A successful fourth quarter has left
Inmet earned $39.5 million (or 90 a share) on revenue of $116.6 million in 1999, against earnings of $31 million on revenue of $105.6 million in 1998. All three of Inmet’s major assets showed operating profits over the year, unlike 1998 when continuing operations showed a net loss of $16.4 million.
Increased production from the Cayeli copper-zinc mine in Turkey, the Troilus gold mine in northern Quebec and the Ok Tedi copper mine in Papua New Guinea caught the wave of increasing metal prices during 1999. Cayeli’s copper production ballooned to 40,100 tonnes, from 27,200 tonnes in 1998, and zinc production was slightly higher at 32,600 tonnes. These increases are attributed to higher mill throughput in 1999.
Cayeli’s production cost fell to its lowest level ever: US$880 per tonne of copper, compared with US$1,015 the previous year. A failure of the gear system in Cayeli’s secondary ball mill, which occurred in early January, will affect production in the first quarter of 2000 but is not expected to cost the company a significant amount of money, as both lost production and repair costs are covered by insurance.
The mill expansion at its Troilus mine allowed Inmet to produce 168,400 oz. gold in 1999, compared with 147,000 oz. in 1998. Cash costs fell to US$231 per oz. A new pit plan, with a significantly lower stripping ratio (1.3:1, as against the original pit’s 2:1), places Troilus’s reserves at 38.5 million tonnes grading 1 gram gold per tonne. The lower stripping ratio is expected to force costs down near US$200.
Inmet is hedging 25% of Troilus’s production using margin-free forward sales at an average US$353 per oz. for 2000 and 2001, and an average US$327 for 2002 through 2004.
At Ok Tedi, where Inmet has an 18% interest, copper production was up to 187,900 tonnes from 1998’s 151,600 tonnes.
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