in Turkey, Inmet Mining (IMN-T) has posted a first-quarter loss of $3.9 million on revenue of $18.2 million.

The loss, 13 per share, compares with earnings of $2.5 million, or 5 per share, in the first quarter of 2000.

The strike, which was settled in mid-March, left Cayeli operating for only 15 days during the quarter, during which time it milled 34,000 tonnes of ore. In the first quarter of 2000, Cayeli milled 204,000 tonnes.

The Cayeli settlement is a 3-year deal that gives the workforce an increase of 5% over the inflation rate in the first 18 months of the contract, which extends retroactively to June 1, 2000. Over the next 18 months, the increase will be 2% over the inflation rate.

During 2000, proven and probable reserves at Cayeli were increased to 14.6 million tonnes grading 4.1% copper and 6.2% zinc, plus 0.7 gram gold and 53 grams silver per tonne — enough for a further 15 years of production at present rates. Inmet has a 49% interest in Cayeli, with the remainder held by the Turkish government’s Eti Holdings.

The strike at Cayeli was coupled with low production at the Troilus gold mine in Quebec, which is still mining low grades following a pushback of the open pit.

During the quarter, Troilus milled 1.3 million tonnes of ore but, at a grade of 1 gram per tonne, produced only 35,000 oz. gold. Lower prices for gold and higher ones for fuel combined to cut Troilus’s operating profit for the period to $968,000, from $4 million a year ago.

Troilus’s stripping ratio continued to decline, reaching 1.7, compared with an average of 3.1 over the whole of 2000. With mining moving to the bottom of the pit over the next year, the life-of-mine stripping ratio will improve to nearly 1.

Inmet has no plans for further large capital expenditures at Troilus and expects to see virtually all the project’s cash flow converted to income over the next six years.

Inmet and Homestake Mining (HM-N) are currently in court over Homestake’s cancellation of an agreement to buy Troilus for $168 million in 1997.

In Papua New Guinea, there was record production from the Ok Tedi open pit, where Inmet holds an 18% interest. During the quarter, Ok Tedi milled 8.3 million tonnes of ore to produce 53,400 tonnes copper and 118,500 oz. gold.

Operator BHP (BHP-N), which owns a 52% interest, is seeking a way to exit the project, which has been facing difficulties over tailings disposal in tributaries of the nearby Fly River. The Papua New Guinean government, holder of a 30% interest, has suggested BHP could move its interest into an offshore trust.