Inmet, Outokumpu rework share deal (October 03, 2003)

A reworking of a March 2002 has paved the way for Finland’s Outokumpo Oyj to sell a portion of its 4 million shares of Inmet Mining (IMN-T).

The shares were issued to Outokumpu as part of Inmet’s acquisition of the Pyhsalmi copper-zinc mine in central Finland. The acquisition deal included provisions restricting the sales of the shares until March 19, 2005.

In return, Outokumpu has extended the maturity date of a 14 million euro, 6% promissory note owed by Inmet under the Pyhsalmi acquisition. The note will now mature on Oct. 3, 2013 instead of March 19, 2012. Outokumpu has also paid Inmet 600,000 euros in cash.

The life-of-mine concentrate sales agreements between the Pyhsalmi mine and Outokumpu’s Kokkola and Harjavalta smelters remain in effect, as does the technology alliance between the two companies.

During the six months ended June 30, Pyhsalmi milled 666,000 tonnes of ore running 1.2% copper and 3% zinc to produce 7,700 tonnes of copper, 18,700 tonnes of zinc, plus 410,000 tonnes of pyrite. Cash cost came in at US20 per lb. of copper.

Inmet expects zinc grades at Pyhsalmi to decrease over the balance of the year, as mining moves to lower-grade stopes; cash cost for the year are pegged at US36 per lb. of copper. Mill throughput should remain at current levels.

The mine is expected to operate until 2015 by exploiting its new deep deposit, more than 1 km underground, via a newly constructed 1.45-km-deep, automated hoisting shaft.

Paced by higher sales volumes at Pyhasalmi, lower operating costs at the Troilus gold mine in Quebec, and a higher gold price, Inmet posted second-quarter net income of $5.3 million (or 11 per share) , compared with year-ago net income of $1.6 million (2 a share). Revenue between the two periods slipped by about $3 million to $57.1 million. The decrease is attributed to the strengthening of the Canadian dollar against the greenback.

Inmet shares yo-yoed themselves a dime lower to finish at $9.30 in Toronto following the news on Oct. 3.