Inmet announces a fourth quarter loss of $0.67 per share following a $0.71 per share write down of Cerattepe and lower metal prices



    All amounts in Canadian dollars unless indicated otherwise

    TORONTO, Feb. 10 /CNW/ -

    
    Highlights

    -   Fourth quarter loss

        The loss in the fourth quarter was due primarily to a significant
        decline in the price of copper and zinc, and an asset impairment
        charge. Lower copper and zinc prices reduced sales by $92 million
        compared to the fourth quarter of 2007. Of that, $58 million is for
        finalization adjustments on our third quarter sales. We took a $34
        million impairment charge on the value of our investment in Cerattepe
        because we decided to not move the project forward.

    -   Realized copper price

        Because of finalization adjustments recorded in the fourth quarter of
        US$0.92 per pound, we realized a copper price of US$0.50 per pound.

    -   Operating cash flow

        Operating cash flow this quarter was $31 million or $0.64 per common
        share compared to $76 million or $1.58 per share in the fourth
        quarter of 2007.

    -   Production

        Copper production this quarter was similar to 2007. Zinc production
        was lower and gold production was higher.

    -   Las Cruces receives support from the water authority to resume
        mining - now awaiting final go-ahead from the mining authority

        In January 2009, the water authority recommended that the provincial
        mining authority allow Las Cruces to resume mining in the pit after
        it reduces the water level in its holding ponds. Las Cruces now
        expects to resume mining at the beginning of March. Plant
        commissioning is well underway and first copper production is
        expected in April.

    -   100% ownership in Petaquilla

        We acquired 100 percent ownership of the Petaquilla project as of
        December 31. Field activities to prepare the new mineral resource
        statement, complete the front-end engineering and design work and
        file the Environmental and Social Impact Assessment are progressing
        as planned.

    Key financial data
    -------------------------------------------------------------------------
                                              three months ended December 31
                                                2008        2007      change
    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS
    (thousands, except per share amounts)

    Sales
    Gross sales                             $139,626    $224,773         -38%

    Net income
    Net income                              ($32,514)    $63,645        -151%
    Net income per share                      ($0.67)      $1.32        -151%

    Cash flow
    Cash flow provided by
     operating activities                    $30,992     $76,325         -59%
    Cash flow provided by
     operating activities per share(1)         $0.64       $1.58         -59%

    Capital spending                        $133,979     $93,889         +43%

    OPERATING HIGHLIGHTS
    Production(2)
      Copper (tonnes)                         21,100      21,700          -3%
      Zinc (tonnes)                           19,600      26,000         -25%
      Gold (ounces)                           64,600      57,200         +13%

    Cash costs(3)
      Copper (US $ per pound)                  $0.50       $0.29         +72%
      Gold (US $ per ounce)                     $460        $552         -17%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      year ended December 31
                                                2008        2007      change
    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS
    (thousands, except per share amounts)

    Sales
    Gross sales                             $944,865  $1,103,698        -14%

    Net income
    Net income                              $216,922    $417,609        -48%
    Net income per share                       $4.49       $8.65        -48%

    Cash flow
    Cash flow provided by
     operating activities                   $324,505    $427,351        -24%
    Cash flow provided by
     operating activities per share(1)         $6.72       $8.85        -24%

    Capital spending                        $460,792    $345,892        +33%

    OPERATING HIGHLIGHTS
    Production(2)
      Copper (tonnes)                         80,500      79,300         +2%
      Zinc (tonnes)                           75,400      85,100        -11%
      Gold (ounces)                          244,100     223,300         +9%

    Cash costs(3)
      Copper (US $ per pound)                  $0.52       $0.20       +160%
      Gold (US $ per ounce)                     $417        $421         -1%
    -------------------------------------------------------------------------

                                              -------------------------------
                                                         as at         as at
                                                   December 31   December 31
    FINANCIAL CONDITION                                   2008          2007
                                              -------------------------------
    Current ratio                                     2.4 to 1      5.6 to 1
    Gross debt to total equity(4)                          19%           13%
    Net working capital balance (millions)                $475          $855
    Cash balance (millions)                               $573          $841
    Shareholders' equity (millions)                     $1,868        $1,392
    -------------------------------------------------------------------------
    (1) Calculated as cash flow provided by operating activities divided by
        average shares outstanding for the respective period.
    (2) Inmet's share.
    (3) Cash cost per pound of copper and cash cost per ounce of gold are
        non-GAAP measures - see Supplementary financial information on pages
        33, 34 and 35.
    (4) Gross debt includes long-term debt and current portion of long-term
        debt less the non-recourse note owing from Las Cruces to its non-
        controlling shareholder.

    Current market environment

    There was a general weakening in the global economic environment in the
fourth quarter, and a significant decline in base metal prices.
    These market conditions will have some impact on our overall financial
position. However, based on the strength of our financial position entering
into this downturn, together with our relatively low operating costs:
    -  we do not expect there to be any impact on our ability to meet
       expected production levels as a result of market conditions
    -  we should be able to maintain capital expenditures at our current
       operations and for the development of Las Cruces
    -  we should be able to continue to pursue our growth objectives by
       advancing the Petaquilla project and considering other opportunities
       as they arise.

    We will continually monitor the metal and financial markets, our financial
performance and resources and our capital spending to make sure we maintain
the financial strength we need in these volatile and uncertain markets.

    Fourth quarter press release

    Where to find it

    Our financial results................................  4
    Key changes in 2008..................................  4
    Understanding our performance........................  5
      Earnings from operations...........................  7
      Corporate costs.................................... 12
    Results of our operations............................ 13
      Cayeli............................................. 14
      Pyhasalmi.......................................... 16
      Troilus............................................ 18
      Ok Tedi............................................ 20
    Status of our development projects................... 22
      Las Cruces......................................... 22
      Petaquilla......................................... 24
    Managing our liquidity............................... 26
    Financial condition.................................. 29
    Accounting changes................................... 31
    Supplementary financial information.................. 33
    Quarterly review..................................... 36
    Consolidated financial statements.................... 37
    

    In this press release, Inmet means Inmet Mining Corporation and we, us
and our mean Inmet and/or its subsidiaries and joint ventures. This quarter
refers to the three months ended December 31, 2008.

    Forward looking information

    Securities regulators encourage companies to disclose forward-looking
information to help investors understand a company's future prospects. This
press release contains statements about our future financial condition,
results of operations and business.
    These are "forward-looking" because we have used what we know and expect
today to make a statement about the future. Forward-looking statements usually
include words such as may, expect, anticipate, believe or other similar words.
We believe the expectations reflected in these forward-looking statements are
reasonable. However, actual events and results could be substantially
different because of the risks and uncertainties associated with our business
or events that happen after the date of this press release. You should not
place undue reliance on forward-looking statements. As a general policy, we do
not update forward-looking statements except as required by securities laws
and regulations.

    
    Our financial results
    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands, except per share amounts)       2008        2007      change
    -------------------------------------------------------------------------

    EARNINGS FROM OPERATIONS(1)

    Cayeli                                   $(8,438)    $36,138       -123%
    Pyhasalmi                                  7,812      28,149        -72%
    Troilus                                    3,695         345       +971%
    Ok Tedi                                   (2,385)     28,441       -108%
    Other                                       (487)       (491)        -1%
    -------------------------------------------------------------------------
                                                 197      92,582       -100%
    -------------------------------------------------------------------------
    DEVELOPMENT AND EXPLORATION
    Corporate development and exploration     (1,971)     (3,510)       -44%
    -------------------------------------------------------------------------

    CORPORATE COSTS
    General and administration                (3,289)    (12,622)       -74%
    Investment and other income                8,057       5,968        +35%
    Asset impairment                         (36,275)          -           -
    Interest expense                            (490)       (407)       +20%
    Income and capital taxes                    (537)    (18,339)       -97%
    Non-controlling interest                   1,794         (27)     -6744%
    -------------------------------------------------------------------------
                                             (30,740)    (25,427)        21%
    -------------------------------------------------------------------------
    Net income (loss)                       $(32,514)    $63,645       -151%
    -------------------------------------------------------------------------
    Basic net income (loss) per share         $(0.67)      $1.32       -151%
    -------------------------------------------------------------------------
    Diluted net income (loss) per share       $(0.67)      $1.32       -151%
    -------------------------------------------------------------------------
    Weighted average shares outstanding       48,282      48,282           -
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands, except per share amounts)       2008        2007      change
    -------------------------------------------------------------------------

    EARNINGS FROM OPERATIONS(1)

    Cayeli                                  $122,483    $223,892        -45%
    Pyhasalmi                                 92,698     138,582        -33%
    Troilus                                   26,328       9,828       +168%
    Ok Tedi                                  135,163     182,774        -26%
    Other                                     (1,951)     (1,953)          -
    -------------------------------------------------------------------------
                                             374,721     553,123        -32%
    -------------------------------------------------------------------------
    DEVELOPMENT AND EXPLORATION
    Corporate development and exploration    (10,620)     (9,083)       +17%
    -------------------------------------------------------------------------
    CORPORATE COSTS
    General and administration               (13,138)    (20,298)       -35%
    Investment and other income                5,986      36,454        -84%
    Asset impairment                         (36,275)          -           -
    Interest expense                          (1,884)     (1,693)       +11%
    Income and capital taxes                (107,368)   (140,694)       -24%
    Non-controlling interest                   5,500        (200)     -2850%
    -------------------------------------------------------------------------
                                            (147,179)   (126,431)       +16%
    -------------------------------------------------------------------------
    Net income (loss)                       $216,922    $417,609        -48%
    -------------------------------------------------------------------------
    Basic net income (loss) per share          $4.49       $8.65        -48%
    -------------------------------------------------------------------------
    Diluted net income (loss) per share        $4.48       $8.64        -48%
    -------------------------------------------------------------------------
    Weighted average shares outstanding       48,282      48,279           -
    -------------------------------------------------------------------------
    (1) Gross sales less smelter processing charges and freight, cost of
        sales, depreciation and provisions for mine reclamation.


    Key changes in 2008
    -------------------------------------------------------------------------
                                      three months         year
                                             ended        ended          see
    (millions)                         December 31  December 31         page
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS
    Sales
    Lower copper and zinc prices
     denominated in Canadian dollars          $(92)       $(194)           8
    Higher gold prices
     denominated in Canadian dollars            12           34            8
    Higher pyrite demand
     (higher sales net of costs)                 7           28            8
    Lower sales volumes                         (5)         (23)           9
    Costs
    Lower smelter processing charges             4           30           10
    Higher operating costs, including costs
     that vary with income and cash flows      (10)         (41)          11
    Higher depreciation                         (5)          (8)          11
    Other                                       (3)          (4)
    -------------------------------------------------------------------------
    Decrease in earnings from operations,
     compared to 2007                          (92)        (178)

    CORPORATE COSTS
    Lower income tax expense                    19           34           13
    Gain on sale of Wolfden in 2007              -          (12)          12
    Asset impairment                           (36)         (36)          13
    Higher foreign exchange losses              (3)         (20)          12
    Lower general and administration costs       9            7
    Other                                        7            4
    -------------------------------------------------------------------------
    Decrease in net income, compared to 2007  $(96)       $(201)
    -------------------------------------------------------------------------

    Understanding our performance

    Metal prices

    The table below shows the average metal prices we realized in US dollars
and Canadian dollars (the prices we realize include finalization adjustments -
see Gross sales on page 7).

    -------------------------------------------------------------------------
                                              three months ended December 31
                                                2008        2007      change
    -------------------------------------------------------------------------
    US dollar metal prices Copper
     (per pound)                            US $0.50    US $2.75        -82%
      Zinc (per pound)                      US $0.46    US $1.10        -58%
      Gold (per ounce)                       US $714     US $664         +8%
    -------------------------------------------------------------------------
    Canadian dollar metal prices Copper
     (per pound)                             C $0.61     C $2.70        -77%
      Zinc (per pound)                       C $0.56     C $1.08        -48%
      Gold (per ounce)                        C $866      C $651        +33%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      year ended December 31
                                                2008        2007      change
    -------------------------------------------------------------------------
    US dollar metal prices Copper
     (per pound)                            US $2.70    US $3.22        -16%
      Zinc (per pound)                      US $0.84    US $1.39        -40%
      Gold (per ounce)                       US $732     US $594        +23%
    -------------------------------------------------------------------------
    Canadian dollar metal prices Copper
     (per pound)                             C $2.88     C $3.45        -17%
      Zinc (per pound)                       C $0.90     C $1.49        -40%
      Gold (per ounce)                       C $ 781      C $636        +23%
    -------------------------------------------------------------------------
    

    Commodity prices this year were very strong until August, when demand
collapsed across almost every market.
    Copper started the year at US $3.02 per pound and peaked in July at over
US $4.00. By September 30, the copper price was back down to US $2.90 per
pound and by December 31 had dropped to US $1.32, its lowest level since 2005.
The copper market also went from being under-supplied to a surplus with an
apparent weakness in end-use markets like construction and transportation.
    Zinc prices fell from a price of US $1.08 per pound at the end of 2007 to
a low of US $0.47 per pound in the second half of 2008. It was among the first
base metals to be affected by deteriorating conditions in the global economy
and the collapse in demand. There were also a significant number of mine
production cuts and closures in the second half of the year.
    Gold was one of the few commodities to close higher this year than it had
in 2007, with a 5 percent gain. In the first half of the year, gold prices
were as high as US $1,000 per ounce. Amid the wave of investment liquidation
and the strengthening of the US dollar in the fourth quarter, the price
dropped by as much as 20 percent.
    The price of sulphur, which is closely linked to pyrite prices, was
strong throughout most of 2008. In September demand for sulphur came to a halt
and prices dropped from $800 per ton to a low of $35 per ton in December.

    
    Exchange rates

    Exchange rates affect revenue and earnings. The table below shows the
average exchange rates we realized.

    -------------------------------------------------------------------------
                three months ended December 31        year ended December 31
                      2008      2007    change      2008      2007    change
    -------------------------------------------------------------------------
    Exchange rates
      1 US$ to C$    $1.21     $0.98       23%     $1.07     $1.07         -
      1 euro to C$   $1.60     $1.42       13%     $1.56     $1.46        7%
      1 euro to US$  $1.32     $1.45       -9%     $1.47     $1.37        7%
    -------------------------------------------------------------------------

    US dollars
    ----------
    
    Sales are affected by the conversion of US dollar revenue to Canadian
dollars. Foreign exchange was not a factor when looking at variances in sales
between years because the US to Canadian exchange rate was consistent between
these periods. The fourth quarter, however, saw a sharp rise in exchange rates
relative to the US dollar.
    Net income was $51 million less for the year and $28 million more for the
quarter because of fluctuations in the value of the US dollar relative to the
Canadian dollar.
    Changes to the US to Canadian dollar exchange rate and US dollar to euro
exchange rate affect our net income in four ways:
    
    -  US dollar sales translated to Canadian dollar
    -  Cayeli and Ok Tedi record all costs in US dollars which we translate
       to Canadian dollars
    -  we recognize deferred foreign exchange gains or losses when we
       repatriate cash from Cayeli and Ok Tedi (we record this in Investment
       and other income). Foreign exchange losses for the year include the
       recognition of a deferred foreign exchange loss of $25 million ($1
       million gain in the fourth quarter) when we repatriated cash from
       Cayeli and Ok Tedi.
    -  we revalue foreign currency balances such as the US dollar debt in
       Las Cruces (recorded in Investment and other income). Pre-tax net
       income this quarter and year was down $12 million and $25 million,
       respectively, because we recognized a foreign exchange loss on the
       translation of the Las Cruces US dollar credit facility.

    Euros
    -----
    
    Net income was lower between periods because costs we incurred in euros
were higher when we converted them to Canadian dollars.
    We recorded foreign exchange gains of $8 million for 2008 ($4 million for
the quarter) when we revalued euro denominated cash and short-term intergroup
receivables. This was the result of a large change in the value of the euro
relative to the Canadian dollar for the quarter. We also recognized deferred
foreign exchange gains of $6 million when we repatriated cash from Pyhasalmi
in the second quarter. We recorded both of these in Investment and other
income.

    Treatment charges down for copper and up for zinc

    Treatment charges are one component of smelter processing charges. We
also pay smelters for content losses and price participation.
    The table below shows the average charges we realized this quarter and
year to date.

    
    -------------------------------------------------------------------------
                three months ended December 31        year ended December 31
                      2008      2007    change      2008      2007    change
    -------------------------------------------------------------------------
    Treatment charges
      Copper (per
       dry metric
       tonne of
       concentrate)    $64       $66       -3%       $50       $63      -21%
      Zinc (per
       dry metric
       tonne of
       concentrate)   $379      $290      +31%      $318      $274      +16%
    -------------------------------------------------------------------------
    Price participation
      Copper
       (per pound)   $0.02     $0.04      -50%     $0.04     $0.08      -50%
      Zinc (per
       pound)(1)    ($0.08)   ($0.05)     +60%    ($0.02)    $0.01     -300%
    -------------------------------------------------------------------------
    Freight charges
      Copper (per
       dry metric
       tonne of
       concentrate)    $37       $58      -36%       $48       $50       -4%
      Zinc (per
       dry metric
       tonne of
       concentrate)    $32       $38      -16%       $37       $33      +12%
    -------------------------------------------------------------------------
    (1) Zinc price participation is based on a zinc price of US $2,000 per
        tonne in 2008 and US $3,500 per tonne in 2007.

    Copper treatment charges were lower this quarter and for 2008 than they
were in 2007 because we had better contract terms with smelters. While zinc
treatment charges were higher than 2007, zinc price participation was down
significantly in 2008.

    Statutory tax rates down slightly

    The table below shows the statutory tax rates for each of our taxable
operating mines.

    -------------------------------------------------------------------------
                                                2008        2007      change
    -------------------------------------------------------------------------
    Statutory tax rates
      Cayeli                                     24%         27%         -3%
      Pyhasalmi                                  26%         26%           -
      Ok Tedi                                    37%         37%           -
      Las Cruces                                 30%         30%           -
    -------------------------------------------------------------------------

    Cayeli's tax rate is lower because the withholding tax rate was reduced
from 8 percent to 5 percent.

    EARNINGS FROM OPERATIONS

    Earnings from operations include the following:

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales                             $139,626    $224,773        -38%
    Smelter processing charges               (32,870)    (43,902)       -25%
    Cost of sales:
      Direct production costs                (86,935)    (79,588)        +9%
      Inventory changes                          (30)      2,239       -101%
      Provisions for mine rehabilitation
       and other non-cash charges             (4,750)     (1,460)      +225%
    Depreciation                             (14,844)     (9,480)       +57%
    -------------------------------------------------------------------------
    Earnings from operations                    $197     $92,582       -100%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales                             $944,865  $1,103,698        -14%
    Smelter processing charges              (179,738)   (206,478)       -13%
    Cost of sales:
      Direct production costs               (331,173)  (295,896)        +12%
      Inventory changes                        3,345     (3,264)       -202%
      Provisions for mine rehabilitation
       and other non-cash charges            (17,974)    (9,264)        +94%
    Depreciation                             (44,604)   (35,673)        +25%
    -------------------------------------------------------------------------
    Earnings from operations                $374,721   $553,123         -32%
    -------------------------------------------------------------------------

    Gross sales were lower this year mainly because the price of copper and
    zinc was down

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales by operation
      Cayeli                                 $27,481     $81,088        -66%
      Pyhasalmi                               37,273      58,672        -36%
      Troilus                                 36,391      27,317        +33%
      Ok Tedi(1)                              38,481      57,696        -33%
    -------------------------------------------------------------------------
                                            $139,626    $224,773        -38%
    -------------------------------------------------------------------------
    Gross sales by metal
      Copper                                 $46,367    $120,705        -62%
      Zinc                                    20,110      53,246        -62%
      Gold                                    54,720      38,313        +43%
      Other                                   18,429      12,509        +47%
    -------------------------------------------------------------------------
                                            $139,626    $224,773        -38%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales by operation
      Cayeli                                $305,190    $418,694        -27%
      Pyhasalmi                              221,124     260,246        -15%
      Troilus                                141,251     108,378        +30%
      Ok Tedi(1)                             277,300     316,380        -12%
    -------------------------------------------------------------------------
                                            $944,865  $1,103,698        -14%
    -------------------------------------------------------------------------
    Gross sales by metal
      Copper                                $511,037    $627,424        -19%
      Zinc                                   150,216     280,713        -46%
      Gold                                   189,379     150,228        +26%
      Other                                   94,233      45,333       +108%
    -------------------------------------------------------------------------
                                            $944,865  $1,103,698        -14%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's sales.

    Key components of the change in sales: copper and zinc prices down, gold
    prices up, pyrite sales up

    -------------------------------------------------------------------------
                                                  three months          year
                                                         ended         ended
    (millions)                                     December 31   December 31
    -------------------------------------------------------------------------
    Lower copper prices, denominated in Canadian
     dollars                                              $(83)        $(106)
    Lower zinc prices, denominated in Canadian
     dollars                                                (9)          (95)
    Higher gold prices, denominated in Canadian
     dollars                                                12            34
    Higher pyrite prices, denominated in Canadian
     dollars                                                 9            38
    Changes in other metal prices                            -             8
    Lower sales volumes                                    (14)          (38)
    -------------------------------------------------------------------------
    Decrease in gross sales, compared to 2007             $(85)        $(159)
    -------------------------------------------------------------------------
    

    We record sales using the metal price we receive for sales that settle
during the reporting period. For sales that have not been settled, we use an
estimate based on the month we expect the sale to settle and the forward price
of the metal at the end of the reporting period. We recognize the difference
between our estimate and the final price we receive by adjusting our gross
sales in the period we settle the sale (finalization adjustment).
    We recorded $58 million in negative finalization adjustments in the
fourth quarter.

    
    At the end of 2008, the following sales had not been settled:
    - 40 million pounds of copper provisionally priced at US $1.39 per pound
    - 16 million pounds of zinc provisionally priced at US $0.54 per pound.

    The finalization adjustment we record for these sales will depend on the
actual price when the sale settles, which can be from one to five months after
we initially record it. We expect the December 31, 2008 unsettled sales to
settle in the following months:

             ----------------------------------------------------
             (millions of pounds)                  copper   zinc
             ----------------------------------------------------
             January 2009                              11     11
             February 2009                              8      5
             March 2009                                11      -
             April and May 2009                        10      -
             ----------------------------------------------------
             Unsettled sales at December 31, 2008      40     16
             ----------------------------------------------------

    Zinc sales volumes down in the quarter - lower production and delayed
    shipments

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Sales volumes
      Copper (tonnes)                         22,500      21,000         +7%
      Zinc (tonnes)                           13,600      24,400        -44%
      Gold (ounces)                           63,700      57,900        +10%
      Pyrite (tonnes)                         66,000     132,600        -50%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Sales volumes
      Copper (tonnes)                         81,700      82,900         -1%
      Zinc (tonnes)                           76,100      87,200        -13%
      Gold (ounces)                          241,800     234,200         +3%
      Pyrite (tonnes)                        557,700     508,900        +10%
    -------------------------------------------------------------------------

    Our sales volumes are directly affected by the amount of production from
our mines, and our ability to ship to our customers.

    Production
    -------------------------------------------------------------------------
                                              three months ended December 31
    Inmet's share(1)                            2008        2007      change
    -------------------------------------------------------------------------
    Copper (tonnes)
      Ok Tedi                                  7,300       8,700        -16%
      Cayeli                                   8,400       9,100         -8%
      Pyhasalmi                                3,400       3,300         +3%
      Las Cruces                                   -           -           -
      Troilus                                  2,000         600       +233%
    -------------------------------------------------------------------------
                                              21,100      21,700         -3%
    -------------------------------------------------------------------------
    Zinc (tonnes)
      Cayeli                                  12,800      13,600         -6%
      Pyhasalmi                                6,800      12,400        -45%
    -------------------------------------------------------------------------
                                              19,600      26,000        -25%
    -------------------------------------------------------------------------
    Gold (ounces)
      Troilus                                 40,500      33,700        +20%
      Ok Tedi                                 24,100      23,500         +3%
    -------------------------------------------------------------------------
                                              64,600      57,200        +13%
    -------------------------------------------------------------------------
    Pyrite (tonnes)
      Pyhasalmi                               81,700     182,000        -55%
    -------------------------------------------------------------------------


    ------------------------------------------------------------ ------------
                                          year ended December 31   objective
    Inmet's share(1)                2008        2007      change        2009
    ------------------------------------------------------------ ------------
    Copper (tonnes)
      Ok Tedi                     28,800      30,400         -5%      31,600
      Cayeli                      32,700      32,500         +1%      36,800
      Pyhasalmi                   13,300      13,600         -2%      13,000
      Las Cruces                       -           -           -      38,200
      Troilus                      5,700       2,800       +104%       6,000
    ------------------------------------------------------------ ------------
                                  80,500      79,300          2%     125,600
    ------------------------------------------------------------ ------------
    Zinc (tonnes)
      Cayeli                      47,600      46,200         +3%      56,400
      Pyhasalmi                   27,800      38,900        -29%      22,600
    ------------------------------------------------------------ ------------
                                  75,400      85,100        -11%      79,000
    ------------------------------------------------------------ ------------
    Gold (ounces)
      Troilus                    151,300     138,400         +9%     132,200
      Ok Tedi                     92,800      84,900         +9%     109,400
    ------------------------------------------------------------ ------------
                                 244,100     223,300         +9%     241,600
    ------------------------------------------------------------ ------------
    Pyrite (tonnes)
      Pyhasalmi                  565,000     486,000        +16%     510,000
    ------------------------------------------------------------ ------------
    (1) Inmet's share represents 100 percent for Cayeli, Pyhasalmi and
        Troilus, 18 percent for Ok Tedi and 70 percent for Las Cruces.


    This quarter:
    -   zinc production was lower than 2007 mainly because zinc grades at
        Pyhasalmi were lower
    -   gold production was higher than 2007 because grades were higher
    -   pyrite production was lower than 2007 because demand was lower.
    

    Zinc production for the year was down from 2007 because zinc grades were
lower. Gold production was higher because gold grades were higher.

    2009 outlook for sales

    Our outlook for sales ties directly to our production outlook. We expect
copper and zinc sales volumes in 2009 to be higher because of our higher
production expectations, including new production at Las Cruces.
    We have set a higher copper production target for 2009 because production
should start at Las Cruces and we expect higher throughput at Cayeli and Ok
Tedi. We expect to mine lower zinc grades at Pyhasalmi in 2009. Estimated
production for our 70 percent share of Las Cruces includes 26,000 tonnes of
copper cathode and 12,200 tonnes of ore that, depending on market conditions,
we will ship directly to smelters.
    Our gold target for 2009 is consistent with our 2008 results. We expect
more production from Ok Tedi because of higher throughput, but lower
production from Troilus when it starts to produce gold from its lower grade
stockpiles.
    Our Canadian dollar sales revenues are affected by the US dollar
denominated metal price we receive, and the exchange rate between the US
dollar and Canadian dollar. According to analysts' consensus forecasts, copper
and zinc are the two metals investors believe are best positioned for a
rebound in demand. With the current volatility in the markets it is even more
difficult to forecast metal prices. We do not know the effect various
government planned stimulus packages and interest rate cuts will have on the
worldwide economy. As part of our strategy, we will focus on maximizing the
efficiency of our operations to ensure that we remain highly competitive in
this economic environment.

    
    Lower smelter processing charges for the quarter and year

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Smelter processing charges and
     freight by operation
      Cayeli                                 $13,279     $19,756        -33%
      Pyhasalmi                                9,615      15,384        -38%
      Troilus                                  3,904       1,798       +117%
      Ok Tedi(1)                               6,072       6,964        -13%
    -------------------------------------------------------------------------
                                             $32,870     $43,902        -25%
    -------------------------------------------------------------------------
    Smelter processing charges and
     freight by metal
      Copper                                 $17,655     $19,910        -11%
      Zinc                                    12,069      20,682        -42%
      Other                                    3,146       3,310         -5%
    -------------------------------------------------------------------------
                                             $32,870     $43,902        -25%
    -------------------------------------------------------------------------
    Smelter processing charges by
     type and freight
      Copper treatment and refining
       charges                                $8,524      $8,092         +5%
      Zinc treatment charges                  10,228      13,444        -24%
      Copper price participation               1,229       1,918        -36%
      Zinc price participation                (2,355)     (2,535)        -7%
      Content losses                           6,778      14,788        -54%
      Other                                      950         139       +583%
      Freight                                  7,516       8,056         -7%
    -------------------------------------------------------------------------
                                             $32,870     $43,902        -25%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Smelter processing charges and
     freight by operation
      Cayeli                                 $78,400     $94,700        -17%
      Pyhasalmi                               56,954      62,081         -8%
      Troilus                                 11,053       7,989        +38%
      Ok Tedi(1)                              33,331      41,708        -20%
    -------------------------------------------------------------------------
                                            $179,738    $206,478        -13%
    -------------------------------------------------------------------------
    Smelter processing charges and
     freight by metal
      Copper                                 $79,792     $97,071        -18%
      Zinc                                    74,071      97,141        -24%
      Other                                   25,875      12,266       +111%
    -------------------------------------------------------------------------
                                            $179,738    $206,478        -13%
    -------------------------------------------------------------------------
    Smelter processing charges by
     type and freight
      Copper treatment and refining
       charges                               $24,625     $32,414        -24%
      Zinc treatment charges                  47,030      46,058         +2%
      Copper price participation               7,025      13,763        -49%
      Zinc price participation                (3,170)      2,529       -225%
      Content losses                          50,530      74,112        -32%
      Other                                    6,600       5,394        +22%
      Freight                                 47,098      32,208        +46%
    -------------------------------------------------------------------------
                                            $179,738    $206,478        -13%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's smelter processing charges and
        freight.
    

    Copper treatment and refining charges were lower in 2008 compared to 2007
because of more favourable contract terms with smelters. Zinc treatment
charges were higher, but lower prices significantly reduced zinc price
participation charges. For the quarter, zinc treatment charges also reflect
lower volumes sold. Freight charges were higher for the year because Pyhasalmi
increased their shipments of pyrite and freight rates increased as a result of
rising demand and fuel prices.

    2009 outlook for smelter processing charges and freight

    We expect copper treatment and refining costs to increase in 2009
following recently announced benchmark settlements between major mining
companies and smelters.
    We sell approximately 90 percent of our copper concentrate under
long-term contracts. We are estimating long-term treatment costs of US $75 per
dry metric tonne and spot treatment costs of about US $85 per dry metric tonne
in 2009. We also expect there will continue to be no price participation.
    In the fourth quarter of 2008, smelters joined mines in cutting
production, to respond to the decline in demand for refined zinc, and to
falling prices. We expect mine production in 2009 to be below smelting
requirements, and believe that a balanced or deficit concentrate market could
evolve. We therefore expect zinc processing charges to be lower in 2009,
potentially by as much as 35 percent.
    We expect to see zinc treatment charges in 2009 of about US $200 per dry
metric tonne. Price participation is expected to continue for zinc
concentrates. This should be approximately US $0.10 per dry metric tonne for
zinc prices greater than US $1,200 per tonne (US $0.54 per pound), and (US
$0.07) per dry metric tonne for zinc prices less than US $1,200 per tonne.
    We expect production to begin at Las Cruces in 2009, and, depending on
market conditions, it may sell crushed ore to smelters and incur smelter
processing charges. The costs associated with smelting this material are
expected to be higher than at our other operations because of the higher level
of impurities in this ore.
    We now expect copper cathode production to start in April 2009. This will
be sold directly to buyers, bypassing the smelters and eliminating smelter and
refining treatment charges.
    We expect our ocean freight costs to be about 20 percent lower than they
were in 2008 because of a general slowdown in global economic activity.

    
    Direct production costs and cost of sales were higher than last year

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------

    Direct production costs by operation
      Cayeli                                 $21,161     $23,913        -12%
      Pyhasalmi                               15,597      13,589        +15%
      Troilus                                 22,628      21,173         +7%
      Ok Tedi(1)                              27,549      20,913        +32%
    -------------------------------------------------------------------------
    Total direct production costs             86,935      79,588         +9%
    Inventory changes                             30      (2,239)      -101%
    Reclamation, accretion and other
     non-cash expenses                         4,750       1,460       +225%
    -------------------------------------------------------------------------
    Total cost of sales                      $91,715     $78,809        +16%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Direct production costs by operation
      Cayeli                                 $89,761     $86,978         +3%
      Pyhasalmi                               59,642      50,043        +19%
      Troilus                                 88,707      77,643        +14%
      Ok Tedi(1)                              93,063      81,232        +15%
    -------------------------------------------------------------------------
    Total direct production costs            331,173     295,896        +12%
    Inventory changes                         (3,345)      3,264       -202%
    Reclamation, accretion and other
     non-cash expenses                        17,974       9,264        +94%
    -------------------------------------------------------------------------
    Total cost of sales                     $345,802    $308,424        +12%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's direct production costs.


    Key reasons for the increase in direct production costs

    -------------------------------------------------------------------------
                                                  three months          year
                                                         ended         ended
    (millions)                                     December 31   December 31
    -------------------------------------------------------------------------
    Volume                                                 $(1)          $(6)
    Labour costs                                             1            11
    Consumables                                              1            16
    Energy                                                   5            13
    Costs that vary with income and cash flow               (3)           (1)
    Other                                                    4             2
    -------------------------------------------------------------------------
    Increase in direct production costs,
     compared to 2007                                       $7           $35
    -------------------------------------------------------------------------

    Depreciation was higher than last year

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Depreciation by operation
      Cayeli                                  $3,150      $2,635        +20%
      Pyhasalmi                                2,502       1,881        +33%
      Troilus                                  2,954       2,620        +13%
      Ok Tedi                                  6,238       2,344       +166%
    -------------------------------------------------------------------------
                                             $14,844      $9,480        +57%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Depreciation by operation
      Cayeli                                 $11,448      $8,857        +29%
      Pyhasalmi                                9,227       8,439         +9%
      Troilus                                  9,239      10,120         -9%
      Ok Tedi                                 14,690       8,257        +78%
    -------------------------------------------------------------------------
                                             $44,604     $35,673        +25%
    -------------------------------------------------------------------------
    

    Depreciation in 2008 included a full year of phase 2 shaft development at
Cayeli, while 2007 included only four months. Ok Tedi's depreciation increased
because depreciation started in October 2008 after the mine waste tailings
project was complete. This project is being depreciated over Ok Tedi's
remaining five year life. In addition, most operations have higher
depreciation because they have replaced mine equipment and increased other
sustaining capital over the last few years.

    2009 outlook for depreciation

    We expect depreciation to be about $85 million for 2009. This is higher
than 2008 because we expect Las Cruces to begin production, and Ok Tedi will
depreciate the mine waste tailings project for the full year. Of this amount,
Las Cruces will be about $20 million, assuming we capitalize pre-production
for two months after first copper is produced.

    CORPORATE COSTS

    Corporate costs include general and administration costs, taxes and
interest. We also record income from investments in this category, as well as
income we receive from other transactions.

    
    Investment and other income was lower in the year because of foreign
    exchange losses

    -------------------------------------------------------------------------
                  three months ended December 31      year ended December 31
    (thousands)               2008          2007          2008          2007
    -------------------------------------------------------------------------
    Interest income         $6,188        $9,703       $28,182       $32,647
    Dividend income
     and royalty             1,825         1,677         4,979         5,748
    Foreign exchange
     loss                   (5,607)       (2,969)      (33,875)      (14,519)
    Sale of Wolfden              -             -             -        11,730
    Other                    5,651        (2,443)        6,700           848
    -------------------------------------------------------------------------
                            $8,057        $5,968        $5,986       $36,454
    -------------------------------------------------------------------------

    Foreign exchange loss
    We have a foreign exchange gain or loss when:
    -   we revalue certain foreign denominated assets and liabilities
    -   we distribute funds from our self-sustaining operations and recognize
        the foreign exchange we previously deferred on our original
        investment and on funds as they accumulated.

    Foreign exchange gains (losses) in 2008 and 2007 are a result of the
following:

    -------------------------------------------------------------------------
                  three months ended December 31      year ended December 31
    (millions)                2008          2007          2008          2007
    -------------------------------------------------------------------------
    Revaluation of
     US dollar
     denominated debt
     at Las Cruces            $(12)           $-          $(25)           $-
    Distribution of
     funds from
     subsidiaries                1            (2)          (19)           (5)
    Revaluation of
     euro denominated
     cash held in
     Canada                      4            (1)            5            (6)
    Revaluation of
     short-term
     foreign inter-
     group loans and
     other monetary
     items                       1             -             5            (3)
    -------------------------------------------------------------------------
                               $(6)          $(3)         $(34)         $(14)
    -------------------------------------------------------------------------
    

    Sale of Wolfden
    In May 2007 we sold our 13.5 million common shares of Wolfden Resources
Inc. to Zinifex Canadian Enterprises Inc. for $51 million or $3.81 per share,
and recorded a gain of $12 million.

    2009 outlook for investment and other income

    Investment and other income is affected by cash balances, interest rates
and exchange rates. We plan to continue to repatriate excess cash balances
from our foreign operations. This could result in foreign exchange losses or
gains depending on the strength or weakness of the Canadian dollar relative to
when we initially invested in the operations or the rate at which funds were
accumulated. The amount of the gain or loss, if any, will depend on the amount
distributed and foreign exchange rates at the time of distribution.
    We plan to repatriate approximately US $80 million in cash from Cayeli
and (euro)20 million from Pyhasalmi in the first half of 2009. This excess
cash was accumulated at 2008 average exchange rates. The foreign exchange
impact will depend on the exchange rate on the day of repatriation. Because Ok
Tedi distributes its earnings more frequently, the effect of repatriation is
normally not that significant.
    At December 31, 2008, we held (euro)30 million in Canada that could be
affected by foreign exchange gains or losses.

    Asset impairment charges to reflect our write down in Cerattepe

    On March 26, 2008 we received notice from the Rize Administrative Court
of its decision to grant an injunction against the Cerattepe property. The
injunction prevented us from doing any further development work on the
project. We appealed the injunction and on October 24, 2008 the Court ruled to
cancel our operating licences. We have joined with the Turkish Ministry of
Energy and Natural Resources in a further appeal to the Turkish Administrative
Supreme Court. We continue to believe that the applications to cancel the
operating licences are without merit. Nonetheless, we have decided that we
will not proceed with the project, regardless of the decision on the appeal.
All work has ceased on the project and we took a $34 million charge to write
down the assets to net realizable value.
    The remaining $2 million asset impairment reflects the write down of
material and supplies at Troilus.

    
    Income tax expense was lower in the quarter because of lower earnings

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Cayeli                                   $(1,991)     $5,956       -133%
    Pyhasalmi                                    948       6,200        -85%
    Ok Tedi                                     (545)     10,822       -105%
    Las Cruces                                (6,049)         32     -19003%
    Corporate                                  8,174      (4,671)      +275%
    -------------------------------------------------------------------------
                                                $537     $18,339        -97%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                      year ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Cayeli                                   $32,216     $46,445        -31%
    Pyhasalmi                                 19,814      30,911        -36%
    Ok Tedi                                   49,779      65,745        -24%
    Las Cruces                               (11,050)        286      -3964%
    Corporate                                 16,609      (2,693)      -717%
    -------------------------------------------------------------------------
                                            $107,368    $140,694        -24%
    -------------------------------------------------------------------------
    

    Our tax expense changes as our earnings change. Cayeli's effective tax
rate was 5 percent this quarter and 38 percent for the year. This is different
from the statutory rate of 24 percent mainly because the asset impairment
charge for Cerattepe is not tax-deductible, and there were foreign exchange
gains in the Turkish lira tax accounts. At Las Cruces, we recorded a tax
recovery related to foreign exchange losses from the translation of its US
dollar denominated debt. We also reduced its future income tax liability by $2
million, reflecting Spain's 30 percent statutory tax rate. The tax expense at
Corporate is a provision for Quebec mining duties and a reduction in its
future income tax asset to reflect Troilus' earnings.

    2009 outlook for income tax expense

    We are not expecting any further changes in statutory tax rates at our
operations in 2009. We expect to expense approximately $9 million in Quebec
mining duties in 2009, depending on Troilus' 2009 net income.

    Results of our operations

    2009 estimates

    We have included estimates for our 2009 operating earnings and operating
cash flows in our financial review by operation. In deriving our estimates we
used our 2009 objectives for production and cost per tonne of ore milled, as
well as the following assumptions:

    
    -------------------------------------------------------------------------
    Copper price                US $1.50 per pound
    Zinc price                  US $0.50 per pound
    Gold price                  US $850 per ounce
    Copper treatment cost       US $75 per tonne
    Zinc treatment cost         US $200 per tonne (basis US $1,200 per tonne)
    US $ to C$ exchange rate    $1.25
    euro to C$ exchange rate    $1.50
    Working capital             Assume no changes
    -------------------------------------------------------------------------


    CAYELI
    -------------------------------------------------------------------------
                                              three months ended December 31
    -------------------------------------------------------------------------
                                                2008        2007      change
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)                              292         277         +5%
    Tonnes of ore
     milled per day                            3,200       3,000         +5%
    -------------------------------------------------------------------------
    Grades (percent)  copper                     3.7         4.2        -12%
                      zinc                       6.2         6.8         -9%
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)        copper                      77          79         -3%
                      zinc                        70          72         -3%
    -------------------------------------------------------------------------
    Production
     (tonnes)         copper                   8,400       9,100         -8%
                      zinc                    12,800      13,600         -6%
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled (C$)                          $72         $86        -16%
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                          year ended December 31   objective
    -------------------------------------------------------------------------
                                    2008        2007      change        2009
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)                1,109       1,046         +6%       1,200
    Tonnes of ore
     milled per day                3,040       2,900         +6%       3,300
    -------------------------------------------------------------------------
    Grades (percent)  copper         3.7         3.8         -3%         3.8
                      zinc           6.1         6.2         -2%         6.5
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)        copper          80          81         -1%          80
                      zinc            71          71           -          72
    -------------------------------------------------------------------------
    Production
     (tonnes)         copper      32,700      32,500         +1%      36,800
                      zinc        47,600      46,200         +3%      56,400
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled (C$)              $81         $83         -2%         $81
    -------------------------------------------------------------------------
    

    Production goals surpassed targets

    Cayeli successfully increased the annual output of the mine to 1.1
million tonnes in 2008, including 292,000 tonnes during the fourth quarter of
the year. Production grades and metallurgical performance for the year were as
expected and in line with 2007 production results. We completed all critical
stope development for the year, giving us access to the lower mining areas.
    In the quarter and in comparison to the 2007 fourth quarter, higher
throughput only partially offset the impacts of lower copper and zinc grades
and lower metallurgical recoveries. As a result copper and zinc production
were below prior year fourth quarter levels.
    The ore pass system and the new cemented rockfill system improved
operational performance in 2008, allowing production and development to
proceed uninterrupted. The two parallel raise systems will permit us to
develop a program of inspection and repair to ensure their continued
reliability.
    Operating costs for the year 2008 were higher than 2007 because inflation
in Turkey raised labour costs, local electricity rates rose, and commodity
prices were higher worldwide. On a unit basis, however, operating costs were
lower because mill throughput was higher. In the quarter, a significant
devaluation of the Turkish lira reduced labour costs, and lower earnings
reduced the royalty charge.

    2009 outlook for production and costs

    Development of the lower mine, improvements in the ore handling system
and the cemented wastefill system - all critical components to higher
production levels - are now in place, and Cayeli remains focused on producing
at a level of 1.2 million tonnes per year through 2012. For 2009, we expect
copper grades to remain at 3.8 percent and zinc grades to rise to 6.5 percent.
    The current three-year labour agreement will expire in May 2009 and
negotiations with the union will begin in April. Pay increases historically
have exceeded inflation levels. We will make a strong effort to manage labour
cost escalations to maintain our competiveness.
    Royalties also have a significant effect on costs and are variable
depending on earnings. Cost per tonne of ore milled includes a negative $6 per
tonne in royalties in the fourth quarter and $6 per tonne in royalties for the
year. We have estimated that royalties will be $1 per tonne out of our total
2009 objective of $81 per tonne of ore milled, depending on metal prices.

    
    Financial review

    Lower earnings this quarter because of a significant decline in copper and
zinc prices

    --------------------------------------------------------------- ---------
    (millions of
     Canadian dollars          three months ended        year ended
     unless otherwise                 December 31       December 31 Objective
     stated)                        2008     2007     2008     2007     2009
    --------------------------------------------------------------- ---------
    Sales analysis
    Copper sales (tonnes)          9,100    9,400   32,500   33,600   36,800
    Zinc sales (tonnes)            7,200   11,500   48,800   48,200   56,400
                               ------------------------------------ ---------
    Gross copper sales               $14      $55     $194     $253     $152
    Gross zinc sales                  11       23       99      155       78
    Other metal sales                  2        3       12       11       23
                               ------------------------------------ ---------
    Gross sales                       27       81      305      419      253
    Smelter processing charges
     and freight                     (13)     (20)     (78)     (95)     (99)
    --------------------------------------------------------------- ---------
    Net sales                        $14      $61     $227     $324     $154
    --------------------------------------------------------------- ---------
    Cost analysis
    Tonnes of ore milled (thousands) 292      277    1,109    1,047    1,200
    Direct production costs
     ($ per tonne)                   $72      $86      $81      $83      $81
    --------------------------------------------------------------- ---------
    Direct production costs          $21      $24      $90      $87      $97
    Change in inventory               (2)      (2)       -        1        -
    Depreciation and other non-cash
     costs                             4        3       14       12       18
    --------------------------------------------------------------- ---------
    Operating costs                  $23      $25     $104     $100     $115
    --------------------------------------------------------------- ---------
    Operating earnings (loss)        $(8)     $36     $123     $224      $39
    --------------------------------------------------------------- ---------
    Operating cash flow              $(7)     $51      $82     $215      $51
    --------------------------------------------------------------- ---------

    The objective for 2009 uses the assumptions laid out on page 13.

    The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

    -------------------------------------------------------------------------
                                                  three months          year
                                                         ended         ended
    (millions)                                     December 31   December 31
    -------------------------------------------------------------------------
    Lower metal prices, denominated in
     Canadian dollars                                     $(43)        $(107)
    Lower sales volumes from fewer shipments                (6)           (6)
    Lower smelter processing charges                         2            17
    Lower (higher) operating costs                           1            (4)
    Lower royalty                                            2             2
    Higher depreciation                                     (1)           (3)
    -------------------------------------------------------------------------
    Lower operating earnings, compared to 2007             (44)         (101)
    Lower tax expense because earnings were lower            8             9
    Lower tax rate                                           1             4
    Changes in working capital (mainly from higher
     tax payments)                                         (15)          (35)
    Other                                                   (8)          (10)
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2007           $(58)        $(133)
    -------------------------------------------------------------------------

    To spend on sustaining capital for 2009

    -------------------------------------------------------------------------
                                              three months ended December 31
                                                2008        2007      change
    -------------------------------------------------------------------------
    Capital spending                          $3,600      $2,100        +71%
    -------------------------------------------------------------------------

    ------------------------------------------------------------ ------------
                                          year ended December 31   objective
                                    2008        2007      change        2009
    ------------------------------------------------------------ ------------
    Capital spending             $20,300     $17,700        +15%     $22,000
    ------------------------------------------------------------ ------------

    We completed the mine infrastructure program in 2008, commissioning the
ore passes, improving the cemented wastefill system, and rehabilitating the
main ventilation intake. We also replaced key equipment, which improved fleet
reliability and overall production performance.

    2009 outlook for capital spending

    Cayeli expects to spend $22 million in 2009 on mine equipment
replacements, mill upgrades and mine development.

    PYHASALMI

    -------------------------------------------------------------------------
                                              three months ended December 31
                                                2008        2007      change
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)                              356         358         -1%
    Tonnes of ore
     milled per day                            3,870       3,900         -1%
    -------------------------------------------------------------------------
    Grades (percent) copper                      1.0         1.0           -
                     zinc                        2.1         3.8        -45%
                     sulphur                      42          40         +5%
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)       copper                       96          96           -
                     zinc                         90          92         -2%
    -------------------------------------------------------------------------
    Production
     (tonnes)        copper                    3,400       3,300         +3%
                     zinc                      6,800      12,400        -45%
                     pyrite                   81,700     182,000        -55%
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled (C$)                          $44         $38        +16%
    -------------------------------------------------------------------------

    ------------------------------------------------------------- -----------
                                          year ended December 31   objective
                                    2008        2007      change        2009
    ------------------------------------------------------------- -----------
    Tonnes of ore
     milled (000's)                1,406       1,377         +2%       1,370
    Tonnes of ore
     milled per day                3,850       3,770         +2%       3,750
    ------------------------------------------------------------- -----------
    Grades (percent) copper          1.0         1.0           -         1.0
                     zinc            2.2         3.1        -29%         1.9
                     sulphur          42          40         +5%          42
    ------------------------------------------------------------- -----------
    Mill recoveries
     (percent)       copper           95          96         -1%          94
                     zinc             91          92         -1%          87
    ------------------------------------------------------------- -----------
    Production
     (tonnes)        copper       13,300      13,600         -2%      13,000
                     zinc         27,800      38,900        -29%      22,600
                     pyrite      565,000     486,000        +16%     510,000
    ------------------------------------------------------------- -----------
    Cost per tonne
     of ore milled (C$)              $42         $36        +17%         $41
    ------------------------------------------------------------- -----------
    

    Continues to improve efficiencies by increasing mill production

    Pyhasalmi had record throughput in 2008, processing more than 1.4 million
tonnes of ore through the mill. The mill had a record 96 percent availability.
    Copper production in 2008 was slightly higher than plan.
    Zinc production was lower than we planned and lower than 2007 because
changes in stope sequencing resulted in lower grades.
    Pyrite production increased to 565,000 tonnes for the year to take
advantage of high demand. Demand decreased in the fourth quarter and
accordingly we reduced our production of pyrite.
    The higher cost of steel and mill processing reagents, combined with the
exchange rate between the euro and Canadian dollar, increased costs this year.

    2009 outlook for production and costs

    Pyhasalmi expects to mine 1.4 million tonnes of 1 percent copper and 1.9
percent zinc in 2009, and produce 13,000 tonnes of copper and 22,600 tonnes of
zinc. Zinc grades should be lower than in recent years because mining stopes
are further from the zinc-rich ore body contact.
    Pyrite sales are beneficial to the financial performance of Pyhasalmi and
we will continue our efforts to enter the long-term pyrite markets in Europe
and Asia. We made important gains in the Chinese market in 2008.

    Financial review

    Higher pyrite sales help offset lower copper and zinc sales

    
    ---------------------------------------------------------------- --------
    (millions of
     Canadian dollars          three months ended        year ended
     unless otherwise                 December 31       December 31 Objective
     stated)                        2008     2007     2008     2007     2009
    ---------------------------------------------------------------- --------
    Sales analysis
    Copper sales (tonnes)          3,800    3,300   13,700   14,000   13,000
    Zinc sales (tonnes)            6,500   12,800   27,400   38,900   22,600
    Pyrite sales (tonnes)         66,000  133,000  558,000  509,000  510,000
                                ------------------------------------ --------
    Gross copper sales               $14      $21      $94     $105      $54
    Gross zinc sales                   9       30       51      125       31
    Other metal sales                 14        8       76       30       46
                                ------------------------------------ --------
    Gross sales                       37       59      221      260      131
    Smelter processing charges
     and freight                      (9)     (16)     (57)     (62)     (38)
    ---------------------------------------------------------------- --------
    Net sales                        $28      $43     $164     $198      $93
    ---------------------------------------------------------------- --------
    Cost analysis
    Tonnes of ore milled
     (thousands)                     356      358    1,406    1,377    1,370
    Direct production costs
     ($ per tonne)                   $44      $38      $42      $36      $41
    ---------------------------------------------------------------- --------
    Direct production costs          $16      $13      $60      $50      $56
    Change in inventory                -        -        -       (1)       -
    Depreciation and other
     non-cash costs                    4        2       11       11       11
    ---------------------------------------------------------------- --------
    Operating costs                  $20      $15      $71      $60      $67
    ---------------------------------------------------------------- --------
    Operating earnings                $8      $28      $93     $138      $26
    ---------------------------------------------------------------- --------
    Operating cash flow              $21       $5     $100     $109      $33
    ---------------------------------------------------------------- --------

    The objective for 2009 uses the assumptions laid out on page 13.

    The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

    -------------------------------------------------------------------------
                                                  three months          year
                                                         ended         ended
    (millions)                                     December 31   December 31
    -------------------------------------------------------------------------
    Lower metal prices, denominated in
     Canadian dollars                                     $(16)         $(41)
    Higher pyrite sales, net of costs to sell                7            28
    Lower sales volumes                                     (8)          (29)
    Lower smelter processing charges and freight             1             6
    Higher operating costs                                  (2)           (5)
    Impact of the Canadian dollar on translated
     operating costs                                        (2)           (4)
    -------------------------------------------------------------------------
    Lower operating earnings, compared to 2007             (20)          (45)
    Lower tax expense because of lower earnings              5            11
    Changes in working capital (mainly from lower
     accounts receivable)                                   30            23
    Other                                                    1             2
                                                  ---------------------------
    Higher (lower) operating cash flow, compared
     to 2007                                               $16           $(9)
    -------------------------------------------------------------------------

    Capital spending in 2008 was to improve mill efficiencies

    -------------------------------------------------------------------------
                                              three months ended December 31
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Capital spending                          $3,900      $1,400       +179%
    -------------------------------------------------------------------------

    ------------------------------------------------------------- -----------
                                          year ended December 31   objective
    (thousands)                     2008        2007      change        2009
    ------------------------------------------------------------- -----------
    Capital spending               9,800      $3,500       +180%     $11,000
    ------------------------------------------------------------- -----------

    We purchased a rock bolter, cable bolter and a production front end loader
in 2008. We also replaced the corroded copper rougher and scavenger cells with
new units.

    2009 outlook for capital spending

    We expect to spend $11 million in 2009, mainly for mine equipment,
improvements in the mill and renovation of process water pumps.

    TROILUS

    -------------------------------------------------------------------------
                                              three months ended December 31
                                                2008        2007      change
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)                            1,500       1,440         +4%
    Tonnes of ore
     milled per day                           16,600      15,700         +4%
    -------------------------------------------------------------------------
    Strip ratio                                  1.3         1.5        -13%
    -------------------------------------------------------------------------
    Grades           gold (grams
                      /tonne)                   0.99        0.89        +11%
                     copper
                      (percent)                 0.14        0.06       +133%
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)       gold                         83          82         +1%
                     copper                       94          89         +6%
    -------------------------------------------------------------------------
    Production       gold
                      (ounces)                40,500      33,700        +20%
                     copper
                      (tonnes)                 2,000         600       +233%
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled (C$)                          $15         $15           -
    -------------------------------------------------------------------------


    ------------------------------------------------------------- -----------
                                          year ended December 31   objective
                                    2008        2007      change        2009
    ------------------------------------------------------------- -----------
    Tonnes of ore
     milled (000's)                5,800       6,000         -3%       6,200
    Tonnes of ore
     milled per day               15,900      16,500         -3%      16,900
    ------------------------------------------------------------- -----------
    Strip ratio                      1.4         1.1        +27%         0.3
    ------------------------------------------------------------- -----------
    Grades           gold (grams
                      /tonne)       0.96        0.87         10%        0.82
                     copper
                      (percent)     0.10        0.05       +100%        0.11
    ------------------------------------------------------------- -----------
    Mill recoveries
     (percent)       gold             84          82         +2%          81
                     copper           93          88         +6%          92
    ------------------------------------------------------------- -----------
    Production       gold
                      (ounces)   151,300     138,400         +9%     132,200
                     copper
                      (tonnes)     5,700       2,800       +104%       6,000
    ------------------------------------------------------------- -----------
    Cost per tonne
     of ore milled (C$)              $15         $13        +15%         $10
    ------------------------------------------------------------- -----------
    

    Higher gold production

    Troilus milled 5.8 million tonnes in 2008, which was well below our
target of 6.6 million tonnes. This was the result of hard ore in the southwest
extension area of the pit, which limited grinding mill throughput for most of
the year, and lower production from the softer areas in the main ore body in
the second half of the year. A total of 151,300 ounces of gold were produced
during the year. Copper production reached 5,700 tonnes.
    We completed mining in the J4 pit early in the year, and in the southwest
ore body extension of the 87 pit in the third quarter. By the fourth quarter,
production was confined to the main ore body in the 87 pit which helped
increase throughput in the fourth quarter. The 87 pit should be complete by
April 2009. Production access and sequencing became very difficult late in
2008 because of the constrained mining area and reduced working faces, but
delays in accessing the pit were mitigated by processing ore from the low
grade stockpile.
    Gold production in the fourth quarter and for the year was higher than
for the same periods in 2007, mainly because grades from the 87 pit were
higher. Gold recoveries also continue to be higher than expected. Copper
grades peaked in the fourth quarter, more than tripling copper production in
the quarter compared to last year's fourth quarter, and increasing it over 100
percent year over year.
    Higher fuel and steel grinding media costs resulted in a higher cost per
tonne compared to last year.

    2009 outlook for production and costs

    Troilus should complete mining in the 87 pit in the second quarter of
2009, and then begin stockpile recovery. We expect mill throughput of 6.2
million tonnes for the year at average grades of 0.8 grams per tonne gold and
0.11 percent copper, which should produce 132,200 ounces of gold and 6,000
tonnes of copper.
    The workforce will be reduced during the year as pit mining is completed
and less equipment is required. We will assign some of the Troilus workforce
and available equipment to reclamation activities.
    We also expect production costs to come down because of the completion of
mining in the pit in May and then reverting to lower cost production from
milling the stockpiles.

    
    Financial review

    Higher gold prices and higher sales volumes improved earnings

    ---------------------------------------------------------------- --------
    (millions of
     Canadian dollars          three months ended        year ended
     unless otherwise                 December 31       December 31 objective
     stated)                        2008     2007     2008     2007     2009
    ---------------------------------------------------------------- --------
    Sales analysis
    Gold sales (ounces)           40,000   36,100  149,700  142,200  132,200
    Copper sales (tonnes)          2,000      800    5,500    2,900    6,000
                               ------------------------------------- --------
    Gross gold sales                 $32      $22     $109      $85     $140
    Gross copper sales                 4        4       30       21       25
    Other metal sales                  -        1        2        2        3
                               ------------------------------------- --------
    Gross sales                       36       27      141      108      168
    Smelter processing charges
     and freight                      (4)      (2)     (11)      (8)     (13)
    ---------------------------------------------------------------- --------
    Net sales                        $32      $25     $130     $100     $155
    ---------------------------------------------------------------- --------
    Cost analysis
    Tonnes of ore milled
     (thousands)                   1,530    1,440    5,800    6,000    6,200
    Direct production costs
     ($ per tonne)                   $15      $15      $15      $13      $10
    ---------------------------------------------------------------- --------
    Direct production costs          $23      $21      $89      $78      $62
    Change in inventory                1        1        -        1        1
    Depreciation and other
     non-cash costs                    5        3       15       11       12
    ---------------------------------------------------------------- --------
    Operating costs                  $29      $25     $104      $90      $75
    ---------------------------------------------------------------- --------
    Operating earnings                $4       $-      $26      $10      $80
    ---------------------------------------------------------------- --------
    Operating cash flow              $20       $5      $41      $15      $90
    ---------------------------------------------------------------- --------

    The objective for 2009 uses the assumptions laid out on page 13.

    The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

    -------------------------------------------------------------------------
                                                  three months          year
                                                         ended         ended
    (millions)                                     December 31   December 31
    -------------------------------------------------------------------------
    Higher gold price denominated in
     Canadian dollars                                       $7           $19
    Lower copper price denominated in
     Canadian dollars                                       (8)          (11)
    Higher sales volumes                                     9            20
    Lower smelter processing charges                         1             3
    Higher operating costs                                  (3)          (11)
    Lay off costs accrued                                   (2)           (4)
    -------------------------------------------------------------------------
    Increase in operating earnings, compared to 2007        $4           $16
    Changes in working capital                               1             4
    Add back - amortization of gold hedges cash
     settled in August                                       7             -
    Other                                                    3             6
    -------------------------------------------------------------------------
    Increase in operating cash flow, compared to 2007      $15           $26
    -------------------------------------------------------------------------


    OK TEDI

    -------------------------------------------------------------------------
                                              three months ended December 31
    (100 percent)                               2008        2007      change
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)                            5,600       6,300        -11%
    Tonnes of ore
     milled per day                           61,000      68,000        -11%
    -------------------------------------------------------------------------
    Strip ratio                                  2.1         1.5        +40%
    -------------------------------------------------------------------------
    Grades           copper
                      (percent)                  0.8         0.9        -11%
                     gold (grams
                      /tonne)                    1.0         1.0           -
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)       copper                       89          87         +2%
                     gold                         72          63        +14%
    -------------------------------------------------------------------------
    Production       copper
                      (tonnes)                40,600      48,400        -16%
                     gold
                      (ounces)               134,100     130,400         +3%
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled (C$)                          $27         $19        +42%
    -------------------------------------------------------------------------

    ------------------------------------------------------------- -----------
                                          year ended December 31   objective
    (100 percent)                   2008        2007      change        2009
    ------------------------------------------------------------- -----------
    Tonnes of ore
     milled (000's)               21,700      25,800        -16%      25,300
    Tonnes of ore
     milled per day               59,000      71,000        -16%      69,000
    ------------------------------------------------------------- -----------
    Strip ratio                      1.8         1.3        +38%         1.2
    ------------------------------------------------------------- -----------
    Grades           copper
                      (percent)      0.9         0.8        +13%         0.8
                     gold (grams
                      /tonne)        1.0         0.9        +11%         1.1
    ------------------------------------------------------------- -----------
    Mill recoveries
     (percent)       copper           87          86         +1%          84
                     gold             73          71         +3%          68
    ------------------------------------------------------------- -----------
    Production       copper
                      (tonnes)   159,700     169,200         -6%     176,000
                     gold
                      (ounces)   515,400     471,800         +9%     608,000
    ------------------------------------------------------------- -----------
    Cost per tonne
     of ore milled (C$)              $24         $18        +33%         $26
    ------------------------------------------------------------- -----------
    

    Lower throughput at Ok Tedi

    Mill throughput in 2008 was 3.6 million tonnes below plan and 4.1 million
tonnes below 2007, averaging about 59,000 tonnes per day. The main cause of
the shortfall was a shortage of ore feed to the mill. Availability and
operational problems with the new in-pit crusher and a three day illegal
strike earlier in the year accounted for most of the lost tonnes.
    Installing the new in-pit crusher has been a challenging project. To
counteract the reduced tonnage, Ok Tedi modified the mine plan to increase the
copper head grade. The higher grade and metal recovery regained about half of
the potential copper losses. By the end of the year, most of the issues that
affected the in-pit crusher's performance in 2008 had been resolved.
    The mine waste tailing project is designed to remove sulphur from the
mill tailings. Commissioning began in September and is five months later than
plan because of late delivery of components and a delay in visa approvals for
key construction staff. Ok Tedi has managed sulphur control to date by
limiting the mining of the Taranaki ore. This reduced gold production this
year to 515,400 ounces, 24 percent below Ok Tedi's target.
    The cost per tonne of ore milled is higher in 2008 because mill
throughput is lower and labour and fuel costs have increased.

    2009 outlook for production and costs

    Ok Tedi expects to process 25.3 million tonnes of ore grading 0.8 percent
copper and containing 1.1 grams per tonne of gold. This should produce 176,000
tonnes of copper and 608,000 ounces of gold. Ok Tedi expects a 18 percent
increase in its gold production compared to 2008 because of the higher content
of skarn ores in the mill feed.
    The delay in commissioning the mine waste and tailings management plant
will be mitigated by limiting mill feed to an average of 6 percent sulphur
grade for the first six months of 2009, after which it should rise to an
average of 8 percent. The sulphur constraint will limit the consumption of
higher grade gold ore from the Taranaki pit during the first half of the year.

    
    Financial review

    Higher operating cash flow

    ---------------------------------------------------------------- --------
    (millions of
     Canadian dollars          three months ended        year ended
     unless otherwise                 December 31       December 31 objective
     stated)                        2008     2007     2008     2007     2009
    ---------------------------------------------------------------- --------
    Sales analysis at 18%
    Copper sales (tonnes)          7,500    7,600   29,900   32,500   31,600
    Gold sales (ounces)           23,500   21,800   92,100   92,000  109,400
                               ------------------------------------- --------
    Gross copper sales               $15      $40     $193     $248     $131
    Gross gold sales                  22       16       81       65      116
    Other metal sales                  1        1        3        3        4
                               ------------------------------------- --------
    Gross sales                       38       57      277      316      251
    Smelter processing charges
     and freight                      (6)      (7)     (33)     (41)     (38)
    ---------------------------------------------------------------- --------
    Net sales                        $32      $50     $244     $275     $213
    ---------------------------------------------------------------- --------
    Cost analysis at 18%
    Tonnes of ore milled
     (thousands)                   1,000    1,125    3,900    4,640    4,550
    Direct production costs
     ($ per tonne)                   $27      $19      $24      $18      $26
    ---------------------------------------------------------------- --------
    Direct production costs          $27      $21      $93      $81     $118
    Change in inventory                1       (1)      (3)       2        -
    Depreciation and other
     non-cash costs                    6        2       19        9       28
    ---------------------------------------------------------------- --------
    Operating costs                  $34      $22     $109      $92     $146
    ---------------------------------------------------------------- --------
    Operating earnings               ($2)     $28     $135     $183      $67
    ---------------------------------------------------------------- --------
    Operating cash flow              $11      $23     $117      $98      $63
    ---------------------------------------------------------------- --------

    The objective for 2009 uses the assumptions laid out on page 13.

    The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

    -------------------------------------------------------------------------
                                                  three months          year
                                                         ended         ended
    (millions)                                     December 31   December 31
    -------------------------------------------------------------------------
    Lower copper prices, denominated in
     Canadian dollars                                     $(25)         $(35)
    Higher gold prices, denominated in
     Canadian dollars                                        5            15
    Lower sales volumes                                      -            (8)
    Lower smelter processing charges                         -             4
    Higher operating costs                                  (6)          (18)
    Higher depreciation                                     (4)           (6)
    -------------------------------------------------------------------------
    Decrease in operating earnings,
     compared to 2007                                      (30)          (48)
    Lower tax expense because of lower earnings             11             8
    Changes in net working capital                           6            41
    Other                                                    1             8
    -------------------------------------------------------------------------
    Increase (decrease) in operating cash flow,
     compared to 2007                                     $(12)          $19
    -------------------------------------------------------------------------

    The mine waste management program was commissioned in September

    In 2008, Ok Tedi spent US $200 million (our 18 percent share was $36
million), of which US $114 million was for the mine waste management program
and US $43 million was for the pit drainage project. Ok Tedi's capital
spending this quarter was mainly for these same two projects.

    -------------------------------------------------------------------------
                                              three months ended December 31
    (18 percent)                                2008        2007      change
    -------------------------------------------------------------------------
    Capital spending                         $11,700     $10,100        +16%
    -------------------------------------------------------------------------

    ------------------------------------------------------------- -----------
                                          year ended December 31   objective
    (18 percent)                    2008        2007      change        2009
    ------------------------------------------------------------- -----------
    Capital spending             $38,400     $31,500        +22%     $26,000
    ------------------------------------------------------------- -----------
    

    2009 outlook for capital spending

    Ok Tedi plans to spend US $115 million (our 18 percent share is $26
million) in 2009 for continuing work on the pit drainage project, further pit
development and other capital projects.

    Status of our development projects

    LAS CRUCES

    Quarterly development update

    Dewatering and re-injection system (DRS)

    In May 2008, the authority responsible for the DRS permit notified Las
Cruces that it had suspended authorization of the dewatering and re-injection
system for the project. This has prevented Las Cruces from mining in the pit.
    Las Cruces implemented short-term water purification and proposed
relocation of certain DRS wells and long-term water purification in response
to the water authority's concerns.
    In a letter dated January 22, 2009, the water authority stated that the
measures set out in the Las Cruces action plan have now been validated and
successfully implemented and recommended that the provincial mining authority
allow Las Cruces to resume mining.
    The recommendation stipulates that Las Cruces must reduce the level of
the contact water in the holding ponds, to make sure there is enough buffer
capacity to support a sudden influx of contact water from the pit. All water
from the holding ponds are treated by reverse osmosis or lime neutralization
before they are discharged.
    Las Cruces has started emptying the holding ponds and expects to complete
this by the end of February. Mining at the bottom of the pit should begin
again during the first week of March, and we expect first ore delivery to the
crusher around March 21 and first production of cathode around the beginning
of the second quarter.
    Because the original authorization did not contemplate long-term water
purification, the permit to operate the DRS has to be amended through a public
review process. The relevant authorities have agreed that Las Cruces can
resume mining and start up the hydrometallurgical plant during this process,
which will be initiated in the next month.
    We expect the public review process to proceed without complication, that
Las Cruces will receive an amended DRS permit in due course, and that there
will not be any adverse impact on its copper production in the interim.

    Preparation for first copper

    Construction of the process plant is essentially completed and
commissioning well underway. The commissioning process will take several
months, and we expect first copper cathode production around the beginning of
the second quarter of 2009.

    2009 outlook for development and production

    Las Cruces construction is essentially complete with only minor finishing
work required during the first quarter of 2009. To date, (euro)448 million has
been spent on the project and (euro)31 million committed, and we expect to
spend the balance in the first quarter of 2009.
    The following table shows total spending for the project to the end of
2008 and our 2009 capital objective:

    
    -------------------------------------------------------------------------
    (millions)              Up to December    Objective        Total project
                                  31, 2008         2009          estimate at
                                                           December 31, 2009
    -------------------------------------------------------------------------
    Construction capital         (euro)448     (euro)56            (euro)504
    Mine development                     6           19                   25
    Sustaining capital                   -           22                   22
    Capitalized interest                18            5                   23
    Pre-operating costs
     capitalized, net of sales           -            8                    8
    Value added tax                     25          (25)                   -
    Other                                5            4                    9
    -------------------------------------------------------------------------
    Capital expenditures         (euro)502     (euro)89            (euro)591
    -------------------------------------------------------------------------


    The following table shows expected production for 100 percent of Las
    Cruces

    -------------------------------------------------------------------------
                                                            2009     Life of
                                                          target        mine
    -------------------------------------------------------------------------
    Tonnes of ore processed (thousands)                      479      17,492
    -------------------------------------------------------------------------
    Strip ratio                                               23        12.5
    -------------------------------------------------------------------------
    Copper grades (percent)                                  8.8         6.2
    -------------------------------------------------------------------------
    Copper production (tonnes)                            54,600     997,200
    -------------------------------------------------------------------------
    Cost per tonne of ore processed (C $)                   $167         $87
    -------------------------------------------------------------------------
    

    Copper production for 2009 includes 37,200 tonnes of copper cathode and
17,400 tonnes of copper in ore that, depending on market conditions, we plan
to ship directly to smelters. If market conditions change and smelters refuse
to accept the ore, we will stockpile the ore and process it in the
hydrometallurgical plant. In that situation, the Las Cruces production target
for 2009 would be reduced to 37,200 tonnes of copper.
    Based on the 2009 production targets and the assumptions laid out on page
13, we are estimating operating earnings and cash flows for 2009 as follows.

    
    100%
    ------------------------------------------------------------- -----------
    (millions of
     Canadian dollars unless                                       objective
     otherwise stated)                                                  2009
    ------------------------------------------------------------- -----------
    Copper sales (tonnes)                                             54,600
    ------------------------------------------------------------- -----------
    Gross copper sales                                                  $188
    ------------------------------------------------------------- -----------
    Smelter processing charges and freight                               (26)
    ------------------------------------------------------------- -----------
    Net sales                                                           $162
    ------------------------------------------------------------- -----------
    Tonnes of ore milled (thousands)                                     479
    ------------------------------------------------------------- -----------
    Direct production costs ($ per tonne)                               $167
    ------------------------------------------------------------- -----------
    Direct production costs                                              $60
    ------------------------------------------------------------- -----------
    Change in inventory                                                   11
    ------------------------------------------------------------- -----------
    Depreciation and other non-cash costs                                 24
    ------------------------------------------------------------- -----------
    Operating costs                                                      $95
    ------------------------------------------------------------- -----------
    Operating earnings                                                   $67
    ------------------------------------------------------------- -----------
    Operating cash flow                                                  $76
    ------------------------------------------------------------- -----------
    

    PETAQUILLA

    Quarterly development update

    Increased equity interest in Petaquilla to 100 percent

    In March 2008, we entered into an arrangement with Teck Cominco Limited
to proceed with development of the Petaquilla project. Under that agreement we
agreed to fund our and Teck's share of project expenditures from April 1, 2008
until we contributed a total between us of US $50 million in development
costs, or until September 30, 2009, whichever was earlier. In late December,
we acquired Teck's 26 percent interest in the project after it gave notice of
its withdrawal from our arrangement. No payment was required other than the US
$30 million we had already paid to fund project expenditures.
    Following our successful unsolicited take-over bid in September to
acquire all of the shares of Petaquilla Copper Ltd., the other partner in the
project, we acquired the remaining shares of Petaquilla Copper in November
under a plan of arrangement approved by its remaining shareholders. This
increased our interest in the project by 26 percent.
    These two transactions increased our ownership in the Petaquilla project
to 100 percent. Our total investment in the Petaquilla project is now $522
million.
    At a time when most mining companies have decided to suspend their copper
growth projects, not necessarily for strategic reasons but out of necessity,
we have decided to advance what we believe to be one of the most promising
copper porphyry projects in the world. Given the rapidly deteriorating supply
of new copper mines, we believe that having a "ready-to-build" project the
size of Petaquilla in Inmet's portfolio, will put us in a very strong position
when the general economy and with it the demand for metals turn around once
again. Our vision is to progress Petaquilla over the next two years before a
major decision on construction will have to be made. We will do this carefully
always ensuring that our balance sheet remains strong and our liquidity is not
impacted to endure the current economic environment.

    
    We are pursuing three main objectives over the next two years:

    (1) Complete sufficient drilling to establish a National Instrument
        43-101 compliant resource large enough to support a daily mill
        throughput of 150,000 tonnes per day for a minimum of 25 years
    (2) Complete all front-end-engineering and design on the basis of a
        150,000-tonne-per-day mill throughput and third-party power supply
        scenario.
    (3) Complete and submit for approval the Environmental and Social Impact
        Assessment (EsIA), advance permitting and continue to build our
        social license.

    The following is an update on the status of the related field activities.
    

    Drilling

    We anticipate that approximately 60,000 metres of drilling will be needed
to reach our project mineral reserve targets, and that this work will take
until mid-2009 to complete. At the same time, we will carry out drilling for
geotechnical and hydrogeological purposes. Once the resource drilling and the
grinding variability test work is completed, we intend to develop a detailed
mine plan based on a throughput of 150,000 tonnes per day. As of early
February we have eight drills working on the property and have completed close
to 30,000 metres of the required drilling.

    Social and environmental impact assessment and community development

    Now that baseline studies are substantially complete, we are moving to
the impact assessment stage. We expect to submit our impact assessment to the
Panamanian environmental authorities towards the end of 2009. As a result of
findings from our commitment to build our social license, we are already
developing a number of community development initiatives. These include
helping local businesses to develop capacity to service future operational
needs in areas such as food supply, road maintenance and services. Other
initiatives, such as local scholarship programs and a hot lunch program for
school children, have been adopted.

    Engineering

    Engineering work is advancing, and our goal is to complete the FEED study
by the end of 2009. The base case is a 150,000 tonne per day conventional
flotation operation which will produce a copper concentrate with gold and
molybdenum by-products. The concentrate will be sent by pipeline to a new port
to be constructed on the coast approximately 30 kilometres from the mine. We
are in discussions with third party independent power producers to provide the
power required for the operation.

    2009 outlook for development

    By the end of 2009, once the FEED studies are complete and the EsIA is
submitted, we expect to begin detailed engineering. At the same time, we will
seek approval for the EsIA and begin the permitting for construction. We
expect construction to take approximately 44 months from the time the
construction permits are issued. We expect to spend approximately $94 million
in 2009 to fund this work. We have also begun to explore options for including
equity partners in the development of the Petaquilla project.

    Managing our liquidity

    We plan our financing strategy by assessing our long-term financial
requirements, reviewing our future capital needs and determining the optimal
mix of several alternatives, including our significant cash position, future
operating cash flow, credit facilities and project financing. In planning our
capital structure, we include a liquidity cushion that allows us to address
operational disruptions or general market downturns, such as the current
weakening of the global economy.

    
    -------------------------------------------------------------------------
                  three months ended December 31      year ended December 31
    (millions)                2008          2007          2008          2007
    -------------------------------------------------------------------------
    CASH FROM OPERATING
     ACTIVITIES
    Cayeli                     ($7)          $51           $82          $215
    Pyhasalmi                   21             5           100           109
    Troilus                     20             5            41            15
    Ok Tedi                     11            23           117            98
    Corporate development
     and exploration not
     included in operations'
     cash flow                  (1)           (2)           (7)           (6)
    General and administration  (3)          (13)          (13)          (20)
    Other                      (10)            7             5            16
    -------------------------------------------------------------------------
                                31            76           325           427
    -------------------------------------------------------------------------
    CASH FROM INVESTING AND
     FINANCING
    Acquisition of Petaquilla
     Copper                    (43)            -          (380)            -
    Capital spending          (134)          (94)         (461)         (346)
    Investing in Petaquilla
     prior to consolidation      -             -           (25)            -
    Long-term - borrowing       22            24           128            98
              - repayment        -             -           (14)           (9)
    Funding from non-
     controlling shareholder    25            16            62            56
    Settlement of foreign
     exchange forward contract   -             -            52             -
    Financial assurance deposits 1             8           (14)           (4)
    Dividends paid on common
     shares                     (5)           (5)          (10)          (10)
    Disposition of portfolio
     investments                 -             -             2            51
    Foreign exchange on cash
     held in foreign currency   37             6            60           (51)
    Other                        3            (5)            7           (11)
    -------------------------------------------------------------------------
                               (94)          (50)         (593)         (226)
    -------------------------------------------------------------------------
    Increase (decrease) in
     cash                      (63)          (26)         (268)          201
    Cash and short-term
     investments
      Beginning of period      636           815           841           640
    -------------------------------------------------------------------------
      End of period           $573          $841          $573          $841
    -------------------------------------------------------------------------


    OPERATING ACTIVITIES

    Key components of the change in operating cash flows
    -------------------------------------------------------------------------
                                                  three months          year
                                                         ended         ended
    (millions)                                     December 31   December 31
    -------------------------------------------------------------------------
    Lower earnings from operations (see page 4)           $(92)        $(178)
    Non-cash changes in operating earnings:
      Add back higher non-cash charges included in
       earnings from operations                             13            10
      Lower tax expense                                     19            34
      Changes in working capital                            15            32
    -------------------------------------------------------------------------
    Decrease in operating cash flow, compared to 2007     $(45)        $(102)
    -------------------------------------------------------------------------
    

    Operating cash flows are lower than they were in 2007 mainly because of
lower operating earnings.

    2009 outlook for cash from operating activities

    In the current volatile markets it is even more difficult than usual to
develop reliable estimates for commodity prices and foreign exchange rates.
The table below shows our expected operating cash at our operations, based on
the market assumptions described on page 13, and the assumptions in Results of
our operations, which starts on page 13.

    
    2009 estimated operating cash flow by operation
    ---------------------------------------------------------

    (millions)
    ---------------------------------------------------------
    Cayeli                                               $51
    Pyhasalmi                                             33
    Troilus                                               90
    Ok Tedi                                               63
    Las Cruces                                            76
    ---------------------------------------------------------
                                                        $313
    ---------------------------------------------------------

    Our estimates of the sensitivity of our earnings and cash flow to key
operating parameters are shown on page 30.

    INVESTING AND FINANCING

    Capital spending
    ---------------------------------------------------------------- --------
                               three months ended        year ended
                                      December 31       December 31 objective
    (millions)                      2008     2007     2008     2007     2009
    ---------------------------------------------------------------- --------
    Cayeli                            $4       $2      $20      $18      $22
    Pyhasalmi                          4        1       10        3       11
    Troilus                            -        -        2        2        -
    Ok Tedi                           12       11       38       32       26
    Las Cruces                        94       76      356      283      133
    Cerattepe                          3        4       18        8        -
    Petaquilla(1)                     17        -       42        -       94
    ---------------------------------------------------------------- --------
                                    $134      $94     $486     $346     $286
    ---------------------------------------------------------------- --------
    (1) Includes our 48 percent share of funding provided to Petaquilla prior
        to acquisition of PTC
    

    Please see Results of our operations and Status of our development
projects for a discussion of actual results and our 2009 objective.

    Long-term borrowings and settlement of hedge

    By June 30, 2008 Las Cruces had fully drawn down its credit facility and
on June 30, this euro denominated debt was converted to a US dollar facility
and the related foreign exchange forward contract was settled. Las Cruces
received (euro)36 million in cash from the settlement of this contract. Since
June 30, Las Cruces has held a US $215 million debt at interest rates of US
Libor plus 2 percent. The funds received from the settlement of the forward
contract will be amortized as a reduction to interest expense over the term of
the loan.
    In 2008, Las Cruces repaid (euro)9 million under Tranche B of its credit
facility which is equal to the amount of VAT refunds received. At December 31,
2008 this facility was fully drawn down.

    Acquisition of Petaquilla

    Details of the transactions that increased our ownership in the
Petaquilla project to 100 percent are described on page 24. We acquired
Petaquilla Copper (whose principal asset is a 26 percent interest in
Petaquilla) at a cost of $378 million. We acquired Teck's 26 percent interest
in Petaquilla at a cost of $32 million, which we had already paid through a
funding arrangement. Our total investment in the Petaquilla project is now
$522 million.

    
    2009 outlook for investing and financing

    We expect capital spending to be $286 million in 2009. The more
significant items include:

    -   $84 million to complete construction of the processing plant at Las
        Cruces
    -   $94 million for work on the development plan at Petaquilla
    -   $10 million for pit development and $7 million for drainage tunnel
        underground works at Ok Tedi.
    

    Until we start receiving proceeds from sales at Las Cruces, we expect to
use sponsor contributions, value added tax refunds and government subsidies to
fund its costs. We are expecting (euro)45 million in subsidies, but we must
meet certain conditions before we receive the funds (mainly reaching specific
levels of employment and completing construction of the plant, which we
believe have been or will be met).

    
    Market conditions
    -----------------
    These market conditions will have some impact on our overall financial
position. However, based on the strength of our financial position entering
into this downturn, together with our relatively low operating costs we expect
to:
    -   be able to meet expected production levels
    -   continue to make ongoing capital expenditures at our current
        operations and to complete the development of Las Cruces
    -   continue to pursue our growth objectives through the advancement of
        the Petaquilla project and consideration of other opportunities as
        they arise.
    

    We will continually monitor the metal and financial markets, our
financial performance and resources, and our capital spending to maintain the
financial strength required in the current volatile and uncertain markets.

    Financial condition

    CASH

    Our cash and cash equivalents balance at December 31, 2008 was $573
million. This included cash and money market instruments that mature in 90
days or less from the date of acquisition, and short-term investments that
mature in 91 days to a year. Our policy is to invest excess cash in highly
liquid investments of the highest credit quality and to limit our exposure to
individual counterparties in order to minimize risks associated with these
investments. Decisions regarding the length of maturities are based on our
cash flow requirements, rates of returns and various other factors.

    
    At December 31, 2008, cash and short-term investments were mainly held in:
    -   Canada and provincial T-Bills
    -   short-term debt instruments issued by Canadian Crown Corporations
    -   highest rated asset backed commercial paper programs sponsored by
        leading Canadian financial institutions backed by global style
        liquidity lines
    -   AAA rated treasury funds and money market funds managed by leading
        international fund managers investing in money market and short-term
        debt securities and fixed income securities issued by leading
        international financial institutions and their sponsored
        securitization vehicles
    -   cash, term and overnight deposits with leading Canadian and
        international financial institutions benefiting directly and
        indirectly from support programs by various governments and central
        banks.
    

    Since the end of the third quarter, general worldwide economic conditions
have weakened dramatically. In response, we adjusted our investment positions
and are now mainly invested in treasury funds to minimize liquidity risk until
normal market conditions return. Turn to note 6 on page 51 in the consolidated
financial statements for more details on where our cash is invested.

    
    Our restricted cash balance of $61 million included:

    -   $17 million in trust for future reclamation at Ok Tedi
    -   $16 million of cash collateralized letters of credit for Inmet
    -   $26 million related to issuing letters of credit to suppliers at Las
        Cruces and its labour bond
    -   $2 million for future reclamation at Pyhasalmi

    COMMON SHARES

    -------------------------------------------------------------------------
    Common shares outstanding as of
      December 31, 2008 and February 10, 2009                     48,281,950
    -------------------------------------------------------------------------
    Deferred share units outstanding as of
      December 31, 2008 (redeemable on a
       one-for-one basis for common shares)                           82,992
    -------------------------------------------------------------------------


    FINANCIAL INSTRUMENTS

    The table below shows the gold and copper forward sales, and interest rate
hedges (and their marked-to-market valuations) recorded on our balance sheet
at the end of 2008.

    -------------------------------------------------------------------------
                                                               C$ marked-to-
                                                                 market loss
    Type of                                                   at December 31,
    contract      Expiry     Quantity          Price                   2008
    -------------------------------------------------------------------------
    Ok Tedi
     copper forward
     sales          2009  3.2 million lbs  US $2.44 per lb    $4.3 million(1)
    Ok Tedi gold
     forward sales  2010     3,600 ounces  US $748 per oz.
                    2011     3,600 ounces  US $775 per oz.
                    2012     3,600 ounces  US $803 per oz.
                    2013     1,800 ounces  US $825 per oz.
                   ----------------------------------------
                            12,600 ounces  US $783 per oz.  ($1.7 million)(2)

    Las Cruces
     interest rate
     swaps          2009
                 to 2014  US $179 million     5.2 percent     ($23.4 million)
                             (reducing in
                         conjunction with
                           debt repayment
                                 schedule)
    -------------------------------------------------------------------------
    (1) At a copper price of US $1.33 per pound.
    (2) At a gold price of US $869 per ounce.

    SENSITIVITY ANALYSIS

    The table below shows you the effect of key variables on our net income
based on our 2009 objectives.

    -------------------------------------------------------------------------
                                                                Would change
                                                  Would change  our 2009 net
                                                  our 2009 net    income per
                                    A change of:    income by:     share by:
    -------------------------------------------------------------------------
    Metal prices
    Copper (per pound)                  US $0.30   $74 million         $1.54
    Zinc (per pound)                    US $0.10   $11 million         $0.24
    Gold (per ounce)(1)                  US $100   $25 million         $0.52
    -------------------------------------------------------------------------
    Exchange rates
    Canadian dollar per US dollar         C$0.10   $43 million         $0.89
    Canadian dollar per euro              C$0.10   $14 million         $0.29
    -------------------------------------------------------------------------
    Treatment and refining charges
    Copper treatment charge per tonne     US $10
     and copper refining charge per
     pound                              US $0.01    $5 million         $0.11
    Zinc treatment charge per tonne       US $10    $1 million         $0.03
    -------------------------------------------------------------------------
    Freight and energy costs
    Concentrate freight per tonne            10%    $3 million         $0.06
    Fuel price per litre                   $0.10    $3 million         $0.05
    Electricity per kilowatt hour          $0.01    $4 million         $0.09
    -------------------------------------------------------------------------
    (1) Calculations include hedging in place at December 31, 2008.


    Accounting changes

    We adopted a new section of the CICA Handbook:

    Section 3031 - Inventories

    Effective January 1, 2008, we adopted CICA Handbook section 3031 -
Inventories on a prospective basis.

    This section requires inventory to be measured at the lower of cost or net
realizable value. It also clarifies how to allocate fixed production overhead,
and requires:

    -   consistent use of either first-in, first-out or weighted average to
        measure inventories
    -   insurance and capital spares be accounted for as property, plant and
        equipment
    -   any previous write-downs be reversed when the value of inventories
        increases. The amount of the reversal is limited to the amount of the
        original write-down.
    

    We are now expensing certain administrative and other costs as we incur
them, rather than including them in the cost of inventory. We measure finished
goods inventory and materials and supplies at the lower of weighted average
cost or net realizable value.
    This change in policy had the following impact on our 2008 consolidated
financial statements:

    
    -   decreased opening 2008 inventory by $3.5 million
    -   increased opening 2008 property, plant and equipment by $1.8 million
    -   decreased opening 2008 future income tax liability by $0.6 million
    -   decreased opening 2008 retained earnings by $1.1 million

    Plans on transition to International Financial Reporting Standards
    (IFRS):
    

    The Accounting Standards Board confirmed in February 2008 that
International Financial Reporting Standards (IFRS) will replace current
Canadian GAAP for financial periods beginning on and after January 1, 2011.
IFRS is based on a conceptual framework similar to Canadian GAAP, but there
are significant differences in recognition, measurement and disclosure.
    While the adoption of IFRS will not change the actual cash flows we
generate, it will result in changes to our reported financial position and
results of operations - which could have material effects.
    We have prepared a comprehensive IFRS convergence plan that addresses the
changes in accounting policy, restatement of comparative periods, internal
control over financial reporting, modification of existing systems, the
training and awareness of staff, as well as other related business matters.
Senior financial management who report to and are overseen by Inmet's Audit
Committee are responsible for planning and implementing the conversion.
    In 2008, we completed an initial analysis of the differences between IFRS
and our current accounting policies under Canadian GAAP. We expect the most
significant effects of adopting IFRS will be on the carrying values of
property, plant and equipment, our accounting for joint venture interests
which currently includes our investment in Ok Tedi, future income taxes and
our accounting for business combinations.
    In 2009, we will develop our accounting policies under IFRS, calculate
all differences and document new internal controls. Our goal is to restate our
December 31, 2009 Canadian GAAP financial statements to IFRS in the first
quarter of 2010.

    Recently issued accounting pronouncement:

    Section 3064 - Goodwill and intangible assets

    This section establishes standards for recognizing, measuring, presenting
and disclosing goodwill after it has been recognized, as well as intangible
assets. It replaces Section 3062, Goodwill and Other Intangible Assets and
Section 3450, Research and Development Costs. It provides guidance for
recognizing internally developed intangible assets, and ensuring consistent
treatment of all intangible assets. It does not change the standards that
apply to goodwill.
    This section will apply beginning on January 1, 2009. The adoption of
this standard will not have an impact on our financial statements.

    
    Section 1582 - Business combinations

    This section establishes new standards for accounting for business
combinations and is the Canadian equivalent to IFRS 3 - Business combinations.
This section requires that:
    -   most identifiable assets, liabilities, non-controlling interests and
        goodwill acquired in a business combination be recorded at full fair
        value
    -   acquisition-related costs are recognized as expenses as incurred
    -   obligations for contingent consideration are measured and recognized
        at fair value at the acquisition date
    -   liabilities associated with restructuring or exit activities are
        recognized only if they meet the definition of a liability as of the
        acquisition date
    -   an acquisition date gain is reflected for a bargain purchase
    -   for step acquisitions, where control is obtained the acquirer
        re-measures its non-controlling equity investment in the acquiree at
        fair value as of the date control is obtained and recognizes any gain
        or loss in income.
    

    Section 1602 - Non-controlling interests

    This section provides guidance on accounting for non-controlling
interests (NCI) subsequent to a business combination and replicates the
provisions of International Accounting Standard (IAS) 27 - Consolidated and
separate financial statements. NCI in subsidiaries are presented in the
consolidated balance sheet with equity, separate from the parent shareholder's
equity. In the income statement, NCI is not deducted in arriving at
consolidated net income but is allocated to the controlling interest and the
NCI according to their percentage ownership. Losses are attributed to NCI even
if they exceed its carrying amount. Acquisitions or dispositions that do not
result in a change of control are accounted for as equity transactions.

    Section 1601 - Consolidated financial statements

    This section carries forward the consolidation guidance previously
included in its predecessor section 1600 except that it removes all guidance
on accounting for NCI that is replaced by that provided in section 1602, and
guidance already included in section 1582.
    Sections 1582, 1601 and 1602, are to be implemented concurrently. Section
1582 is effective for business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after January 1, 2011. Sections 1601 and 1602 are effective for fiscal years
beginning on or after January 1, 2011 with earlier adoption permitted as of
the beginning of a fiscal year. Section 1602 is to be applied retrospectively,
with certain exceptions. We are currently assessing the impact these changes
in accounting policies will have on our consolidated financial statements.

    Supplementary financial information

    Pages 34 and 35 include supplementary financial information on cash
costs. These measures do not fall into the category of generally accepted
accounting principles.
    We use unit cash cost information as a key performance indicator, both on
a segmented and consolidated basis. We have included cash costs as
supplementary information because we believe our key stakeholders use these
measures as a financial indicator of our profitability and cash flows before
the effects of capital investment and financing costs, such as interest.
    Since cash costs are not recognized measures under Canadian generally
accepted accounting principles they should not be considered in isolation of
earnings or cash flows. There is also no standard way to calculate cash costs,
so they are not a reliable way to compare us to other companies.

    About Inmet

    Inmet is a Canadian-based global mining company that produces copper,
zinc and gold. We have interests in four mining operations in locations around
the world: Cayeli, Pyhasalmi, Troilus and Ok Tedi. We also have interests in
two development properties, Las Cruces and Petaquilla.
    This press release is also available at www.inmetmining.com

    
    Fourth quarter conference call

    Will be held on
    -   Wednesday, February 11, 2009
    -   8:30 a.m. Eastern Time
    -   webcast available at
    www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2515700 or
    www.inmetmining.com.

    You can also dial in by calling
    -   Local or international: +1.416.644.3415
    -   Toll-free within North America: +1.800.731.6941

    Starting 10:30 a.m. (ET) Wednesday February 11, 2009, conference call
replay will be available
    -   Local or international: +1.416.640.1917 passcode 21294126No.
    -   Toll-free within North America: +1.877.289.8525 passcode 21294126
        followed by the number sign.



    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs
    2008 For the year ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars)

    Direct production costs    $1.07      $1.92    $1.32     $1.32      $550
    Royalties and variable
     compensation               0.10          -     0.07      0.07         -
    Smelter processing
     charges and freight        1.13       1.10     0.49      0.88        70
    Metal credits              (1.55)     (3.33)   (1.25)    (1.75)     (203)
                            --------------------------------------- ---------

    Cash cost                  $0.75     ($0.31)   $0.63     $0.52      $417
                            --------------------------------------- ---------
                            --------------------------------------- ---------


    2007 For the year ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars)

    Direct production costs    $1.01      $1.58    $1.09     $1.14      $522
    Royalties and variable
     compensation               0.13          -     0.05      0.08         -
    Smelter processing
     charges and freight        1.18       1.64     0.53      1.00        52
    Metal credits              (1.97)     (4.63)   (0.90)    (2.02)     (153)
                            --------------------------------------- ---------

    Cash cost                  $0.35     ($1.41)   $0.77     $0.20      $421
                            --------------------------------------- ---------
                            --------------------------------------- ---------

    -------------------------------------------------------------------------


    Reconciliation of cash costs to statements of earnings
    2008 For the year ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise noted)         CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 14    page 16  page 20             page 18

    Direct production costs      $90        $60      $93      $243       $89
    Smelter processing
     charges and freight          78         57       33       168        12
    By product sales            (111)      (127)     (84)     (322)      (33)
    Adjust smelter processing
     and freight, and sales
     to production basis           1          -        1         2        (1)
                            --------------------------------------- ---------
    Operating costs net
     of metal credits            $58       ($10)     $43       $91       $67
    US $ to C$ exchange rate   $1.07      $1.07    $1.07     $1.07     $1.07
    Inmet's share of
     production (000's)       72,100     29,300   63,400   164,800   151,300
                            --------------------------------------- ---------
    Cash cost                  $0.75     ($0.31)   $0.63     $0.52      $417
                            --------------------------------------- ---------
                            --------------------------------------- ---------

    2007 For the year ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise noted)         CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 14    page 16  page 20             page 18

    Direct production costs      $87        $50      $81      $218       $78
    Smelter processing
     charges and freight          95         62       41       198         8
    By product sales            (165)      (155)     (68)     (388)      (23)
    Adjust smelter processing
     and freight, and sales
     to production basis           9         (2)       1         8         -
                            --------------------------------------- ---------
    Operating costs net
     of metal credits            $26       ($45)     $55       $36       $63
    US $ to C$ exchange rate   $1.07      $1.07    $1.07     $1.07     $1.07
    Inmet's share of
     production (000's)       72,000     30,000   67,000   169,000   138,400
                            --------------------------------------- ---------
    Cash cost                  $0.35     ($1.41)   $0.77     $0.20      $421
                            --------------------------------------- ---------
                            --------------------------------------- ---------



    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs
    2008 For the three months ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars)

    Direct production costs    $0.98      $1.73    $1.41     $1.28      $466
    Royalties and variable
     compensation              (0.07)         -        -     (0.03)        -
    Smelter processing
     charges and freight        0.88       0.82     0.33      0.66        80
    Metal credits              (1.18)     (2.46)   (1.18)    (1.41)      (86)
                            --------------------------------------- ---------

    Cash cost                  $0.61      $0.09    $0.56     $0.50      $460
                            --------------------------------------- ---------
                            --------------------------------------- ---------


    2007 For the three months ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                              CAYELI  PYHASALMI  OK TEDI     TOTAL   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars per pound)

    Direct production costs    $1.10      $1.95    $1.10     $1.23      $640
    Royalties and variable
     compensation               0.07          -     0.03      0.04         -
    Smelter processing
     charges and freight        1.09       1.77     0.43      0.92        51
    Metal credits              (1.64)     (5.05)   (0.99)    (1.90)     (139)
                            --------------------------------------- ---------

    Cash cost                  $0.62     ($1.33)   $0.57     $0.29      $552
                            --------------------------------------- ---------
                            --------------------------------------- ---------

    -------------------------------------------------------------------------



    Reconciliation of cash costs to statements of earnings
    2008 For the three months ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise note)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 14    page 16  page 20             page 18

    Direct production costs      $21        $16      $28       $65       $23
    Smelter processing
     charges and freight          13         10        6        29         4
    By product sales             (13)       (24)     (23)      (60)       (4)
    Adjust smelter processing
     and freight, and sales
     to production basis          (7)        (1)       -        (8)        -
                            --------------------------------------- ---------
    Operating costs net
     of metal credits            $14         $1      $11       $26       $23
    US $ to C$ exchange rate   $1.21      $1.21    $1.21     $1.21     $1.21
    Inmet's share of
     production (000's)       18,400      7,400   16,100    41,900    40,500
                            --------------------------------------- ---------
    Cash cost                  $0.61      $0.09    $0.56     $0.50      $460
                            --------------------------------------- ---------
                            --------------------------------------- ---------

    2007 For the three months ended December 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise note)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 14    page 16  page 20             page 18

    Direct production costs      $24        $13      $21       $58       $21
    Smelter processing
     charges and freight          20         16        7        43         2
    By product sales             (26)       (38)     (17)      (81)       (5)
    Adjust smelter processing
     and freight, and sales
     to production basis          (6)         -        -        (6)        -
                            --------------------------------------- ---------
    Operating costs net
     of metal credits            $12        ($9)     $11       $14       $18
    US $ to C$ exchange rate   $0.98      $0.98    $0.98     $0.98     $0.98
    Inmet's share of
     production (000's)       20,000      7,200   19,200    46,400    33,700
                            --------------------------------------- ---------
    Cash cost                  $0.62     ($1.33)   $0.57     $0.29      $552
                            --------------------------------------- ---------
                            --------------------------------------- ---------


    Quarterly review

    INMET MINING CORPORATION
    Quarterly review
    (unaudited)

    Latest Four Quarters
    -------------------------------------------------------------------------
                                       2008       2008       2008       2008
    (thousands of Canadian dollars,  Fourth      Third     Second      First
    except per share amounts)       quarter    quarter    quarter    quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS
    Gross sales                    $139,626   $247,495   $281,463   $276,281
    Smelter processing charges
     and freight                    (32,870)   (49,502)   (53,209)   (44,157)
    Cost of sales                   (91,715)   (84,948)   (89,893)   (79,246)
    Depreciation                    (14,844)   (11,395)    (9,195)    (9,170)
                                  -------------------------------------------
                                        197    101,650    129,166    143,708
    Corporate development and
     exploration                     (1,971)    (3,548)    (2,483)    (2,618)
    General and administration       (3,289)    (3,411)    (2,790)    (3,648)
    Investment and other income
     (expense)                        8,057     (5,467)   (11,358)    14,754
    Asset impairment                (36,275)         -          -          -
    Interest expense                   (490)      (476)      (471)      (447)
    Capital tax expense              (1,304)      (125)      (124)      (126)
    Income tax recovery (expense)       767    (17,379)   (44,333)   (44,744)
    Non-controlling interest          1,794      3,813         98       (205)
                                  -------------------------------------------
    Net income (loss)              ($32,514)   $75,057    $67,705   $106,674
                                  -------------------------------------------
    Net income (loss) per
     common share                    ($0.67)     $1.55      $1.40      $2.21
                                  -------------------------------------------
    Diluted net income (loss)
     per common share                ($0.67)     $1.55      $1.40      $2.21
                                  -------------------------------------------


    Previous Four Quarters
    -------------------------------------------------------------------------
                                       2007       2007       2007       2007
    (thousands of Canadian dollars,  Fourth      Third     Second      First
     except per share amounts)      quarter    quarter    quarter    quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS
    Gross sales                    $224,773   $272,293   $320,018   $286,614
    Smelter processing charges
     and freight                    (43,902)   (42,557)   (55,413)   (64,606)
    Cost of sales                   (78,809)   (72,057)   (78,181)   (79,377)
    Depreciation                     (9,480)    (8,739)    (8,039)    (9,415)
                                  -------------------------------------------
                                     92,582    148,940    178,385    133,216
    Corporate development and
     exploration                     (3,510)    (2,475)    (2,086)    (1,012)
    General and administration      (12,622)    (2,674)    (2,162)    (2,840)
    Investment and other income       5,968      9,224     13,665      7,597
    Interest expense                   (407)      (424)      (424)      (438)
    Capital tax (expense)
     recovery                           212       (273)      (274)      (274)
    Income tax expense              (18,551)   (37,649)   (48,509)   (35,376)
    Non-controlling interest            (27)       167       (545)       205
                                  -------------------------------------------
    Net income                      $63,645   $114,836   $138,050   $101,078
                                  -------------------------------------------
    Net income per common share       $1.32      $2.38      $2.86      $2.09
                                  -------------------------------------------
    Diluted net income per common
     share                            $1.32      $2.37      $2.86      $2.09
                                  -------------------------------------------



    Consolidated Financial Statements
    INMET MINING CORPORATION
    Consolidated balance sheets

                                                   December 31   December 31
    (thousands of Canadian dollars)                       2008          2007
    -------------------------------------------------------------------------
                                                    (unaudited)
    Assets

    Current assets:
      Cash and short-term investments (note 6)        $572,733      $840,823
      Restricted cash (note 7)                           8,311         1,569
      Accounts receivable (note 8)                     135,742       131,197
      Inventories (note 2)                              74,362        52,725
      Future income tax asset                           14,311        14,515
                                                    -------------------------
                                                       805,459     1,040,829

    Restricted cash (note 7)                            52,893        37,205
    Property, plant and equipment                    1,950,535       870,965
    Investments (note 9)                                17,514        32,266
    Future income tax asset                              5,499         7,884
    Derivatives (note 10)                                4,327        33,565
    Other assets                                         5,031        25,751
                                                    -------------------------
                                                    $2,841,258    $2,048,465
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities:
      Accounts payable and accrued liabilities
       (note 11)                                      $212,527      $172,800
      Derivatives                                        8,693             -
      Current portion of long-term debt                109,666        12,971
                                                    -------------------------
                                                       330,886       185,771

    Long-term debt (note 12)                           384,848       234,317
    Asset retirement obligations (note 13)             126,782        84,017
    Derivatives (note 10)                               16,417        43,960
    Other liabilities                                   27,122        19,249
    Future income tax liabilities                       15,971        37,084
    Non-controlling interest                            71,449        51,574
                                                    -------------------------
                                                       973,475       655,972
                                                    -------------------------
    Commitments (note 14)

    Shareholders' equity

    Share capital                                      337,464       337,464
    Contributed surplus                                 61,925        60,722
    Stock based compensation                             2,688         1,085
    Retained earnings                                1,283,074     1,076,958
    Accumulated other comprehensive income
     (loss) (note 15)                                  182,632       (83,736)
                                                    -------------------------
                                                     1,867,783     1,392,493
                                                    -------------------------
                                                    $2,841,258    $2,048,465
    -------------------------------------------------------------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented balance sheets


    2008 As at December 31
    (unaudited)                CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of Canadian                   (Turkey)   (Finland)    (Canada)
     dollars)

    Assets

    Cash and short-term
     investments                $241,238    $192,881     $65,976  $        -
    Other current assets          15,992      43,946      39,428      22,595
    Restricted cash               16,343           -       2,104           -
    Property, plant and
     equipment                       916     144,124      74,790      27,659
    Investments                   17,514           -           -           -
    Derivatives                        -           -           -           -
    Other assets                   3,183         454           -       1,825
                              -----------------------------------------------
                                $295,186    $381,405    $182,298     $52,079
                              -----------------------------------------------

    Liabilities

    Current liabilities          $15,983     $52,112     $11,537     $11,029
    Long-term debt                19,741           -           -           -
    Asset retirement
     obligations                  23,501       9,654      16,307      12,626
    Derivatives                        -           -           -           -
    Other liabilities              4,911       5,374           -       1,484
    Future income tax
     liabilities                   1,026       5,509       9,215           -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------
                                 $65,162     $72,649     $37,059     $25,139
                              -----------------------------------------------


    2008 As at December 31
    (unaudited)                  OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
    ------------------------------------------------------------- -----------
    (thousands of Canadian    (Papua New      (Spain)    (Panama)
     dollars)                     Guinea)

    Assets

    Cash and short-term
     investments                 $37,547     $33,981      $1,110    $572,733
    Other current assets          43,148      66,774         843     232,726
    Restricted cash               16,667      17,779           -      52,893
    Property, plant and
     equipment                   105,145   1,065,435     532,466   1,950,535
    Investments                        -           -           -      17,514
    Derivatives                    4,327           -           -       4,327
    Other assets                   2,712       2,356           -      10,530
                              ----------------------------------- -----------
                                $209,546  $1,186,325    $534,419  $2,841,258
                              ----------------------------------- -----------

    Liabilities

    Current liabilities          $45,711    $182,535     $11,979    $330,886
    Long-term debt                     -     365,107           -     384,848
    Asset retirement
     obligations                  25,016      39,678           -     126,782
    Derivatives                    1,670      14,747           -      16,417
    Other liabilities              2,232      13,121           -      27,122
    Future income tax
     liabilities                       -         221           -      15,971
    Non-controlling interest           -      71,449           -      71,449
                              ----------------------------------- -----------
                                 $74,629    $686,858     $11,979    $973,475
                              ----------------------------------- -----------


    2007 As at December 31
                                CORPORATE     CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of Canadian                   (Turkey)   (Finland)    (Canada)
     dollars)

    Assets

    Cash and short-term
     investments                $359,359    $333,671    $111,492  $        -
    Other current assets          23,455      29,384      55,069      23,644
    Restricted cash               14,444           -           -           -
    Property, plant and
     equipment                       629     115,064      63,147      28,413
    Investments                   32,266           -           -           -
    Derivatives                        -           -           -           -
    Other assets                   5,618         441           -       6,289
                              -----------------------------------------------
                                $435,771    $478,560    $229,708     $58,346
                              -----------------------------------------------

    Liabilities

    Current liabilities          $16,948     $39,161     $14,560     $11,972
    Long-term debt                16,267           -           -           -
    Asset retirement
     obligations                  24,393       3,169      13,104       7,662
    Derivatives                        -           -           -      26,889
    Other liabilities              5,057       4,787           -           -
    Future income tax
     liabilities                       -      17,723      27,122       7,393
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------
                                 $62,665     $64,840     $35,057     $46,523
                              -----------------------------------------------


    2007 As at December 31
                                 OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
    ------------------------------------------------------------- -----------
    (thousands of Canadian    (Papua New      (Spain)    (Panama)
     dollars)                     Guinea)

    Assets

    Cash and short-term
     investments                 $13,473     $22,828  $        -    $840,823
    Other current assets          38,162      30,292           -     200,006
    Restricted cash               11,836      10,925           -      37,205
    Property, plant and
     equipment                    63,655     600,057           -     870,965
    Investments                        -           -           -      32,266
    Derivatives                        -      33,565           -      33,565
    Other assets                   2,101       2,461      16,725      33,635
                              ----------------------------------- -----------
                                $129,227    $700,128     $16,725  $2,048,465
                              ----------------------------------- -----------

    Liabilities

    Current liabilities          $21,487     $81,643  $        -    $185,771
    Long-term debt                     -     218,050           -     234,317
    Asset retirement
     obligations                  19,708      15,981           -      84,017
    Derivatives                    9,034       8,037           -      43,960
    Other liabilities              1,412       7,993           -      19,249
    Future income tax
     liabilities                       -      11,968           -      37,084
    Non-controlling interest           -      51,574           -      51,574
                              ----------------------------------- -----------
                                 $51,641    $395,246  $        -    $655,972
                              ----------------------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of earnings
    (unaudited)


    (thousands of Canadian       Three Months Ended               Year Ended
     dollars except per share            December 31             December 31
     amounts)                       2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Gross sales                 $139,626    $224,773    $944,865  $1,103,698

    Smelter processing charges
     and freight                 (32,870)    (43,902)   (179,738)   (206,478)

    Cost of sales                (91,715)    (78,809)   (345,802)   (308,424)

    Depreciation                 (14,844)     (9,480)    (44,604)    (35,673)

    ------------------------------------------------- -----------------------
                                     197      92,582     374,721     553,123


    Corporate development
     and exploration              (1,971)     (3,510)    (10,620)     (9,083)

    General and administration    (3,289)    (12,622)    (13,138)    (20,298)

    Investment and other
     income (note 16)              8,057       5,968       5,986      36,454

    Asset impairment (note 19)   (36,275)          -     (36,275)          -

    Interest expense                (490)       (407)     (1,884)     (1,693)

    Capital tax expense           (1,304)        212      (1,679)       (609)

    Income tax recovery
     (expense) (note 17)             767     (18,551)   (105,689)   (140,085)

    Non-controlling interest       1,794         (27)      5,500        (200)

    ------------------------------------------------- -----------------------

    Net income (loss)           ($32,514)    $63,645    $216,922    $417,609
    ------------------------------------------------- -----------------------

    Basic net income (loss) per
     common share (note 18)       ($0.67)      $1.32       $4.49       $8.65
    ------------------------------------------------- -----------------------

    Diluted net income (loss)
     per common share (note 18)   ($0.67)      $1.32       $4.48       $8.64
    ------------------------------------------------- -----------------------

    Weighted average shares
     outstanding (000's)          48,282      48,282      48,282      48,279
    ------------------------------------------------- -----------------------
     (see accompanying notes)



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2008 For the year ended
     December 31               CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of Canadian                   (Turkey)   (Finland)    (Canada)
      dollars)

    Gross sales               $        -    $305,190    $221,124    $141,251
    Smelter processing
     charges and freight               -     (78,400)    (56,954)    (11,053)
    Cost of sales                 (1,951)    (92,859)    (62,245)    (94,631)
    Depreciation                       -     (11,448)     (9,227)     (9,239)
                              -----------------------------------------------
                                  (1,951)    122,483      92,698      26,328

    Corporate development and
     exploration                  (7,325)       (487)     (2,808)          -
    General and administration   (13,138)          -           -           -
    Investment and other
     income (expense)             23,490      (3,009)        603       5,444
    Asset impairment                   -     (34,200)          -      (2,075)
    Interest expense              (1,884)          -           -           -
    Capital tax expense           (1,679)          -           -           -
    Income tax (expense)
     recovery                    (14,930)    (32,216)    (19,814)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------
    Net income (loss)           ($17,417)    $52,571     $70,679     $29,697
                              -----------------------------------------------


    2008 For the year ended
     December 31                 OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
    ------------------------------------------------------------- -----------
    (thousands of Canadian    (Papua New      (Spain)    (Panama)
     dollars)                     Guinea)

    Gross sales                 $277,300  $        -  $        -    $944,865
    Smelter processing
     charges and freight         (33,331)          -           -    (179,738)
    Cost of sales                (94,116)          -           -    (345,802)
    Depreciation                 (14,690)          -           -     (44,604)
                              ----------------------------------- -----------
                                 135,163           -           -     374,721

    Corporate development and
     exploration                       -           -           -     (10,620)
    General and administration         -           -           -     (13,138)
    Investment and other
     income (expense)              6,780     (27,322)          -       5,986
    Asset impairment                               -           -     (36,275)
    Interest expense                   -           -           -      (1,884)
    Capital tax expense                -           -           -      (1,679)
    Income tax (expense)
     recovery                    (49,779)     11,050           -    (105,689)
    Non-controlling interest           -       5,500           -       5,500
                              ----------------------------------- -----------
    Net income (loss)            $92,164   ($10,772)  $        -    $216,922
                              ----------------------------------- -----------


    2007 For the year ended
     December 31               CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of Canadian                   (Turkey)   (Finland)    (Canada)
     dollars)

    Gross sales               $        -    $418,694    $260,246    $108,378
    Smelter processing
     charges and freight               -     (94,700)    (62,081)     (7,989)
    Cost of sales                 (1,953)    (91,245)    (51,144)    (80,441)
    Depreciation                       -      (8,857)     (8,439)    (10,120)
                              -----------------------------------------------
                                  (1,953)    223,892     138,582       9,828

    Corporate development
     and exploration              (5,590)     (1,686)     (2,077)        270
    General and administration   (20,298)          -           -           -
    Investment and other
     income (expense)             34,807      (2,004)          -       5,549
    Interest expense              (1,693)          -           -           -
    Capital tax expense             (609)          -           -           -
    Income tax (expense)
     recovery                      3,302     (46,445)    (30,911)
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------
    Net income                    $7,966    $173,757    $105,594     $15,647
                              -----------------------------------------------


    2007 For the year ended
     December 31                 OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
    ------------------------------------------------------------- -----------
    (thousands of Canadian    (Papua New      (Spain)    (Panama)
     dollars)                     Guinea)

    Gross sales                 $316,380  $        -  $        -  $1,103,698
    Smelter processing
     charges and freight         (41,708)          -           -    (206,478)
    Cost of sales                (83,641)          -           -    (308,424)
    Depreciation                  (8,257)          -           -     (35,673)
                              ----------------------------------- -----------
                                 182,774           -           -     553,123

    Corporate development
     and exploration                   -           -           -      (9,083)
    General and administration         -           -           -     (20,298)
    Investment and other
     income (expense)             (2,850)        952           -      36,454
    Interest expense                   -           -           -      (1,693)
    Capital tax expense                -           -           -        (609)
    Income tax (expense)
     recovery                    (65,745)       (286)          -    (140,085)
    Non-controlling interest           -        (200)          -        (200)
                              ----------------------------------- -----------
    Net income                  $114,179        $466  $        -    $417,609
                              ----------------------------------- -----------



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2008 For the three months ended December 31

                               CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------

    (thousands of
     Canadian dollars)                       (Turkey)   (Finland)    (Canada)

    Gross sales               $        -  $   27,481  $   37,273  $   36,391
    Smelter processing
     charges and freight               -     (13,279)     (9,615)     (3,904)
    Cost of sales                   (487)    (19,490)    (17,344)    (25,838)
    Depreciation                       -      (3,150)     (2,502)     (2,954)
                              -----------------------------------------------
                                    (487)     (8,438)      7,812       3,695

    Corporate development
     and exploration                (818)       (209)     (1,007)         63
    General and administration    (3,289)          -           -           -
    Investment and other
     income (expense)             15,007      (5,149)        831       1,361
    Asset impairment                   -     (34,200)          -      (2,075)
    Interest expense                (490)          -           -           -
    Capital tax expense           (1,304)          -           -           -
    Income tax (expense)
     recovery                     (6,870)      1,991        (948)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------

    Net income (loss)              1,749    ($46,005)     $6,688      $3,044
                              -----------------------------------------------


    2008 For the three months ended December 31

                                 OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
    ------------------------------------------------------------- -----------

    (thousands of             (Papua New
     Canadian dollars)            Guinea)     (Spain)    (Panama)

    Gross sales               $   38,481  $        -   $       -  $  139,626
    Smelter processing
     charges and freight          (6,072)          -           -     (32,870)
    Cost of sales                (28,556)          -           -     (91,715)
    Depreciation                  (6,238)          -           -     (14,844)
                              ----------------------------------- -----------
                                  (2,385)          -           -         197

    Corporate development
     and exploration                   -           -           -      (1,971)
    General and administration         -           -           -      (3,289)
    Investment and other
     income (expense)              6,539     (10,532)          -       8,057
    Asset impairment                   -           -           -     (36,275)
    Interest expense                   -           -           -        (490)
    Capital tax expense                -           -           -      (1,304)
    Income tax (expense)
     recovery                        545       6,049           -         767
    Non-controlling interest           -       1,794           -       1,794
                              ----------------------------------- -----------

    Net income (loss)         $    4,699     ($2,689) $        -    ($32,514)
                              ----------------------------------- -----------


    2007 For the three months ended December 31

                               CORPORATE      CAYELI   PYHASALMI     TROILUS
                             ------------------------------------------------

    (thousands of Canadian
     dollars)                                (Turkey)   (Finland)    (Canada)

    Gross sales               $        -  $   81,088  $   58,672  $   27,317
    Smelter processing
     charges and freight               -     (19,756)    (15,384)     (1,798)
    Cost of sales                   (491)    (22,559)    (13,258)    (22,554)
    Depreciation                       -      (2,635)     (1,881)     (2,620)
                             ------------------------------------------------
                                    (491)     36,138      28,149         345

    Corporate development
     and exploration               (2,438)      (526)       (506)        (40)
    General and
     administration               (12,622)         -           -           -
    Investment and other
     income (expense)               6,447       (587)          -       1,361
    Interest expense                 (407)         -           -           -
    Capital tax expense               212          -           -           -
    Income tax (expense)
     recovery                       4,459     (5,956)     (6,200)          -
    Non-controlling interest            -          -           -           -
                             ------------------------------------------------

    Net income (loss)             ($4,840) $   29,069  $   21,443  $    1,666
                             ------------------------------------------------


                                 OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
                             ------------------------------------ -----------

    (thousands of Canadian    (Papua New
     dollars)                     Guinea)     (Spain)    (Panama)

    Gross sales               $   57,696  $        -  $        -  $  224,773
    Smelter processing
     charges and freight          (6,964)          -           -     (43,902)
    Cost of sales                (19,947)          -           -     (78,809)
    Depreciation                  (2,344)          -           -      (9,480)
                             ------------------------------------ -----------
                                  28,441           -           -      92,582

    Corporate development
     and exploration                   -           -           -      (3,510)
    General and
     administration                    -           -           -     (12,622)
    Investment and other
     income (expense)             (1,358)        105           -       5,968
    Interest expense                   -           -           -        (407)
    Capital tax expense                -           -           -         212
    Income tax (expense)
     recovery                    (10,822)        (32)          -     (18,551)
    Non-controlling interest           -         (27)          -         (27)
                             ------------------------------------ -----------

                              $   16,261  $       46  $        -  $   63,645
                             ------------------------------------ -----------




    INMET MINING CORPORATION
    Consolidated statements of cash flows
    (unaudited)
                                  Three Months Ended              Year Ended
    (thousands of Canadian               December 31             December 31
     dollars)                       2008        2007        2008        2007
    -------------------------------------------------------------------------

    Cash provided by (used in)
     operating activities (1)

    Net income                  ($32,514)    $63,645    $216,922    $417,609
    Add (deduct) items not
     affecting cash:
      Gain on disposition of
       investments                     -           -        (256)    (11,730)
      Depreciation                14,844       9,480      44,604      35,673
      Future income tax           (4,050)     (4,217)     (5,980)     (5,724)
      Accretion expense on
       asset retirement
       obligations                 1,131         899       4,360       3,609
      Non-controlling interest    (1,794)         27      (5,500)        200
      Asset impairment
       (note 19)                  34,428           -      34,428           -
      Foreign exchange loss        5,541       4,657      35,688      10,491
      Other                         (877)      2,796       4,292       1,982
    Settlement of gold
     forward contracts
     (note 10)                         -           -     (12,399)          -
    Reclamation costs             (1,330)     (1,460)     (2,792)     (3,410)
    Net change in non-cash
     working capital (note 5)     15,613         498      11,138     (21,349)
                             ------------------------------------------------
                                  30,992      76,325     324,505     427,351
                             ------------------------------------------------

    Cash provided by (used in)
     investing activities

    Acquisition of Petaquilla
     Copper, net of cash
     acquired (note 4)           (42,863)          -    (379,774)          -
    Capital spending            (102,976)   (149,097)   (422,676)   (376,569)
    Working capital changes
     associated with capital
     spending                    (31,003)     55,208     (38,116)     30,677
    Loans to other Petaquilla
     shareholders                      -           -     (13,234)          -
    Investment in Petaquilla
     prior to consolidation            -           -     (12,167)          -
    Disposition of investments         -           -       1,521      50,170
    Sale (purchase) of
     short-term investments       78,405     (29,363)    282,644     (64,949)
    Other                              -           -           -         (43)
                             ------------------------------------------------
                                 (98,437)   (123,252)   (581,802)   (360,714)
                             ------------------------------------------------

    Cash provided by (used in)
     financing activities

    Long-term debt:
      Borrowings (note 12)        22,199      23,599     128,439      97,537
      Repayment (note 12)              -           -     (13,871)     (8,604)
    Funding by non-controlling
     shareholder                  25,450      16,277      61,638      55,805
    Settlement of foreign
     currency forward contract
     (note 10)                         -           -      52,256           -
    Financial assurance deposits  1,101        8,487     (14,215)     (4,164)
    Dividends paid on common
     shares                      (4,828)      (4,828)     (9,656)     (9,656)
    Other                          (746)      (4,588)      2,349      (8,672)
                             ------------------------------------------------
                                 43,176       38,947     206,940     122,246
                             ------------------------------------------------

    Cash assumed on
     consolidation of
     Petaquilla                       -            -       4,414           -
                             ------------------------------------------------

    Foreign exchange change
     on cash held in foreign
     currency                     36,911       5,602      60,497     (50,988)
                             ------------------------------------------------

    Increase (decrease) in
     cash                         12,642      (2,378)     14,554     137,895

    Cash:
      Beginning of period        524,417     524,883     522,505     384,610
                             ------------------------------------------------
      End of period              537,059     522,505     537,059     522,505

    Short-term investments        35,674     318,318      35,674     318,318
                             ------------------------------------------------

    Cash and short-term
     investments                $572,733    $840,823    $572,733    $840,823
    -------------------------------------------------------------------------
    (see accompanying notes)

    (1) Supplementary cash
        flow information:
          Cash interest paid      $8,782      $1,557     $18,562      $7,119
          Cash taxes paid        $19,945     $58,076    $143,357    $173,645
    -------------------------------------------------------------------------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2008 For the year ended December 31

                               CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                       (Turkey)   (Finland)    (Canada)

    Cash provided by (used in)
     operating activities
      Before net change
       in non-cash
       working capital           ($6,881) $   94,440  $   82,801  $   41,456
      Net change in
       non-cash working
       capital                    (8,398)    (11,988)     16,856        (635)
                            -------------------------------------------------
                                ($15,279)     82,452      99,657      40,821
                            -------------------------------------------------

    Cash provided by
     (used in) investing
     activities
      Acquisition of
       Petaquilla Copper,
       net of cash acquired     (379,774)          -           -           -
      Capital spending              (361)    (37,632)     (9,772)     (1,510)
      Working capital changes
       associated with
       capital spending                -           -           -           -
      Disposition of
       investments                 1,521           -           -           -
      Sale of short-term
       investments               282,644           -           -           -
      Loans to Petaquilla
       shareholders              (13,234)          -           -           -
      Investment in
       Petaquilla prior to
       consolidation             (12,167)          -           -           -
                            -------------------------------------------------
                                (121,371)    (37,632)     (9,772)     (1,510)
                            -------------------------------------------------

    Cash provided by
     (used in) financing
     activities                  (10,287)          -      (1,932)       (700)
                            -------------------------------------------------

    Cash assumed on
     consolidation of
     Petaquilla                        -           -           -           -
                            -------------------------------------------------

      Foreign exchange
       change on cash
       held in foreign
       currency                        -      37,298      13,018           -
                            -------------------------------------------------

    Intergroup funding
     (distributions)             311,460    (222,908)   (146,487)    (38,611)
                            -------------------------------------------------

    Increase (decrease)
     in cash                     164,523    (140,790)    (45,516)          -
                            -------------------------------------------------
    Cash:
      Beginning of period         41,041     333,671     111,492           -
                            -------------------------------------------------
      End of period              205,564     192,881      65,976           -
    Short-term investments        35,674           -           -           -
                            -------------------------------------------------

    Cash and short-term
     investments             $   241,238  $  192,881  $   65,976  $        -
                            -------------------------------------------------



    2008 For the year ended December 31

                                                 LAS
                                 OK TEDI      CRUCES  PETAQUILLA       TOTAL
                            ------------------------------------- -----------

    (thousands of             (Papua New
     Canadian dollars)            Guinea)     (Spain)    (Panama)


    Cash provided by (used in)
     operating activities
      Before net change
       in non-cash
       working capital      $    101,551           -  $        -  $  313,367
      Net change in
       non-cash working
       capital                    15,303           -           -      11,138
                            ------------------------------------- -----------
                                 116,854           -           -     324,505
                            ------------------------------------- -----------

    Cash provided by (used in)
     investing activities
      Acquisition of
       Petaquilla Copper,
       net of cash acquired            -           -           -    (379,774)
      Capital spending           (38,357)   (318,019)    (17,025)   (422,676)
      Working capital changes
       associated with
       capital spending                -     (38,116)          -     (38,116)
      Disposition of
       investments                     -           -           -       1,521
      Sale of short-term
       investments                     -           -           -     282,644
      Loans to Petaquilla
       shareholders                    -           -           -     (13,234)
      Investment in
       Petaquilla prior to
       consolidation                   -           -           -     (12,167)
                            ------------------------------------- -----------
                                 (38,357)   (356,135)    (17,025)   (581,802)
                            ------------------------------------- -----------

    Cash provided by
     (used in) financing
     activities                   (1,317)    221,176           -     206,940
                            ------------------------------------- -----------

    Cash assumed on
     consolidation of
     Petaquilla                        -           -       4,414       4,414
                            ------------------------------------- -----------

      Foreign exchange
       change on cash
       held in foreign
       currency                    6,387       4,668        (874)     60,497
                            ------------------------------------- -----------

    Intergroup funding
     (distributions)             (59,493)    141,444      14,595           -
                            ------------------------------------- -----------

    Increase (decrease)
     in cash                      24,074      11,153       1,110      14,554
    Cash:
      Beginning of period         13,473      22,828           -     522,505
                            ------------------------------------- -----------
      End of period               37,547      33,981       1,110     537,059
    Short-term investments             -           -           -      35,674
                            ------------------------------------- -----------

    Cash and short-term
     investments             $    37,547  $   33,981  $    1,110  $  572,733
                            ------------------------------------- -----------



    2007 For the year ended December 31

                               CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                       (Turkey)   (Finland)    (Canada)


    Cash provided by
     (used in) operating
     activities
      Before net change in
       non-cash working
       capital                   ($1,583) $  191,754  $  114,982  $   19,584
      Net change in
       non-cash working
       capital                    (7,210)     22,773      (6,470)     (4,935)
                            -------------------------------------------------
                                  (8,793)    214,527     108,512      14,649
                            -------------------------------------------------
    Cash provided by
     (used in) investing
     activities
      Capital spending              (191)    (26,073)     (3,451)     (1,742)
      Working capital
       changes associated
       with capital spending           -           -           -           -
      Disposition of
       investments                50,170           -           -           -
      Sale (purchase) of
       short-term
       investments               (90,940)     16,113           -           -
      Other                            -           -           -         (43)
                            -------------------------------------------------
                                 (40,961)     (9,960)     (3,451)     (1,785)
                            -------------------------------------------------

    Cash provided by
     (used in) financing
     activities                  (14,472)          -           -      (4,000)
                            -------------------------------------------------

      Foreign exchange
       change on cash held
       in foreign currency             -     (40,362)     (4,405)          -

    Intergroup funding
     (distributions)              65,368      10,271    (108,424)     (8,864)
                            -------------------------------------------------

    Increase (decrease)
     in cash                       1,142     174,476      (7,768)          -
    Cash:
      Beginning of period         39,899     159,195     119,260           -
                            -------------------------------------------------
      End of period               41,041     333,671     111,492           -
    Short-term investments       318,318           -           -           -
                            -------------------------------------------------

    Cash and short-term
     investments             $   359,359  $  333,671  $  111,492  $        -
                            -------------------------------------------------


    2007 For the year ended December 31

                                                 LAS
                                 OK TEDI      CRUCES  PETAQUILLA       TOTAL
                            -------------------------------------- ----------

    (thousands of             (Papua New
     Canadian dollars)            Guinea)     (Spain)    (Panama)


    Cash provided by
     (used in) operating
     activities
      Before net change in
       non-cash working
       capital               $   123,963  $        -  $        -  $  448,700
      Net change in
       non-cash working
       capital                   (25,507)          -           -     (21,349)
                            ------------------------------------- -----------
                                  98,456           -           -     427,351
                            ------------------------------------- -----------
    Cash provided by
     (used in) investing
     activities
      Capital spending           (31,527)   (313,585)          -    (376,569)
      Working capital
       changes associated
       with capital spending           -      30,677           -      30,677
      Disposition of
       investments                     -           -           -      50,170
      Sale (purchase) of
       short-term
       investments                 9,878           -           -     (64,949)
      Other                            -           -           -         (43)
                            ------------------------------------- -----------
                                 (21,649)   (282,908)          -    (360,714)
                            -------------------------------------------------

    Cash provided by
     (used in) financing
     activities                   (1,609)    142,327           -     122,246
                            ------------------------------------- -----------

      Foreign exchange
       change on cash held
       in foreign currency        (7,375)      1,154           -     (50,988)
                            ------------------------------------- -----------

    Intergroup funding
     (distributions)             (88,322)    129,971           -           -
                            ------------------------------------- -----------

    Increase (decrease)
     in cash                     (20,499)     (9,456)          -     137,895
    Cash:
      Beginning of period         33,972      32,284           -     384,610
                            ------------------------------------- -----------
      End of period               13,473      22,828           -     522,505
    Short-term investments             -           -           -     318,318
                            ------------------------------------- -----------

    Cash and short-term
     investments             $    13,473  $   22,828  $        -  $  840,823
                            ------------------------------------- -----------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2008 For the three months ended December 31

                               CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of Canadian
     dollars)                                (Turkey)   (Finland)    (Canada)

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                   ($6,322)    ($8,736) $   10,269  $   16,174
      Net change in non-cash
       working capital            (6,977)      1,543      10,795       3,488
                              -----------------------------------------------
                                 (13,299)     (7,193)     21,064      19,662
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Acquisition of
       Petaquilla Copper, net
       of cash acquired          (42,863)          -           -           -
      Capital spending                 7      (6,687)     (3,924)       (153)
      Working capital changes
       associated with capital
       spending                        -           -           -           -
      Purchase of short-term
       investments                78,405           -           -           -
      Loans to Petaquilla
       shareholders                    -           -           -           -
      Investment in Petaquilla
       prior to consolidation          -           -           -           -
                              -----------------------------------------------
                                  35,549      (6,687)     (3,924)       (153)
                              -----------------------------------------------

    Cash provided by (used in)
     financing activities         (3,591)          -         (74)       (700)
                              -----------------------------------------------

      Foreign exchange change
       on cash held in foreign
       currency                        -      20,553       9,432           -
                              -----------------------------------------------

    Intergroup funding
     (distributions)               8,323      (1,366)    (37,627)    (18,809)
                              -----------------------------------------------

    Increase (decrease) in
     cash                         26,982       5,307     (11,129)          -
    Cash:
      Beginning of period        178,582     187,574      77,105           -
                              -----------------------------------------------
      End of period              205,564     192,881      65,976           -
    Short-term investments        35,674           -          -            -
                              -----------------------------------------------

    Cash and short-term
     investments              $  241,238  $  192,881  $   65,976  $        -
                              -----------------------------------------------


                                 OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
    ------------------------------------------------------------- -----------
    (thousands of Canadian    (Papua New
     dollars)                     Guinea)     (Spain)    (Panama)

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                $    3,994           -  $        -  $   15,379
      Net change in non-cash
       working capital             6,764           -           -      15,613
                              ----------------------------------- -----------
                                  10,758           -           -      30,992
                              ----------------------------------- -----------
    Cash provided by (used in)
     investing activities
      Acquisition of
       Petaquilla Copper, net
       of cash acquired                -           -           -     (42,863)
                              ----------------------------------- -----------

      Capital spending           (11,704)    (63,490)    (17,025)   (102,976)
      Working capital changes
       associated with capital
       spending                        -     (31,003)          -     (31,003)
      Purchase of short-term
       investments                     -           -           -      78,405
      Loans to Petaquilla
       shareholders                    -           -           -           -
      Investment in Petaquilla
       prior to consolidation          -           -           -           -
                              ----------------------------------- -----------
                                 (11,704)    (94,493)    (17,025)    (98,437)
                              ----------------------------------- -----------

    Cash provided by (used in)
     financing activities            (59)     47,600           -      43,176
                              ----------------------------------- -----------

      Foreign exchange change
       on cash held in foreign
       currency                    3,911       3,889        (874)     36,911
                              ----------------------------------- -----------

    Intergroup funding
     (distributions)             (18,863)     53,747      14,595           -
                              ----------------------------------- -----------

    Increase (decrease) in
     cash                        (15,957)     10,743      (3,304)     12,642
    Cash:
      Beginning of period         53,504      23,238       4,414     524,417
                              ----------------------------------- -----------
      End of period               37,547      33,981       1,110     537,059
    Short-term investments             -           -          -       35,674
                              ----------------------------------- -----------

    Cash and short-term
     investments              $   37,547  $   33,981  $    1,110  $  572,733
                              ----------------------------------- -----------



    2007 For the three months ended December 31

                               CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                       (Turkey)   (Finland)    (Canada)

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                   ($7,167) $   33,684  $   23,976  $    3,260
      Net change in non-cash
       working capital               234      16,910     (19,143)      1,866
                              -----------------------------------------------
                                  (6,933)     50,594       4,833       5,126
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending               (46)     (5,814)     (1,380)       (285)
      Working capital changes
       associated with capital
       spending                        -           -           -           -
      Purchase of short-term
       investments               (28,617)       (462)          -           -
      Other                            -           -           -           -
                              -----------------------------------------------
                                 (28,663)     (6,276)     (1,380)       (285)
                              -----------------------------------------------
    Cash provided by (used in)
     financing activities         (8,000)          -           -      (1,000)
                              -----------------------------------------------
      Foreign exchange change
       on cash held in foreign
       currency                        -        (448)      2,863           -
                              -----------------------------------------------
    Intergroup funding
     (distributions)               2,312       4,068      (3,775)     (3,841)
                              -----------------------------------------------
    Increase (decrease) in
     cash                        (41,284)     47,938       2,541           -
    Cash:
      Beginning of period         82,325     285,733     108,951           -
                              -----------------------------------------------
      End of period               41,041     333,671     111,492           -
    Short-term investments       318,318           -           -           -
                              -----------------------------------------------
    Cash and short-term
     investments              $  359,359  $  333,671  $  111,492  $        -
                              -----------------------------------------------


    2007 For the three months ended December 31

                                 OK TEDI  LAS CRUCES  PETAQUILLA       TOTAL
    ------------------------------------------------------------- -----------
    (thousands of             (Papua New
     Canadian dollars)            Guinea)     (Spain)    (Panama)

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                $   22,074  $        -  $        -  $   75,827
      Net change in non-cash
       working capital               631           -           -         498
                              ----------------------------------- -----------
                                  22,705           -           -      76,325
                              ----------------------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending           (10,113)   (131,459)          -    (149,097)
      Working capital changes
       associated with capital
       spending                        -      55,208           -      55,208
      Purchase of short-term
       investments                  (284)          -           -     (29,363)
      Other                            -           -           -           -
                              ----------------------------------- -----------
                                 (10,397)    (76,251)          -    (123,252)
                              ----------------------------------- -----------
    Cash provided by (used in)
     financing activities             50      47,897           -      38,947
                              ----------------------------------- -----------
      Foreign exchange change
       on cash held in foreign
       currency                      973       2,214           -       5,602
                              ----------------------------------- -----------
    Intergroup funding
     (distributions)             (36,041)     37,277           -           -
                              ----------------------------------- -----------
    Increase (decrease) in
     cash                        (22,710)     11,137           -      (2,378)
    Cash:
      Beginning of period         36,183      11,691           -     524,883
                              ----------------------------------- -----------
      End of period               13,473      22,828           -     522,505
    Short-term investments             -           -           -     318,318
                              ----------------------------------- -----------
    Cash and short-term
     investments              $   13,473  $   22,828  $        -  $  840,823
                              ----------------------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of retained earnings
    (unaudited)

                                  Three Months Ended              Year Ended
    (thousands of Canadian               December 31             December 31
     dollars)                       2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Retained earnings,
     beginning of period, as
     previously reported      $1,320,416  $1,018,141  $1,076,958  $  669,005

    Adjustment for inventory
     (note 2)                          -           -      (1,150)          -
                              ----------------------- -----------------------
    Retained earnings,
     as adjusted               1,320,416   1,018,141   1,075,808     669,005

    Net income (loss)            (32,514)     63,645     216,922     417,609

    Dividends on common
     shares                       (4,828)     (4,828)     (9,656)     (9,656)
    ------------------------------------------------- -----------------------
    Retained earnings, end
     of period                $1,283,074  $1,076,958  $1,283,074  $1,076,958
    ------------------------------------------------- -----------------------
    (see accompanying notes)



    Consolidated statements of comprehensive income (loss)
    (unaudited)

                                  Three Months Ended              Year Ended
    (thousands of Canadian               December 31             December 31
     dollars)                       2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Net income (loss)           ($32,514) $   63,645  $  216,922  $  417,609
                              ----------------------- -----------------------

    Other comprehensive
     income (loss) for the
     period(1) :
      Changes in fair value
       of gold forward sales
       contracts                  (5,309)    (6,017)      (8,999)     (8,576)

      Changes in fair value
       of interest rate swap
       contracts                  (5,538)    (2,392)      (5,865)     (3,929)

      Changes in fair value
       of foreign exchange
       forward contracts              54      2,193        7,137       8,264

      Changes in fair value
       of investments             (6,260)     2,820      (10,936)     23,202

      Currency translation
       adjustments                195,945    10,907      236,401     (88,296)

    Reclassification to net
     income of gains/losses
     realized:
      Gain on sale of
       investments                     -           -        (256)    (11,730)

      Troilus gold hedges loss     7,440       4,872      31,812      15,689

      Amortization of deferred
       Troilus gold hedges        (1,361)          -      (5,444)          -

      Amortization of gains on
       foreign exchange
       forward contracts              43           -      (3,181)          -

      Ok Tedi gold hedges loss     5,723       3,595       6,736       3,595

      Foreign exchange gain
       (loss) on reduction of
       net investment in
       self-sustaining foreign
       operations (note 16)       (1,421)      2,083      18,963       5,394
                              ----------------------- -----------------------
                                 189,316      18,061     266,368     (56,387)
                              ----------------------- -----------------------

    Comprehensive income      $  156,802  $   81,706  $  483,290  $  361,222
    ------------------------------------------------- -----------------------
    (see accompanying notes)

    (1) Net of applicable income tax and non-controlling interest.



    INMET MINING CORPORATION

    Notes to the consolidated financial statements

    1.  Significant accounting policies

        Our interim consolidated financial statements do not include all of
        the disclosure required for annual financial statements under
        generally accepted accounting principles (GAAP), and they have not
        been reviewed by our external auditors. These statements do, however,
        follow the same accounting policies and methods of application used
        in our most recent annual consolidated financial statements, except
        for the differences explained in note 2. You should read our interim
        statements in conjunction with our annual statements, which you can
        find in our 2007 Annual Review.

    2.  Changes in accounting policies

        Section 3031 - Inventories

        Effective January 1, 2008, we adopted CICA Handbook section 3031 -
        Inventories on a prospective basis.

        This section requires inventory to be measured at the lower of cost
        or net realizable value. It also clarifies how to allocate fixed
        production overhead, and requires:

        -  consistent use of either first-in, first-out or weighted average
           to measure inventories
        -  insurance and capital spares be accounted for as property, plant
           and equipment
        -  any previous write-downs be reversed when the value of inventories
           increases. The amount of the reversal is limited to the amount of
           the original write-down.

        We are now expensing certain administrative and other costs as we
        incur them, rather than including them in the cost of inventory. We
        measure finished goods inventory and materials and supplies at the
        lower of weighted average cost or net realizable value.

        This change in policy had the following impact on our 2008
        consolidated financial statements:

        -  decreased opening 2008 inventory by $3.5 million
        -  increased opening 2008 property, plant and equipment by
           $1.8 million
        -  decreased opening 2008 future income tax liability by $0.6 million
        -  decreased opening 2008 retained earnings by $1.1 million

    3.  Recently issued accounting pronouncement

        Section 3064 - Goodwill and intangible assets

        This section establishes standards for the recognition, measurement,
        presentation and disclosure of goodwill subsequent to its initial
        recognition and of intangible assets. This section replaces Section
        3062, Goodwill and Other Intangible Assets and Section 3450, Research
        and Development Costs. Various changes have been made to other
        sections of the CICA Handbook for consistency purposes. It provides
        guidance for the recognition of internally developed intangible
        assets and ensuring consistent treatment of all intangible assets,
        whether separately acquired or internally developed. Standards
        concerning goodwill are unchanged from the standards included in the
        previous section. This section becomes effective for us beginning on
        January 1, 2009. The adoption of this standard will not have an
        impact on our financial statements.

        Section 1582 - Business combinations

        This section establishes new standards for accounting for business
        combinations and is the Canadian equivalent to IFRS 3 - Business
        combinations. This section requires that:
        -  most identifiable assets, liabilities, non-controlling interests
           and goodwill acquired in a business combination be recorded at
           full fair value
        -  acquisition-related costs are recognized as expenses as incurred
        -  obligations for contingent consideration are measured and
           recognized at fair value at the acquisition date
        -  liabilities associated with restructuring or exit activities are
           recognized only if they meet the definition of a liability as of
           the acquisition date
        -  an acquisition date gain is reflected for a bargain purchase
        -  for step acquisitions, where control is obtained the acquirer re-
           measures its non-controlling equity investment in the acquiree at
           fair value as of the date control is obtained and recognizes any
           gain or loss in income.

        Section 1602 - Non-controlling interests

        This section provides guidance on accounting for non-controlling
        interests (NCI) subsequent to a business combination and replicates
        the provisions of International Accounting Standard (IAS) 27 -
        Consolidated and separate financial statements. NCI in subsidiaries
        are presented in the consolidated balance sheet with equity, separate
        from the parent shareholder's equity. In the income statement, NCI is
        not deducted in arriving at consolidated net income but is allocated
        to the controlling interest and the NCI according to their percentage
        ownership. Losses are attributed to NCI even if they exceed its
        carrying amount. Acquisitions or dispositions that do not result in a
        change of control are accounted for as equity transactions.

        Section 1601 - Consolidated financial statements

        This section carries forward the consolidation guidance previously
        included in its predecessor section 1600 except that it removes all
        guidance on accounting for NCI that is replaced by that provided in
        section 1602, and guidance already included in section 1582.

        Sections 1582, 1601 and 1602, are to be implemented concurrently.
        Section 1582 is effective for business combinations for which the
        acquisition date is on or after the beginning of the first annual
        reporting period beginning on or after January 1, 2011. Sections 1601
        and 1602 are effective for fiscal years beginning on or after January
        1, 2011 with earlier adoption permitted as of the beginning of a
        fiscal year. Section 1602 is to be applied retrospectively, with
        certain exceptions. We are currently assessing the impact these
        changes in accounting policies will have on our consolidated
        financial statements.


    4.  Acquisition

        (a) Petaquilla Copper Ltd.

        In 2008 and through a wholly-owned subsidiary, we acquired all the
        outstanding common shares of Petaquilla Copper Ltd. ("PTC"), a
        Canadian junior mining company listed on the Toronto Stock Exchange.
        PTC's principal asset is a 26 percent interest in Minera Panama S.A.
        (MPSA), the Panamanian company that owns Petaquilla.

        We acquired 95 percent of PTC on September 19, 2008, and the
        remaining 5 percent on November 28, 2008 under a court approved plan
        of arrangement, paying a total of $378 million in cash or $2.20 per
        PTC common share for our interest.

        The table below shows the fair value of the assets we acquired and
        liabilities we assumed at the date of acquisition, based on the
        consideration paid.

        ---------------------------------------------------------------------
        (thousands of Canadian dollars)
        ---------------------------------------------------------------------
        Consideration:
        Cash paid                                                   $377,669
        Transaction costs                                             24,411
        ---------------------------------------------------------------------
        Cost of acquisition                                         $402,080
        ---------------------------------------------------------------------

        ---------------------------------------------------------------------
        Assets acquired:
        Cash                                                         $21,909
        Other current assets                                             918
        Property, plant and equipment and other assets               395,380
        ---------------------------------------------------------------------
                                                                     418,207
        Liabilities assumed:
        Current liabilities                                          (16,127)
        ---------------------------------------------------------------------
        Net assets acquired                                         $402,080
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Transaction costs include Panamanian advanced capital gains taxes of
        $18.9 million on the transfer of share ownership.

        We included 95 percent of PTC's earnings in our consolidated
        statement of earnings from September 19, 2008 to November 28, 2008
        and 100 percent after November 28, 2008.

        Until September 19, 2008, we proportionally consolidated our 48
        percent interest in Petaquilla. Our acquisition of PTC gave us a
        76 percent interest in Petaquilla, and we have determined that we
        control this entity, so we consolidated Petaquilla's balance sheet
        effective September 19, 2008.

        (b) Teck Cominco Limited's 26 percent interest in Petaquilla

        On March 26, 2008, we entered into an agreement with Teck Cominco
        Limited (Teck) to proceed with the development of Petaquilla. We
        agreed to work closely with Teck in project development, acting as
        operator of the project on their behalf. We also agreed to fund our
        and Teck's share of project expenditures until we had contributed
        US $50 million in development costs, or until September 30, 2009,
        whichever was earlier.

        On November 20, 2008, Teck chose not to continue to participate in
        the Petaquilla copper project. We acquired their 26 percent interest
        in the project at a purchase price of US $30 million. No payments
        were required, as provided by our March 26, 2008 agreement. The
        transaction closed in December 2008.

        The table below shows the fair value of the assets we acquired and
        liabilities we assumed at the date of acquisition, based on the
        consideration paid.

        ---------------------------------------------------------------------
        (thousands of Canadian dollars)
        ---------------------------------------------------------------------
        Consideration:
        Funding provided on behalf of Teck
         and PTC plus accrued interest                               $32,065
        Indemnity fee                                                  3,654
        ---------------------------------------------------------------------
        Cost of acquisition                                          $35,719
        ---------------------------------------------------------------------

        ---------------------------------------------------------------------
        Assets acquired:
        Cash                                                            $289
        Other current assets                                             219
        Property, plant and equipment                                 38,879
        ---------------------------------------------------------------------
                                                                      39,387
        Liabilities assumed:
        Current liabilities                                           (3,668)
        ---------------------------------------------------------------------
        Net assets acquired                                          $35,719
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    5.  Statement of cash flows

        The following tables show the components of our net change in non-
        cash working capital by segment.

    For the twelve months ended December 31, 2008
    -------------------------------------------------------------------------

    (thousands)  Corporate    Cayeli  Pyhasalmi  Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------
    Accounts
     receivable     $8,506   $11,980   $30,408    $1,220   $17,136   $69,250
    Inventories          -    (2,851)     (682)    1,241    (8,348)  (10,640)
    Accounts
     payable and
     accrued
     liabilities   (10,594)   (2,453)   (5,114)   (3,096)   17,374    (3,883)
    Taxes           (6,310)  (18,742)   (7,756)        -   (12,128)  (44,936)
    Other                -        78         -         -     1,269     1,347
    -------------------------------------------------------------------------
                   $(8,398) $(11,988)  $16,856     $(635)  $15,303   $11,138
    -------------------------------------------------------------------------


    For the twelve months ended December 31, 2007
    -------------------------------------------------------------------------

    (thousands)  Corporate    Cayeli  Pyhasalmi  Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------
    Accounts
     receivable    $(4,814)  $17,032   $14,383   $(7,685) $(14,877)   $4,039
    Inventories          -       557      (853)    1,814    (1,362)      156
    Accounts
     payable and
     accrued
     liabilities     5,927    (2,707)       94       936     2,528     6,778
    Taxes           (3,905)    7,920   (20,094)        -    (8,450)  (24,529)
    Other           (4,418)      (29)        -         -    (3,346)   (7,793)
    -------------------------------------------------------------------------
                   $(7,210)  $22,773   $(6,470)  $(4,935) $(25,507) $(21,349)
    -------------------------------------------------------------------------


    For the three months ended December 31, 2008
    -------------------------------------------------------------------------

    (thousands)  Corporate    Cayeli  Pyhasalmi  Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------
    Accounts
     receivable    $(2,247)  $13,168   $18,421      $687   $(1,118)  $28,911
    Inventories          -    (1,859)     (591)    2,435       239       224
    Accounts
     payable and
     accrued
     liabilities       (64)   (3,788)   (6,005)      366    18,782     9,291
    Taxes           (4,557)   (6,024)   (1,030)        -   (12,503)  (24,114)
    Other             (109)      (46)        -         -     1,364     1,301
    -------------------------------------------------------------------------
                   $(6,977)   $1,543   $10,795    $3,488    $6,764   $15,613
    -------------------------------------------------------------------------


    For the three months ended December 31, 2007
    -------------------------------------------------------------------------

    (thousands)  Corporate    Cayeli  Pyhasalmi  Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------
    Accounts
     receivable    $(2,061)  $16,777   $(3,436)  $(2,613)   $7,923   $16,590
    Inventories          -      (690)     (149)    3,619    (1,845)      935
    Accounts
     payable and
     accrued
     liabilities     7,052     3,617       280       860     5,317    17,126
    Taxes             (357)   (2,783)  (15,838)        -    (8,871)  (27,849)
    Other           (4,400)      (11)        -         -    (1,893)   (6,304)
    -------------------------------------------------------------------------
                      $234   $16,910  $(19,143)   $1,866      $631      $498
    -------------------------------------------------------------------------

    6.  Cash and short-term investments

        At December 31, our cash and short-term investments are held in:

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2008    31 2007
        ---------------------------------------------------------------------
        Cash:
        Liquidity funds                                  $276,301   $424,390
        Term deposits                                      78,041     22,186
        Overnight deposits                                 14,684     50,822
        Bankers acceptances                                64,293          -
        Money market funds                                 38,683     18,531
        Provincial short-term notes                        12,628          -
        Bank deposits                                      52,429      7,018
                                                        ---------------------
                                                          537,059    522,947
        Short-term investments:
        Federal and crown corporation investments               -    317,876
        Provincial short-term notes                        35,674          -
        ---------------------------------------------------------------------
                                                           35,674    317,876
        ---------------------------------------------------------------------
        Total cash and short-term investments            $572,733   $840,823
        ---------------------------------------------------------------------

    7.  Restricted cash

        The table below shows our restricted cash balances.

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2008    31 2007
        ---------------------------------------------------------------------
        Collateralized cash for letter of
         credit facility - Inmet Mining                   $16,343    $14,444
        In trust for Ok Tedi reclamation                   16,667     11,836
        Collateralized cash for letters
         of credit - Las Cruces                            26,090     12,494
        Collateralized cash for Pyhasalmi
         reclamation                                        2,104          -
        ---------------------------------------------------------------------
                                                           61,204     38,774
        Less current portion:
         Collateralized cash for letters of
          credit - Las Cruces                              (8,311)    (1,569)
        ---------------------------------------------------------------------
                                                          $52,893    $37,205
        ---------------------------------------------------------------------

        Cash collateralized letters of credit for Las Cruces are for the
        following:

        -  (euro)3.1 million to secure payments that will ultimately be for
           the use of an electrical substation
        -  (euro)2.5 million to secure payments to local townships that it
           will owe once certain licences are granted
        -  (euro)5 million for a labour bond previously issued under
           Tranche A of its credit facility. The labour bond is fixed at
           (euro)5 million for the life of the mine.
        -  (euro)4.7 million for dewatering and other purposes.

    8.  Accounts receivable

        ---------------------------------------------------------------------
                                                             2008       2007
        ---------------------------------------------------------------------
        Accounts receivable from sale of metal            $39,232    $70,407
        Value-added and other taxes receivable             66,817     30,368
        Advances and prepaid expenses                      23,373     15,772
        Other amounts receivable                            6,320     14,649
        ---------------------------------------------------------------------
                                                         $135,742   $131,197
        ---------------------------------------------------------------------

    9.  Investments

        The table below shows our investments.

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2008    31 2007
        ---------------------------------------------------------------------
        Available-for-sale equity securities:
          Premier Gold Mines Ltd.                         $15,309    $22,680
          Other                                             2,205      9,586
        ---------------------------------------------------------------------
                                                          $17,514    $32,266
        ---------------------------------------------------------------------

    10. Derivatives

        The table below shows the fair value of our derivatives.

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2008    31 2007
                                                            (fair      (fair
                                                            value)     value)
        ---------------------------------------------------------------------
        Derivative asset:
          Ok Tedi copper forward sales contracts           $4,327
          Las Cruces currency forward sales contracts           -     33,565
        ---------------------------------------------------------------------
                                                           $4,327    $33,565
        ---------------------------------------------------------------------
        Derivative liabilities:
          Troilus gold forward sales contracts                 $-    $26,889
          Ok Tedi gold forward sales contracts              1,670      6,603
          Ok Tedi copper forward sales contracts                -      2,431
          Las Cruces interest rate swaps                   23,440      8,037
        ---------------------------------------------------------------------
                                                          $25,110    $43,960
        ---------------------------------------------------------------------

        During the second quarter, Las Cruces' currency forward sale settled
        and Las Cruces received (euro)32.6 million. As this hedge was highly
        effective from inception to the date of settlement, we continue to
        apply hedge accounting for this contract. The gain on settlement
        continues to be deferred in Accumulated other comprehensive income
        (note 15) and will be recognized in income as a reduction of interest
        expense over the life of Las Cruces' credit facility - Tranche A. Las
        Cruces is currently capitalizing interest on long-term debt as a cost
        of deferred development, therefore the amortized gain is being
        recognized as a reduction of this interest. During 2008, this
        amounted to a reduction of $6.5 million.

        During the third quarter, we settled Troilus' remaining gold forward
        sales contracts for 24,250 ounces relating to gold shipments taking
        place during the remainder of 2008. These contracts were settled at a
        market price of US $819 per ounce, resulting in a cash payment of
        $12.4 million. We applied hedge accounting up to the point of
        settlement of these contracts therefore the settlement loss will be
        recognized against gross sales at the same time as the originally
        hedged gold shipments.

    11. Accounts payable and accrued liabilities

        The table below shows the significant components of our accounts
        payable and accrued liabilities balance at December 31.

        ---------------------------------------------------------------------
                                                             2008       2007
        ---------------------------------------------------------------------
        Accounts payables and accrued liabilities        $143,715   $140,168
        Amounts payable related to metal sales             47,639      5,029
        Income taxes payable                               17,173     23,603
        Current portion of asset retirement obligations     4,000      4,000
        ---------------------------------------------------------------------
                                                         $212,527   $172,800
        ---------------------------------------------------------------------

    12. Long-term debt

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2008    31 2007
        ---------------------------------------------------------------------
        Credit facility - Tranche A                      $262,504   $125,776
                        - Tranche B                        80,364     34,656
        Promissory note                                    19,741     16,267
        Loans from non-controlling shareholder            131,905     70,589
        ---------------------------------------------------------------------
                                                          494,514    247,288

        Less current portion:
        Credit facility - Tranche A                       (29,302)
                        - Tranche B                       (80,364)   (12,971)
        ---------------------------------------------------------------------
                                                         $384,848   $234,317
        ---------------------------------------------------------------------

        Credit facility

        In the first half of 2008, Las Cruces borrowed an additional
        (euro)52 million under Tranche A, the US $215 million senior secured
        facility. On June 30, 2008, Tranche A was fully drawn and was
        converted from a euro-denominated loan to a US $215 million loan.
        Beginning July 1, we revalued the loan to euros (the functional
        currency of Las Cruces). Foreign exchange gains and losses on
        revaluations are reflected in Investment and other income (note 16).

        In this quarter, there was additional borrowings of (euro)14 million
        (2008 year to date - (euro)33 million) under Tranche B, the
        (euro)69 million senior secured bridge financing facility. During the
        third quarter, Las Cruces repaid (euro)9 million under Tranche B
        equal to value-added tax refunds received.

        The credit facility loans approximate fair value because the loans
        accrue interest at prevailing market rates.

        Loans from non-controlling shareholder

        This quarter, Las Cruces received (euro)23 million (2008 year to date
        - (euro)101 million) of intercompany loan advances. These loans bear
        interest at EURIBOR plus 6.1 percent and are due to be repaid on
        February 25, 2020. The non-controlling portion of these loans,
        (euro)78 million, is reflected in long-term debt at December 31,
        2008. Loans from non-controlling shareholders approximate fair value
        because the loans accrue interest at prevailing market rates.

    13. Asset retirement obligations

        During 2008, we have recognized additional liabilities of
        $17.6 million at Las Cruces as a result of development activities
        that have taken place.

        During the second quarter, we recognized additional liabilities of
        $4.3 million at Cayeli primarily as a result of cost escalation. At
        December 31, 2008, we recognized additional liabilities of
        $5.3 million at Troilus because of additional owner's costs.

    14. Commitments

        Our operations have the following capital commitments as at
        December 31, 2008:

        -  Ok Tedi committed approximately $86.5 million (our proportionate
           share is $15.6 million) for expenditures related to pit drainage,
           dredging and other mining equipment.
        -  Las Cruces committed $39.8 million for engineering, procurement
           and construction management related to the plant.
        -  Petaquilla committed $177.7 million for the design and supply of
           certain SAG mill and ball mill equipment.

    15. Accumulated other comprehensive income (loss) (AOCI)

        The table below shows the components of the beginning and ending
        balances of AOCI.

        ---------------------------------------------------------------------
        (thousands)
        ---------------------------------------------------------------------
        Unrealized losses on gold forward sales contracts
         (net of tax of $2,169)                                     $(31,951)
        Deferred Troilus gold hedges                                   5,444
        Unrealized gains on foreign exchange forward contract(1)      17,067
        Unrealized losses on interest rate swap contracts(2)          (4,097)
        Unrealized losses on investments (net of tax of $2,951)       14,506
        Currency translation adjustment                              (84,705)
        ---------------------------------------------------------------------
        AOCI, December 31, 2007                                     $(83,736)
        Other comprehensive income for the year ending
         December 31, 2008                                           266,368
        ---------------------------------------------------------------------
        AOCI, December 31, 2008                                     $182,632
        ---------------------------------------------------------------------

        AOCI December 31, 2008 comprises:
        Unrealized losses on gold forward sales contracts
         (net of tax of $1,030)                                      $(2,402)
        Unrealized gains on foreign exchange forward contract(3)      21,023
        Unrealized losses on interest rate swap contract(4)           (9,962)
        Unrealized gains on investments (net of tax of $667)           3,314
        Currency translation adjustment                              170,659
        ---------------------------------------------------------------------
        AOCI, December 31, 2008                                     $182,632
        ---------------------------------------------------------------------
        (1) Net of tax of $10,448 and non-controlling interest of $7,315.
        (2) Net of tax of $2,510 and non-controlling interest of $1,756.
        (3) Net of tax of $14,818 and non-controlling interest of $10,373.
        (4) Net of tax of $6,102 and non-controlling interest of $4,270.

        The table below shows the breakdown of the currency translation
        adjustment included in AOCI.

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2008    31 2007
        ---------------------------------------------------------------------
        Pyhasalmi (euro functional currency)              $17,480    $(1,466)
        Las Cruces (euro functional currency)              57,947     (1,919)
        Cayeli (US dollar functional currency)             24,751    (65,822)
        Ok Tedi (US dollar functional currency)             6,224    (15,498)
        Petaquilla (US dollar functional currency)         64,257          -
        ---------------------------------------------------------------------
                                                         $170,659   $(84,705)
        ---------------------------------------------------------------------

        The US dollar to Canadian dollar exchange rate was $1.22 at
        December 31, 2008 and $0.99 at December 31, 2007. The euro to
        Canadian dollar exchange rate was $1.70 at December 31, 2008 and
        $1.45 at December 31, 2007.

    16. Investment and other income

        Investment and other income are summarized as follows:

        ---------------------------------------------------------------------
                                   Three months ended    Twelve months ended
                                          December 31            December 31
        (thousands)                   2008       2007        2008       2007
        ---------------------------------------------------------------------
        Interest income             $6,188     $9,703     $28,182    $32,647
        Foreign exchange loss       (5,607)    (2,969)    (33,875)   (14,519)
        Dividend and royalty income  1,825      1,677       4,979      5,748
        Gain on sale of Wolfden          -          -           -     11,730
        Mark to market on Ok Tedi
         copper forward contracts    3,791     (1,615)      3,791     (3,109)
        Other                        1,860       (828)      2,909      3,957
        ---------------------------------------------------------------------
                                    $8,057     $5,968      $5,986    $36,454
        ---------------------------------------------------------------------

        Foreign exchange

        For transactions with foreign currencies we use:
        -  the exchange rates in effect at year-end for monetary assets and
           liabilities
        -  the exchange rates in effect on the date of the transaction for
           non-monetary assets and liabilities
        -  the exchange rates in effect on the date of the transaction for
           income and expenses

        Foreign exchange loss is a result of:

        ---------------------------------------------------------------------
                                   Three months ended    Twelve months ended
                                          December 31            December 31
                                      2008       2007        2008       2007
        ---------------------------------------------------------------------
        Translation of foreign-
         denominated cash           $4,292     ($(722)     $5,102    $(5,511)
        Translation of Las Cruces'
         US dollar-denominated debt
         (note 12)                 (12,001)         -     (24,896)         -
        Translation of other-
         monetary assets and
         liabilities                   681       (138)      4,882     (3,614)
        Reduction in our net
         investments                 1,421     (2,109)    (18,963)    (5,394)
        ---------------------------------------------------------------------
                                   $(5,607)   $(2,969)   $(33,875)  $(14,519)
        ---------------------------------------------------------------------

        Gain on sale of Wolfden

        In 2007, we sold our shares in Wolfden for cash proceeds of
        $51.4 million and recorded a gain of $11.7 million.

    17. Income tax expense (recovery)

        The tables below show our current and future income tax expense.

    For the twelve months ended December 31, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli  Pyhasalmi  Ok Tedi    Cruces   Total
    -------------------------------------------------------------------------
    Current
     income taxes   $9,930   $32,965   $18,995   $49,779       $ -  $111,669
    Future
     income taxes    5,000      (749)      819         -   (11,050)   (5,980)
    -------------------------------------------------------------------------
                   $14,930   $32,216   $19,814   $49,779  $(11,050) $105,689
    -------------------------------------------------------------------------


    For the twelve months ended December 31, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli  Pyhasalmi  Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current
     income taxes   $1,698   $45,866   $30,117   $68,128       $ -  $145,809
    Future
     income taxes   (5,000)      579       794    (2,383)      286    (5,724)
    -------------------------------------------------------------------------
                   $(3,302)  $46,445   $30,911   $65,745      $286  $140,085
    -------------------------------------------------------------------------


    For the three months ended December 31, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli  Pyhasalmi  Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current
     income taxes   $1,870   $(3,600)     $398      $332    $4,283   $3,283
    Future
     income taxes    5,000     1,609       550      (877)  (10,332)   (4,050)
    -------------------------------------------------------------------------
                    $6,870   $(1,991)     $948     $(545)  $(6,049)    $(767)
    -------------------------------------------------------------------------


    For the three months ended December 31, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli  Pyhasalmi  Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current
     income taxes     $541    $5,735     $5,569  $10,923       $ -   $22,768
    Future
     income taxes   (5,000)      221        631     (101)       32    (4,217)
    -------------------------------------------------------------------------
                   $(4,459)   $5,956     $6,200  $10,822       $32   $18,551
    -------------------------------------------------------------------------

    18. Net income (loss) per share

        The following tables show our calculation of basic and diluted net
        income (loss) per share.

        ---------------------------------------------------------------------
                                   Three months ended    Twelve months ended
                                          December 31            December 31
        (thousands)                   2008       2007        2008       2007
        ---------------------------------------------------------------------
        Net income (loss)
         available to common
         shareholders             $(32,514)   $63,645    $216,922   $417,609
        ---------------------------------------------------------------------

        (thousands)
        ---------------------------------------------------------------------
        Weighted average common
         shares outstanding         48,282     48,282      48,282     48,279

        Plus incremental shares
         from assumed conversions:
          Deferred share units          83         75          83         75
          Long-term incentive plan
           units                        43          -          43          -
        ---------------------------------------------------------------------
        Diluted weighted average
         common shares outstanding  48,408     48,357      48,408     48,354
        ---------------------------------------------------------------------

        (Canadian dollars per share)
        ---------------------------------------------------------------------
        Basic net income (loss) per
         common share               $(0.67)     $1.32       $4.49      $8.65
        Dilutive effect from
          assumed conversions of
          deferred share units per
          common share                   -          -       (0.01)     (0.01)
        ---------------------------------------------------------------------
        Diluted net income (loss)
         per common share           $(0.67)     $1.32       $4.48      $8.64
        ---------------------------------------------------------------------

    19. Asset impairment

       At December 31, 2008, we have recorded impairment charges as follows:

        ---------------------------------------------------------------------
                                                             2008       2007
        ---------------------------------------------------------------------

        Long-lived assets - Cerattepe                     $34,200        $ -
        Materials and supplies inventory - Troilus          2,075          -
        ---------------------------------------------------------------------
                                                          $36,275        $ -
        ---------------------------------------------------------------------

        (a) Cerattepe

        On March 26, 2008 we received notice from the Rize Administrative
        Court of its decision to grant an injunction against the Cerattepe
        property. The injunction prevented us from doing any further
        development work on the project. We appealed the injunction and on
        October 24, 2008 the Court ruled to cancel our operating licences. We
        made a further appeal to the Supreme Administrative Court. We
        continue to believe that the applications to cancel the operating
        licences are without merit. Nonetheless, we have decided that we will
        not proceed with the project, regardless of the decision on the
        appeal. All work has ceased and we took a $34 million charge to write
        down the assets to its fair value of $5.5 million. We calculated the
        impairment charges using expected discounted cash flows.

        (b) Troilus

        During the quarter, we recognized an impairment charge of $2 million
        to write down materials and supplies that Troilus will not use over
        the remainder of its operations to its net realizable value.

    





For further information:

For further information: Richard Ross, Chairman and Chief Executive
Officer, (416) 860-3974; Jochen Tilk, President and Chief Operating Officer,
(416) 860-3972

Organization Profile

INMET MINING CORPORATION

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890