Inmet hopes for turnaround in 1997 as new copper and gold projects come on stream

After losing money for the second year in a row and seeing drops in its production levels for 1996, Inmet Mining (IMN-T) is hoping its newest copper and gold projects will improve its fortunes in the current year.

The Toronto-based company reported a net loss of $364 million (or $4.59 per share) in 1996, compared with a net loss of $186 million ($2.39 per share) in the previous year. In the fourth quarter of 1996, net income was $1.6 million, down from a net income of $2.4 million for the same period in 1995.

The high net losses over the past two years were mostly due to the writedowns of the Copper Range mine in Michigan in 1995 and the Cayeli copper-zinc mine in Turkey in 1996.

Inmet’s total share of copper production in 1996 dropped to 43,900 tonnes from 85,000 tonnes in 1995, mostly due to the suspension of operations at Copper Range. However, the cash cost of mine production in 1996 was US58 cents per lb., compared with US75 cents per lb. for the previous year. In the fourth quarter, the company realized a copper price of US$1 per lb., compared with US$1.31 per lb. in the same period in 1995.

Inmet produced 58,200 tonnes of zinc in 1996, down from 63,900 tonnes in 1995. For 1996, the cash cost was US53 cents per lb., compared with US42 cents per lb. for 1995.

Inmet’s total share of gold production in 1996 was 94,300 oz., down from 104,800 oz. in the previous year.

On a positive note, Inmet and Rio Algom (ROM-T) are proceeding with their large Antamina project in Peru, where the equal partners have so far delineated an open-pit resource of 400 million tonnes grading 1.2% copper and 1.1% zinc. Capital investment in the project is expected to be in the US$1-billion range.

Gold pour

In November 1996, Inmet celebrated the first gold pour from its wholly owned Troilus gold-copper mine near Chibougamau, Que. Total investment at Troilus, including working capital, has been $215 million, with overruns resulting from an increase in the amount of pre-stripping required. The mill is now operating at 83% of its planned daily capacity of 10,000 tonnes but has produced up to 12,000 tonnes per day. Gold head grades and mill recoveries have yet to achieve their targets.

Construction at another new project, the 33%-owned Ovacik gold-silver property in western Turkey, got under way in December 1996. Capital costs are projected at US$49 million, with proven and probable reserves estimated at 1.3 million tonnes grading 11.7 grams gold per tonne, within a resource of 2.98 million tonnes grading 9 grams gold.

Meanwhile, at the troubled, wholly owned Winston Lake zinc mine, east of Thunder Bay, Ont., losses continued to mount in the fourth quarter as a result of lower throughput and reduced zinc grades. At the adjacent Pick Lake deposit, development is behind schedule by four months and production is now expected in the first quarter of 1998. Until then, Winston Lake requires a zinc price of US50 cents per lb. to break even.

Inmet also holds interests in other projects worldwide, including: * the Ok Tedi copper-gold mine in Papua New Guinea;

* the Petaquilla copper-gold project in Panama;

* the Sachtleben barite and fluorspar mine in Germany;

* the Norddeuttsche Affinerie copper smelter in Hamburg, Germany; * the Bougrine zinc-lead mine in Tunisia;

* the Navachab open-pit gold mine in Namibia;

* and the Izok Lake base-metal prospect in the Northwest Territories.

William James became president of Inmet last fall, having previously presided over the return of profitability first of Falconbridge (FL-T) in the 1980s and then of Denison Mines (DEN-T) in the 1990s.