Cayeli strike sinks Inmet’s quarter

Inmet Mining (IMN-T) posted a first-quarter loss of $3.9 million (13 per share), thanks to a three-month-long strike at the Cayeli zinc-copper mine in Turkey.

In the first quarter of 2000, the company earned $2.5 million (5 per share). Revenues between the two periods fell to $18,2 million from $27.7 million.

Cayeli, which is usually the company’s best performer, milled just 34,000 tonnes of ore to produce 1,200 tonnes copper and 600 tonnes zinc.

Cayeli operated for just 15 days during the quarter because of the strike, which began Dec. 7, 2000, and ended March 15. A new three-year agreement provides for a wage increase 5% above inflation over the first 18 months and 2% above inflation for the following 18 months. For the rest of the year, Cayeli is expected to run at a rate of 1 million tonnes per year.

At the Troilus gold mine in north-central Quebec, mill throughput improved to an average of 14,500 tonnes per day. Gold grades and production were lower than a year earlier. The mine spit out 35,000 oz. gold at a cash cost of US$245 per oz. in the recent quarter, down from 37,700 oz. at US$229 per oz. a year earlier. The strip ratio fell to 1.7-to-1 from 2.8-to-1. This is in line with the expected strip ratio for the balance of the year.

For the rest of 2001, about 35% of Troilus’ production is hedged at US$331 per oz. Production is expected to increase as mining moves to higher-grade ore in the centre of the pit.

In late April, Inmet received a dividend of $2.8 million from the Ok Tedi mine in Papua New Guinea, in which it has an 18% interest. Inmet expects another $5-million dividend in May.

BHP (BHP-N), which owns a 52% interest and operates the mine, is negotiating with the Government of Papua New Guinea about its withdrawal from Ok Tedi. A heads of agreement is expected this summer.

At the end of March, Inmet had $66.6 million in cash and short-term investments.

The company recently announced plans to buy back up to 2.9 million of its common shares, or about 10% of its public float. Purchases will take place over a one-year period, beginning on May 7, through the facilities of the Toronto Stock Exchange.