The comprehensive restructuring of
The once-diversified producer has narrowed its focus to copper and gold and has pared down its portfolio to just three operations: the wholly owned Troilus gold mine in northern Quebec; the 49%-owned Cayeli copper-gold-zinc mine in northeastern Turkey; and the 18%-owned Ok Tedi copper-gold mine in Papua New Guinea (T.N.M., March 1-7/99 and Dec. 14-20/98).
“Inmet is a very different company than it was at this time last year,” said Inmet President William James. “We’ve closed or sold operations that were unproductive or inappropriate; we’ve distributed excess cash to shareholders; and we’ve improved operating results at our principal operations, Troilus and Cayeli.
“And we’ll continue to make further improvements. The cost structure of our mining operations will enable us to weather protracted low prices for copper and gold and to benefit from any future price increases.”
At the open-pit Troilus operation, Inmet commissioned new screens and a cone crusher in January. When it became apparent that an existing pebble crusher would not consistently handle the higher recirculating load, the company decided to install a larger crusher that will increase average mill throughput to 15,000 tonnes per day by the end of the second quarter.
During the first quarter of 1999, Troilus produced 39,000 oz. gold at a cash cost of US$238 per oz., compared with 39,100 oz. gold at a cash cost of US$259 per oz. during the same period last year.
“A year ago, the future of Troilus was extremely uncertain,” commented James. “Now we are confident that the expansion will be accomplished and will be successful, and that Troilus will be a profitable producer.”
Proven and probable reserves at Troilus have been revised to 49.2 million tonnes grading 0.1% copper plus 1 gram gold and 1.2 grams silver per tonne, in effect replacing last year’s production.
During the first quarter at Cayeli, the underground operation produced 9,400 tonnes copper and 9,200 tonnes zinc at a cash cost of US41 cents per lb. copper. This compares with the 7,600 tonnes copper and 9,000 tonnes zinc produced at a cash cost of US53 cents per lb. during the same period last year.
Last year’s replacement of the mill’s flotation cells has improved concentrate grades for both copper and zinc, and the construction of a paste-backfill plant is nearly complete.
“Cayeli is a core asset,” said James. “It’s got great people, good grades, improving metallurgical results, substantial reserves and resources, and excellent exploration potential. We look forward to a long and profitable operation at this fine orebody.”
One of Inmet’s most prospective areas for exploration is in the vicinity of the Cayeli orebody, and a second underground drill had been added to explore for extensions of the orebody, both at depth and to the south along strike.
Cayeli is also investigating the possibility of further increasing mill throughput, and a related feasibility study should be completed later this year.
Ok Tedi boosts output
During the first quarter, the Ok Tedi mine exploited high-grade skarn ore that boosted copper and gold grades and resulted in the production of 45,900 tonnes copper and 104,400 oz. gold at cash cost of US54 cents per lb. copper. This compares with last year’s 10,700 tonnes copper and 30,800 oz. gold produced at a cash cost of US66 cents per lb. copper, at a time when operations were crippled by drought conditions in Papua New Guinea.
Ok Tedi’s operator and 60%-owner,
During the first quarter, Inmet earmarked $14.2 million for reclamation and closures, including $8 million spent shutting down the Winston Lake zinc mine on the north shore of Lake Superior. At the closed Copper Range property in Michigan’s Upper Peninsula, bids for mill demolition and tailings revegetation have been received and are being evaluated.
In terms of growth opportunities, James said the company is aggressively looking for economic copper and gold deposits in the Americas and is redoubling its exploration efforts around Troilus and Cayeli.
For the first quarter ended March 31, Inmet recorded net income of $2.8 million (nil per share) on sales revenue of $26.1 million, compared with a net loss of $837,000 (3 cents per share) on sales revenue of $26.9 million during the corresponding period last year. The improvement is due chiefly to lower costs and higher copper and gold production from continuing operations.
On April 5, Inmet’s $125-million convertible debentures, due in July 1999, were redeemed for 100% of their principal amount plus $1.8 million in interest. Taking into account the recently closed sale of the Ovacik and Perama Hill gold projects to
Be the first to comment on "Restructuring leaves Inmet lean, profitable"