Inmet announces first quarter earnings of $1.06 per share



    All amounts in Canadian dollars unless indicated otherwise

    TORONTO, April 28 /CNW/ -

    
    First quarter highlights

    -   Earnings lower because of lower metal prices

        Lower copper and zinc prices reduced sales by $88 million this
        quarter compared to the same quarter in 2008. Earnings from Troilus
        of $58 million in the quarter were unique as it completed mining
        high grade ore from the bottom of the pit while realizing a price for
        gold of US $942 per ounce.

    -   Copper prices increased from last quarter

        We realized a copper price of US $2.01 per pound this quarter, of
        which US $0.27 per pound was a result of finalization adjustments in
        respect of shipments in previous quarters. This quarter, copper
        recorded its strongest quarterly price performance since 2006,
        gaining over 30 percent, compared to a 50 percent decline in the
        fourth quarter of 2008.

    -   Copper cash costs

        Copper cash costs this quarter were US $0.56 per pound compared to US
        $0.33 per pound in the first quarter of 2008. The increase in unit
        costs is largely due to lower zinc metal credits. Cash costs are a
        non-GAAP measure (see pages 29 and 31).

    -   Production

        Copper production this quarter was in line with last year's
        production. Zinc production was lower and gold production was higher.

    -   Las Cruces resumes mining operations

        On April 7th, the Andalucian Regional Ministry of Innovation, Science
        and Business (CICE) issued a resolution to approve lifting of the
        suspension on mining at Las Cruces imposed in May 2008, and Las
        Cruces believes it has satisfied the prescribed pre-conditions for
        the resumption of mining set out in the resolution and is awaiting
        CICE's confirmation that it can resume mining. Plant commissioning
        has been completed and we expect first copper to be produced at the
        beginning of June.

    -   Petaquilla pursuing higher copper production target

        The base case for the front-end engineering and design program is a
        throughput rate of 150,000 tonnes per day, which equates to an
        average annual production of 275,000 tonnes of copper for the first
        ten years. Work is progressing well on the drilling program designed
        to expand reserves to ensure a minimum mine life of 30 years at this
        throughput.


    Key financial data
    -------------------------------------------------------------------------
                                                 three months ended March 31
                                              2009         2008       change
    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS
    (thousands, except per share amounts)

    Sales
    Gross sales                           $239,152     $276,281         -13%

    Net income
    Net income                             $51,327     $106,674         -52%
    Net income per share                     $1.06        $2.21         -52%

    Cash flow
    Cash flow provided by operating
     activities                            $17,097      $76,750         -78%
    Cash flow provided by operating
     activities per share(1)                 $0.35        $1.59         -78%

    Capital spending                       $94,859     $111,414         -15%

    OPERATING HIGHLIGHTS
    Production(2)
      Copper (tonnes)                       20,000       19,200          +4%
      Zinc (tonnes)                         15,300       20,300         -25%
      Gold (ounces)                         78,800       56,300         +40%

    Cash costs(3)
      Copper (US $ per pound)                $0.56        $0.33         +70%
      Gold (US $ per ounce)                   $120         $392         -69%
    -------------------------------------------------------------------------
                                         ------------------------------------
                                          as at March 31   as at December 31
    FINANCIAL CONDITION                             2009                2008
                                         ------------------------------------
    Current ratio                               3.0 to 1            2.4 to 1
    Gross debt to total equity(4)                    19%                 19%
    Net working capital balance (millions)          $513                $475
    Cash balance (millions)                         $507                $573
    Shareholders' equity (millions)               $1,949              $1,868
    -------------------------------------------------------------------------
    (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
        29 and 31.
    (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

    Although we saw some improvement in base metal prices in the latter part
of this quarter, we continue to consider market conditions to be volatile.
Based on the strength of our financial position, together with our relatively
low operating costs:
    
    -   we do not expect market conditions to have any impact on our ability
        to meet expected production levels
    -   we expect to maintain capital expenditures
    -   we expect to continue to pursue our growth objectives by advancing
        the Petaquilla project and considering other opportunities as they
        arise.

    We will 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.


    First quarter press release

    Where to find it

    Our financial results...........................  4
    Key changes in 2009.............................  4
    Understanding our performance...................  5
      Earnings from operations......................  7
      Corporate costs............................... 11
    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.......................... 25
    Financial condition............................. 27
    Accounting changes.............................. 28
    Supplementary financial information............. 29
    Quarterly review................................ 32
    Consolidated financial statements............... 33
    

    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 March 31, 2009.

    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 March 31
    (thousands, except per share amounts)     2009         2008       change
    -------------------------------------------------------------------------

    EARNINGS FROM OPERATIONS(1)

    Cayeli                                 $14,901      $53,655         -72%
    Pyhasalmi                                6,543       27,994         -77%
    Troilus                                 54,484        8,635        +531%
    Ok Tedi                                 17,585       53,918         -67%
    Other                                     (484)        (494)         -2%
    -------------------------------------------------------------------------
                                            93,029      143,708         -35%
    -------------------------------------------------------------------------
    DEVELOPMENT AND EXPLORATION
    Corporate development and
     exploration                            (3,232)      (2,618)        +23%
    -------------------------------------------------------------------------

    CORPORATE COSTS
    General and administration              (4,124)      (3,648)        +13%
    Investment and other income            (11,203)      14,754        -176%
    Asset impairment                        (6,419)           -        -100%
    Interest expense                          (492)        (447)        +10%
    Income and capital taxes               (19,015)     (44,870)        -58%
    Non-controlling interest                 2,783         (205)     +1,458%
    -------------------------------------------------------------------------
                                           (38,470)     (34,416)        +12%
    -------------------------------------------------------------------------

    Net income                             $51,327     $106,674         -52%
    -------------------------------------------------------------------------
    Basic net income per share               $1.06        $2.21         -52%
    -------------------------------------------------------------------------
    Diluted net income per share             $1.06        $2.21         -52%
    -------------------------------------------------------------------------

    Weighted average shares outstanding     48,282       48,282            -

    -------------------------------------------------------------------------
    (1) Gross sales less smelter processing charges and freight, cost of
        sales, depreciation and provisions for mine reclamation.



    Key changes in 2009
    -------------------------------------------------------------------------
                                             three months ended          see
    (millions)                                         March 31         page
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS
    Sales
    Lower copper and zinc prices denominated in
     Canadian dollars                                      $(88)           7
    Higher gold prices and other prices                      30            7
    Higher sales volumes                                     12            8
    Costs
    Lower smelter processing charges and freight              4            9
    Higher operating costs, net of costs that vary
     with income and cash flows                              (2)
    Higher depreciation                                      (7)          10
    -------------------------------------------------------------------------
    Decrease in earnings from operations, compared to
     2008                                                   (51)

    CORPORATE COSTS
    Lower income tax expense from lower earnings             20           12
    Asset impairment related to Cerattepe, net of tax
     recovery                                                 -           12
    Lower interest income on cash balances                   (7)          11
    Foreign exchange loss on Las Cruces debt                (11)          11
    Other foreign exchange loss                              (6)          11
    -------------------------------------------------------------------------
    Decrease in net income, compared to 2008               $(55)
    -------------------------------------------------------------------------

    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 March 31
                                              2009         2008       change
    -------------------------------------------------------------------------
    US dollar metal prices
      Copper (per pound)                  US $2.01     US $4.16         -52%
      Zinc (per pound)                    US $0.52     US $1.08         -52%
      Gold (per ounce)                     US $922      US $776         +19%
    -------------------------------------------------------------------------
    Canadian dollar metal prices
      Copper (per pound)                   C$ 2.50      C$ 4.16         -40%
      Zinc (per pound)                     C$ 0.65      C$ 1.08         -40%
      Gold (per ounce)                     C$1,147       C$ 776         +48%
    -------------------------------------------------------------------------
    

    There was an overall improvement in base metal prices by the end of the
first quarter, and a steady increase in the price of gold.
    In the first quarter of 2009 the copper price gained over 30 percent,
compared to a 50 percent decline in the previous quarter, and reached over US
$1.80 per pound for the first time since November 2008. The average market
copper price for the quarter was US $1.56 per pound including the March
average of US $1.70 per pound.
    Total copper exchange stocks fell by 40,000 tonnes in March, with much of
the material destined for China. This is the largest monthly draw down in LME
warehouses we have seen in the past four years.
    Zinc prices were down for the first two months of the year, but increased
13 percent in March, bringing the price back to where it had been at the start
of the year. The average price for zinc was US $0.55 per pound in March. Like
copper, zinc prices were boosted by the Chinese stockpile purchases, which
brought down stocks in Asian warehouses, and reduced LME stocks by about four
percent in March.
    The median price for gold in the first quarter of 2009 was about US $862
per ounce, about six percent below its closing price of US $918 per ounce at
the end of March. In February, gold prices approached US $1,000 per ounce for
the first time in 11 months in response to rising fears about the stability of
the global economy.
    Towards the end of 2008, the financial crisis began to have a significant
effect on demand for sulphur and sulphuric acid. According to analysts, the
sulphuric acid market will continue to deteriorate and sulphur prices will
continue to be lower over the short to medium term. This will have a direct
impact on pyrite prices.

    
    Exchange rates

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

    -------------------------------------------------------------------------
                                                 three months ended March 31
                                              2009         2008       Change
    -------------------------------------------------------------------------
    Exchange rates
      1 US$ to C$                            $1.24        $1.00         +24%
      1 euro to C$                           $1.62        $1.51          +7%
      1 euro to US$                          $1.31        $1.51         -13%
    -------------------------------------------------------------------------
    

    Sales are affected by the conversion of US dollar revenue to Canadian
dollars. Foreign exchange had a significant impact on our first quarter 2009
results compared to the same period last year. The Canadian dollar dropped 24
percent relative to the US dollar and 7 percent relative to the euro.
    Net income was $19 million more for the quarter because of fluctuations
in the value of the US dollar and euro relative to the Canadian dollar, as
described in the table below.

    
    -------------------------------------------------------------------------
                                                          three months ended
    (millions)                                                      March 31
    -------------------------------------------------------------------------
    US dollar sales translated into Canadian dollars (reflected in
     Canadian dollar sales price)                                        $60
    Cayeli and Ok Tedi US dollar costs translated into Canadian
     dollars                                                             (33)
    Pyhasalmi euro based costs translated into Canadian dollars           (3)
    Foreign exchange loss on Las Cruces debt, net of tax and non-
     controlling interest                                                 (6)
    Foreign exchange loss on euro denominated cash held in Canada         (2)
    Other                                                                  3
    -------------------------------------------------------------------------
                                                                         $19
    -------------------------------------------------------------------------

    Treatment charges up for copper and down 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 March 31
                                              2009         2008       change
    -------------------------------------------------------------------------
    Treatment charges
      Copper (per dry metric tonne of
       concentrate)                          US$68        US$52         +31%
      Zinc (per dry metric tonne of
       concentrate)                         US$248       US$310         -20%
    -------------------------------------------------------------------------
    Price participation
      Copper (per pound)                   US$0.02      US$0.05         -60%
      Zinc (per pound)                    US($0.03)    US($0.04)        -25%
    -------------------------------------------------------------------------
    Freight charges
      Copper (per dry metric tonne of
       concentrate)                          US$26        US$50         -48%
      Zinc (per dry metric tonne of
       concentrate)                          US$23        US$39         -41%
    -------------------------------------------------------------------------

    Copper treatment charges were higher this quarter than 2008 because of
less favourable contract terms with smelters. Contract terms for zinc smelters
have not been finalized yet and are based on 2008 terms.

    Statutory tax rates remain consistent

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

    -------------------------------------------------------------------------
                                              2009         2008       change
    -------------------------------------------------------------------------
    Statutory tax rates
      Cayeli                                   24%          24%            -
      Pyhasalmi                                26%          26%            -
      Ok Tedi                                  37%          37%            -
      Las Cruces                               30%          30%            -
    -------------------------------------------------------------------------

    Earnings from operations

    Earnings from operations include the following:

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (thousands)                               2009         2008       change
    -------------------------------------------------------------------------
    Gross sales                           $239,152     $276,281         -13%
    Smelter processing charges and
     freight                               (40,540)     (44,157)         -8%
    Cost of sales:
      Direct production costs              (78,419)     (77,534)         +1%
      Inventory changes                     (3,895)       2,940        -232%
      Provisions for mine
       rehabilitation and other
       non-cash charges                     (7,590)      (4,652)        +63%
    Depreciation                           (15,679)      (9,170)        +71%
    -------------------------------------------------------------------------
    Earnings from operations               $93,029     $143,708         -35%
    -------------------------------------------------------------------------

    Gross sales were down this year

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (thousands)                               2009         2008       change
    -------------------------------------------------------------------------
    Gross sales by operation
      Cayeli                               $60,021     $100,616         -40%
      Pyhasalmi                             33,981       54,908         -38%
      Troilus                               86,990       34,251        +154%
      Ok Tedi(1)                            58,160       86,506         -33%
    -------------------------------------------------------------------------
                                          $239,152     $276,281         -13%
    -------------------------------------------------------------------------
    Gross sales by metal
      Copper                              $104,739     $168,168         -38%
      Zinc                                  27,024       48,806         -45%
      Gold                                  93,014       43,287        +115%
      Other                                 14,375       16,020         -10%
    -------------------------------------------------------------------------
                                          $239,152     $276,281         -13%
    -------------------------------------------------------------------------
    (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

    -------------------------------------------------------------------------
                                                          three months ended
    (millions)                                                      March 31
    -------------------------------------------------------------------------
    Lower copper prices, denominated in Canadian dollars                $(70)
    Lower zinc prices, denominated in Canadian dollars                   (18)
    Higher gold prices, denominated in Canadian dollars                   28
    Changes in other metal prices                                          2
    Higher sales volumes                                                  21
    -------------------------------------------------------------------------
    Decrease in gross sales, compared to 2008                           $(37)
    -------------------------------------------------------------------------
    

    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 $14 million in positive finalization adjustments from 2008
sales in the first quarter.

    
    At the end of this quarter, the following sales had not been settled:
    -   39 million pounds of copper provisionally priced at US $1.83 per
        pound
    -   3 million pounds of zinc provisionally priced at US $0.59 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 sales that had not settled on March 31,
2009 to settle in the following months:

        ----------------------------------------------------
        (millions of pounds)                   copper   zinc
        ----------------------------------------------------
        April 2009                                 26      3
        May 2009                                    9      -
        June 2009                                   2      -
        July and August 2009                        2      -
        ----------------------------------------------------
        Unsettled sales at March 31, 2009          39      3
        ----------------------------------------------------

    Gold sales volumes up in the quarter - Troilus completes mining in the
    high grade pit bottom

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

    -------------------------------------------------------------------------
                                                 three months ended March 31
                                              2009         2008       change
    -------------------------------------------------------------------------
    Sales volumes
      Copper (tonnes)                       19,000       18,300          +4%
      Zinc (tonnes)                         18,700       20,500          -9%
      Gold (ounces)                         83,900       55,300         +52%
      Pyrite (tonnes)                       76,000      124,100         -39%
    -------------------------------------------------------------------------


    Production
    -------------------------------------------------------------------------
                                                                     revised
                                    three months ended March 31    objective
    Inmet's share(1)             2009         2008       change         2009
    -------------------------------------------------------------------------
    Copper (tonnes)
      Ok Tedi                   6,600        6,700          -1%       31,600
      Cayeli                    7,000        8,100         -14%       36,800
      Pyhasalmi                 3,600        3,500          +3%       13,000
      Las Cruces                    -            -            -       20,200
      Troilus                   2,800          900        +211%        6,000
    -------------------------------------------------------------------------
                               20,000       19,200          +4%      107,600
    -------------------------------------------------------------------------
    Zinc (tonnes)
      Cayeli                   11,800       12,700          -7%       56,400
      Pyhasalmi                 3,500        7,600         -54%       22,600
    -------------------------------------------------------------------------
                               15,300       20,300         -25%       79,000
    -------------------------------------------------------------------------
    Gold (ounces)
      Troilus                  58,100       35,000         +66%      132,200
      Ok Tedi                  20,700       21,300          -3%      109,400
    -------------------------------------------------------------------------
                               78,800       56,300         +40%      241,600
    -------------------------------------------------------------------------
    Pyrite (tonnes)
      Pyhasalmi               190,800      194,500          -2%      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 compared to the first quarter of 2008:
    -   zinc production was lower mainly because zinc grades at Pyhasalmi
        were lower
    -   gold production was higher because grades were higher at Troilus.
    

    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 than 2008 because our
production expectations, which include new copper production at Las Cruces,
are higher.
    We have set a higher copper production target for 2009 because of
expected production at Las Cruces and expected higher throughput at Cayeli and
Ok Tedi. Estimated production for our 70 percent share of Las Cruces includes
16,400 tonnes of copper cathode and 3,800 tonnes of ore that, depending on
market conditions and export permit renewals, we plan on shipping directly to
smelters (we also plan on shipping another 8,900 tonnes of ore directly to
smelters in 2010). Our Las Cruces objective is lower than our original
objective because of the delay in receiving approval to resume mining. It
assumes first copper is produced in June.
    We expect to mine lower zinc grades at Pyhasalmi in 2009.
    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 after 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. The market uncertainty makes it difficult to
forecast metal prices, but we remain focused on maximizing the efficiency of
our operations to ensure that we remain highly competitive in any economic
environment.

    
    Lower smelter processing charges for the quarter

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (thousands)                               2009         2008       change
    -------------------------------------------------------------------------
    Smelter processing charges and
     freight by operation
      Cayeli                               $19,076      $22,013         -13%
      Pyhasalmi                              8,991       10,820         -17%
      Troilus                                6,260        2,187        +186%
      Ok Tedi(1)                             6,213        9,137         -32%
    -------------------------------------------------------------------------
                                           $40,540      $44,157          -8%
    -------------------------------------------------------------------------
    Smelter processing charges and
     freight by metal
      Copper                               $18,516      $20,894         -11%
      Zinc                                  15,188       19,772         -23%
      Other                                  6,836        3,491         +96%
    -------------------------------------------------------------------------
                                           $40,540      $44,157          -8%
    -------------------------------------------------------------------------
    Smelter processing charges by type
     and freight

      Copper treatment and refining
       charges                              $9,693       $5,975         +62%
      Zinc treatment charges                11,679       11,792          -1%
      Copper price participation             1,463        1,963         -25%
      Zinc price participation              (1,668)      (1,894)        -12%
      Content losses                        10,743       16,257         -34%
      Other                                  1,968        2,272         -13%
      Freight                                6,662        7,792         -15%
    -------------------------------------------------------------------------
                                           $40,540      $44,157          -8%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's smelter processing charges and
        freight.
    

    Copper treatment and refining charges were higher in 2009 compared to
2008 because of less favourable contract terms with smelters. Zinc treatment
charges were lower in part because of lower sales volumes. The 2009 terms for
zinc have not yet been finalized.

    2009 outlook for smelter processing charges and freight

    We expect copper treatment and refining costs to increase in 2009, and
recently signed agreements with our smelters reflect this. We sell
approximately 90 percent of our copper concentrate under long-term contracts.
We are estimating annual treatment costs of US $75 per dry metric tonne in
2009. We also expect there will continue to be minimal price participation.
    In the first quarter of 2009, smelters joined mines in cutting zinc
production to respond to the decline in demand for refined zinc and to falling
prices. We expect zinc mine production in 2009 to be below smelting
requirements, and believe that a balanced or deficit zinc concentrate market
could evolve. We therefore expect realized zinc processing charges to be less
than US $200 per tonne in 2009.
    We are expecting production to begin at Las Cruces in June. Depending on
certain 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.
    Las Cruces' copper cathode production will be sold directly to copper
fabricators, bypassing the smelters and eliminating smelting and refining
charges.
    We expect our ocean freight costs to be about 20 percent lower than they
were in 2008 because of the general slowdown in global economic activity.

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

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (thousands)                               2009         2008       change
    -------------------------------------------------------------------------
    Direct production costs by operation
      Cayeli                               $20,472      $23,340         -12%
      Pyhasalmi                             15,654       14,604          +7%
      Troilus                               18,606       19,947          -7%
      Ok Tedi(1)                            23,687       19,643         +21%
    -------------------------------------------------------------------------
    Total direct production costs           78,419       77,534          +1%
    Inventory changes                        3,895       (2,940)       +232%
    Reclamation, accretion and other
     non-cash expenses                       7,590        4,652         +63%
    -------------------------------------------------------------------------
    Total cost of sales                    $89,904      $79,246         +13%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's direct production costs.
    

    2009 outlook for cost of sales

    We expect cost of sales to increase in 2009 reflecting the expected start
of production at Las Cruces. We expect to see cost reductions in consumables
and energy. The total amount we spend in Canadian dollars will also be
affected by the value of the US dollar and euro relative to the Canadian
dollar.

    
    Depreciation was higher than last year

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (thousands)                               2009         2008       change
    -------------------------------------------------------------------------
    Depreciation by operation
      Cayeli                                $3,473       $2,373         +46%
      Pyhasalmi                              2,602        2,150         +21%
      Troilus                                3,419        2,418         +41%
      Ok Tedi                                6,185        2,229        +177%
    -------------------------------------------------------------------------
                                           $15,679       $9,170         +71%
    -------------------------------------------------------------------------

    Depreciation to date in 2009 is higher mainly because we started
depreciating the mine waste tailings plant at Ok Tedi.

    2009 outlook for depreciation

    We expect depreciation to be about $70 million for 2009. Depreciation for
Las Cruces should be about $14 million, assuming we capitalize pre-production
for the four months after first copper is produced, which is expected in June.

    Corporate costs

    Corporate costs include general and administration costs, taxes, interest
and other income.

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

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (thousands)                                            2009         2008
    -------------------------------------------------------------------------
    Interest income                                      $2,042       $8,723
    Foreign exchange gain (loss)                        (10,098)       6,858
    Other                                                (3,147)        (827)
    -------------------------------------------------------------------------
                                                       $(11,203)     $14,754
    -------------------------------------------------------------------------

    Foreign exchange gain (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) are a result of the following:

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (millions)                                             2009         2008
    -------------------------------------------------------------------------
    Revaluation of US dollar denominated debt at Las
     Cruces                                                $(11)           -
    Distribution of funds from subsidiaries                   -           (5)
    Revaluation of euro denominated cash held in
     Canada                                                  (2)           1
    Revaluation of short-term foreign intergroup
     loans and other monetary items                           3           11
    -------------------------------------------------------------------------
                                                           $(10)          $7
    -------------------------------------------------------------------------
    

    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 might result in foreign exchange gains or
losses, 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)10 million from Pyhasalmi in the second quarter 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 March 31, 2009, we held (euro)13 million in Canada that could be
affected by foreign exchange gains or losses.

    Asset impairment

    We made a decision in 2008 not to proceed with the Cerattepe project. All
work has ceased on the project and we took a $34 million charge that year to
write down the assets to net realizable value. This quarter, we took an
additional impairment charge of $6 million and a tax recovery of $6 million.

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

    -------------------------------------------------------------------------
                                                 three months ended March 31
    (thousands)                               2009         2008       change
    -------------------------------------------------------------------------
    Cayeli                                   $(581)     $19,124        -103%
    Pyhasalmi                                  435        6,023         -93%
    Ok Tedi                                  6,540       19,347         -66%
    Las Cruces                              (4,035)         250      -1,714%
    Corporate                               16,656          126     +13,119%
    -------------------------------------------------------------------------
                                           $19,015      $44,870         -58%
    -------------------------------------------------------------------------

    Our tax expense changes as our earnings change.
    -   At Cayeli, we recorded a $6 million tax recovery related to the
        impairment on Cerattepe.
    -   At Las Cruces, we recorded a tax recovery related to foreign exchange
        losses from the translation of US dollar denominated debt.
    -   The tax expense at Corporate relates to a provision for Quebec mining
        duties and a reduction in our future income tax asset to reflect
        Troilus' first quarter earnings.

    2009 outlook for income tax expense

    We are not expecting any further changes in statutory tax rates at our
operations this year. We do, however, expect to expense approximately $10
million in Quebec mining duties, 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 $900 per ounce
    Copper treatment cost                US $75 per tonne
    Zinc treatment cost                  US $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 March 31    objective
    -------------------------------------------------------------------------
                                  2009        2008       change         2009
    -------------------------------------------------------------------------
    Tonnes of ore milled
     (000's)                       264         278          -5%        1,200
    Tonnes of ore milled
     per day                     2,900       3,100          -5%        3,300
    -------------------------------------------------------------------------
    Grades (percent)    copper     3.4         3.6          -6%          3.8
                          zinc     6.2         6.5          -5%          6.5
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)          copper      78          81          -4%           80
                          zinc      72          70          +3%           72
    -------------------------------------------------------------------------
    Production
     (tonnes)           copper   7,000       8,100         -14%       36,800
                          zinc  11,800      12,700          -7%       56,400
    -------------------------------------------------------------------------
    Cost per tonne of ore
     milled (C$)                   $77         $84          -8%          $81
    -------------------------------------------------------------------------
    

    Production targets remain consistent

    Cayeli achieved a mill throughput rate of 143 tonnes per hour during the
quarter - which keeps it on target to achieve its objective of a 1.2 million
tonne annualized rate.
    Interruptions in stope sequencing, however, meant lower mine production
and mill throughput, as well as lower ore grades than last year's first
quarter and our 2009 plan. Copper and zinc production were therefore lower
this quarter than in the first quarter of 2008. We expect grades to increase
in the second quarter.
    Operating costs for the quarter were lower than last year, mainly because
of the drop in the value of the Turkish lira, which reduced labour costs, and
the cost of key commodities, such as copper sulphate and electricity. Programs
designed to achieve additional savings also made an impact, saving about $0.5
million in operating costs and 700 man shift hours in labour throughout the
quarter. Royalty charges were $2 million less than the first quarter of last
year because earnings were lower.

    2009 outlook for production and costs

    We expect copper grades in 2009 to increase to 3.8 percent and zinc
grades to rise to 6.5 percent. Although we have not adjusted our objective for
cost per tonne of ore milled yet, we expect savings during the year from cost
savings programs, lower commodity prices and lower labour costs.
    The current three-year labour agreement will expire in May 2009 and
negotiations with the union are expected to begin in May. 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 $7 per tonne in
royalties in the first quarter. We have estimated that royalties will be $3
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 March 31    objective
     unless otherwise stated)                 2009         2008         2009
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)                    6,500        6,700       36,800
    Zinc sales (tonnes)                     14,800       13,900       56,400
                                       --------------------------------------
    Gross copper sales                         $37          $64         $152
    Gross zinc sales                            21           34           78
    Other metal sales                            2            3           23
                                       --------------------------------------
    Gross sales                                 60          101          253
    Smelter processing charges and
     freight                                   (19)         (22)         (99)
    -------------------------------------------------------------------------
    Net sales                                  $41          $79         $154
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)           264          278        1,200
    Direct production costs ($ per
     tonne)                                    $77          $84          $81
    -------------------------------------------------------------------------
    Direct production costs                    $20          $23          $97
    Change in inventory                          2           (2)           -
    Depreciation and other non-cash
     costs                                       4            4           18
    -------------------------------------------------------------------------
    Operating costs                            $26          $25         $115
    -------------------------------------------------------------------------
    Operating earnings                         $15          $54          $39
    -------------------------------------------------------------------------
    Operating cash flow                        ($9)         $15          $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 2009 and 2008.

    -------------------------------------------------------------------------
    (millions)                                            three months ended
                                                                    March 31
    -------------------------------------------------------------------------
    Lower metal prices, denominated in Canadian dollars                 $(39)
    Lower smelter processing charges                                       1
    Lower royalty                                                          2
    Higher depreciation                                                   (1)
    Other                                                                 (2)
    -------------------------------------------------------------------------
    Lower operating earnings, compared to 2008                           (39)
    Lower tax expense because earnings were lower                         11
    Changes in working capital                                             5
    Other                                                                 (1)
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2008                         $(24)
    -------------------------------------------------------------------------

    Spending in 2009 will be limited to sustaining capital

    -------------------------------------------------------------------------
                                    three months ended March 31    objective
                                 2009         2008       change         2009
    -------------------------------------------------------------------------
    Capital spending           $3,600       $5,700         -37%      $22,000
    -------------------------------------------------------------------------

    Capital spending in the quarter was for mine equipment replacements.

    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 March 31    objective
                                 2009         2008       change         2009
    -------------------------------------------------------------------------
    Tonnes of ore milled
     (000's)                      349          348            -        1,370
    Tonnes of ore milled
     per day                    3,900        3,900            -        3,750
    -------------------------------------------------------------------------
    Grades (percent) copper       1.1          1.1            -          1.0
                     zinc         1.2          2.4         -50%          1.9
                     sulphur       44           42          +5%           42
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)       copper        95           96          -1%           94
                     zinc          85           92          -8%           87
    -------------------------------------------------------------------------
    Production
     (tonnes)        copper     3,600        3,500          +3%       13,000
                     zinc       3,500        7,600         -54%       22,600
                     pyrite   190,800      194,500          -2%      510,000
    -------------------------------------------------------------------------
    Cost per tonne of ore
     milled (C$)                  $45          $42          +7%          $41
    -------------------------------------------------------------------------
    

    Lower zinc grades reduce zinc production by more than half

    Pyhasalmi maintained its strong production record in the first quarter of
2009, processing at an annualized rate of 1.4 million tonnes.
    Copper production was consistent with last year. Zinc production in the
first quarter was lower than we planned and lower than the first quarter of
2008 because changes in stope sequencing resulted in lower grades. Pyrite
production was consistent with last year, but a steep drop in pyrite demand at
the end of 2008 reduced prices significantly, and customers took only minimum
contracted deliveries. Pyhasalmi sold 76,000 tonnes of pyrite in the first
quarter of 2009 compared to 124,000 tonnes in the same period last year.
    The higher cost in 2009 is a result of the exchange rate between the euro
and Canadian dollar.

    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 are expected to increase through the rest of the year to
reach our objective of 1.9 percent.

    
    Financial review

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

    -------------------------------------------------------------------------
    (millions of Canadian dollars   three months ended March 31    objective
     unless otherwise stated)                 2009         2008         2009
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)                    3,700        3,500       13,000
    Zinc sales (tonnes)                      4,000        6,600       22,600
    Pyrite sales (tonnes)                   76,000      124,000      510,000
                                       --------------------------------------
    Gross copper sales                         $17          $28          $54
    Gross zinc sales                             6           15           31
    Other metal sales                           11           12           46
                                       --------------------------------------
    Gross sales                                 34           55          131
    Smelter processing charges and
     freight                                    (9)         (11)         (38)
    -------------------------------------------------------------------------
    Net sales                                  $25          $44          $93
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)           349          348        1,370
    Direct production costs ($ per
     tonne)                                    $45          $42          $41
    -------------------------------------------------------------------------
    Direct production costs                    $16          $15          $56
    Change in inventory                         (1)          (2)           -
    Depreciation and other non-cash
     costs                                       3            3           11
    -------------------------------------------------------------------------
    Operating costs                            $18          $16          $67
    -------------------------------------------------------------------------
    Operating earnings                          $7          $28          $26
    -------------------------------------------------------------------------
    Operating cash flow                        ($2)         $31          $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 2009 and 2008.

    -------------------------------------------------------------------------
                                                          three months ended
    (millions)                                                      March 31
    -------------------------------------------------------------------------
    Lower metal prices, denominated in Canadian dollars                 $(11)
    Lower pyrite sales, net of costs to sell                              (5)
    Lower sales volumes                                                   (5)
    -------------------------------------------------------------------------
    Lower operating earnings, compared to 2008                           (21)
    Lower tax expense because of lower earnings                            6
    Changes in working capital (mainly from higher accounts
     receivable)                                                         (15)
    Other                                                                 (3)
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2008                         $(33)
    -------------------------------------------------------------------------

    Capital spending to sustain and improve

    -------------------------------------------------------------------------
                                    three months ended March 31    objective
    (thousands)                  2009         2008       change         2009
    -------------------------------------------------------------------------
    Capital spending             $800       $1,800         -56%      $11,000
    -------------------------------------------------------------------------

    2009 outlook for capital spending

    We expect to spend $11 million in 2009, mainly for mine equipment, making
improvements in the mill and renovating process water pumps. We expect to
replace the zinc circuit cells in September, and these should provide a
reliable circuit for the remaining mine life.

    Troilus

    -------------------------------------------------------------------------
                                    three months ended March 31    objective
                                 2009         2008       change         2009
    -------------------------------------------------------------------------
    Tonnes of ore milled
     (000's)                    1,500        1,400          +7%        6,200
    Tonnes of ore milled
     per day                   16,700       15,400          +7%       16,900
    -------------------------------------------------------------------------
    Strip ratio                   0.1          1.2         -89%          0.3
    -------------------------------------------------------------------------
    Grades gold
           (grams/tonne)         1.44         0.93         +55%         0.82
           copper (percent)      0.20         0.07        +186%         0.11
    -------------------------------------------------------------------------
    Mill recoveries (percent)
           gold                    85           84          +1%           81
           copper                  95           91          +4%           92
    -------------------------------------------------------------------------
    Production
           gold (ounces)       58,100       35,000         +66%      132,200
           copper (tonnes)      2,800          900        +211%        6,000
    -------------------------------------------------------------------------
    Cost per tonne of ore
     milled (C$)                  $13          $14          -7%          $10
    -------------------------------------------------------------------------
    

    Record gold production in January and February

    Troilus had record production in the first two months of the year because
of the high grade of the ore it mined from the main 87 pit.
    As we were mining the final benches of the pit, we expected challenges
with the stability of the pit walls. By the end of February and into March
those concerns caused us to frequently suspend activities, which impacted
production. At the end of March, the pit wall had deteriorated to the point
where we decided to permanently withdraw from the pit bottom and resulted in a
net loss in reserves of about 2,600 ounces.

    2009 outlook for production and costs

    Stockpile recovery will begin in May, lowering production costs.
    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.
    Layoffs of mining and maintenance personnel began at the end of March and
will continue once the primary reclamation activities and pit clean up are
completed.

    
    Financial review

    Higher gold prices and higher sales volumes improved earnings

    -------------------------------------------------------------------------
                                                                     revised
    (millions of Canadian dollars   three months ended March 31    objective
     unless otherwise stated)                 2009         2008         2009
    -------------------------------------------------------------------------
    Sales analysis
    Gold sales (ounces)                     60,100       35,100      132,200
    Copper sales (tonnes)                    2,800          800        6,000
                                       --------------------------------------
    Gross gold sales                           $70          $26         $149
    Gross copper sales                          16            7           25
    Other metal sales                            1            1            3
                                       --------------------------------------
    Gross sales                                 87           34          177
    Smelter processing charges and
     freight                                    (6)          (2)         (13)
    -------------------------------------------------------------------------
    Net sales                                  $81          $32         $164
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)         1,500        1,400        6,200
    Direct production costs ($ per
     tonne)                                    $13          $14          $10
    -------------------------------------------------------------------------
    Direct production costs                    $19          $20          $62
    Change in inventory                          3           (1)           1
    Depreciation and other non-cash
     costs                                       4            4           12
    -------------------------------------------------------------------------
    Operating costs                            $26          $23          $75
    -------------------------------------------------------------------------
    Operating earnings                         $55           $9          $89
    -------------------------------------------------------------------------
    Operating cash flow                        $49           $6          $99
    -------------------------------------------------------------------------

    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 2009 and 2008.

    -------------------------------------------------------------------------
                                                          three months ended
    (millions)                                                      March 31
    -------------------------------------------------------------------------
    Higher gold price denominated in Canadian dollars                    $26
    Lower copper price denominated in Canadian dollars                   (12)
    Higher sales volumes                                                  31
    Higher smelter processing charges                                     (1)
    Lower operating costs                                                  2
    -------------------------------------------------------------------------
    Higher operating earnings, compared to 2008                           46
    Changes in working capital                                            (5)
    Other                                                                  2
    -------------------------------------------------------------------------
    Higher operating cash flow, compared to 2008                         $43
    -------------------------------------------------------------------------


    Ok Tedi

    -------------------------------------------------------------------------
                                    three months ended March 31    objective
    (100 percent)                2009         2008       change         2009
    -------------------------------------------------------------------------
    Tonnes of ore milled
     (000's)                    5,200        5,000          +4%       25,300
    Tonnes of ore milled
     per day                   57,800       54,900          +4%       69,000
    -------------------------------------------------------------------------
    Strip ratio                   1.6          1.9         -16%          1.2
    -------------------------------------------------------------------------
    Grades
         copper (percent)         0.8          0.9         -11%          0.8
         gold (grams/tonne)       1.1          1.0         +10%          1.1
    -------------------------------------------------------------------------
    Mill recoveries (percent)
         copper                    86           85          +1%           84
         gold                      66           73         -10%           68
    -------------------------------------------------------------------------
    Production
         copper (tonnes)       36,900       37,300          -1%      176,000
         gold (ounces)        115,100      118,500          -3%      608,000
    -------------------------------------------------------------------------
    Cost per tonne of ore
     milled (C$)                  $25          $24          +4%          $26
    -------------------------------------------------------------------------


    Throughput to improve once the mine tailings management plant has reached
    designed performance
    

    The mine plan this quarter was modified to limit the amount of sulphur in
tailings while the tailings management plant is being fully commissioned. The
purpose of the plant is to minimize discharge of sulphur to the river, thus
greatly reducing the potential environmental impact. Until the plant reaches
its design performance, Ok Tedi will only mine ores with low sulphur content.
The change in plan reduced gold grades but increased copper grades from what
we expected.
    Mill throughput in the quarter was higher than last year, but lower than
expected because of lower mine production and low grinding rates on certain
ores. Gold recoveries were low because of difficulty with complex ores.
    The cost per tonne of ore milled this quarter was higher than in 2008
mainly because of the weaker value of the Canadian dollar.

    2009 outlook for production and costs

    Ok Tedi expects to process 25.3 million tonnes of ore containing 0.8
percent copper and 1.1 grams per tonne of gold. This should produce 176,000
tonnes of copper and 608,000 ounces of gold. Copper grades should be slightly
lower during the rest of the year, but gold grades should be slightly higher.
    Modifications on the mine tailings management plant to reach full
performance are required, and engineering for this is now underway. Modifying
and operating the plant to achieve designed results are critical not only to
achieve annual production objectives but also for the continued responsible
operation of the mine.

    
    Financial review

    Lower earnings and operating cash flow

    -------------------------------------------------------------------------
                                                                     revised
    (millions of Canadian dollars   three months ended March 31    objective
     unless otherwise stated)                 2009         2008         2009
    -------------------------------------------------------------------------
    Sales analysis at 18%
    Copper sales (tonnes)                    6,000        7,400       31,600
    Gold sales (ounces)                     23,800       20,200      109,400
                                       --------------------------------------
    Gross copper sales                         $34          $68         $131
    Gross gold sales                            23           17          123
    Other metal sales                            1            1            4
                                       --------------------------------------
    Gross sales                                 58           86          258
    Smelter processing charges and
     freight                                    (6)          (9)         (38)
    -------------------------------------------------------------------------
    Net sales                                  $52          $77         $220
    -------------------------------------------------------------------------
    Cost analysis at 18%
    Tonnes of ore milled (thousands)           932          900        4,550
    Direct production costs ($ per
     tonne)                                    $25          $24          $26
    -------------------------------------------------------------------------
    Direct production costs                    $23          $20         $118
    Change in inventory                          1            1            -
    Depreciation and other non-cash
     costs                                      10            2           28
    -------------------------------------------------------------------------
    Operating costs                            $34          $23         $146
    -------------------------------------------------------------------------
    Operating earnings                         $18          $54          $74
    -------------------------------------------------------------------------
    Operating cash flow                       ($14)         $39          $70
    -------------------------------------------------------------------------

    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 2009 and 2008.

    -------------------------------------------------------------------------
                                                          three months ended
    (millions)                                                      March 31
    -------------------------------------------------------------------------
    Lower copper prices, denominated in Canadian dollars                $(19)
    Higher gold prices, denominated in Canadian dollars                    2
    Lower sales volumes                                                   (8)
    Higher operating costs                                                (7)
    Higher depreciation                                                   (4)
    -------------------------------------------------------------------------
    Lower operating earnings, compared to 2008                           (36)
    Lower tax expense because of lower earnings                           12
    Changes in net working capital (mainly from the repayment of
     overpaid metal sales)                                               (34)
    Add back - non-cash higher depreciation                                4
    Other                                                                  1
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2008                         $(53)
    -------------------------------------------------------------------------

    Capital spending on pit drainage

    In 2009, Ok Tedi spent US $15 million (our 18 percent share was $3 
million) on capital projects. Of this, US $8 million was for the pit drainage
project.

    -------------------------------------------------------------------------
    (18 percent)                    three months ended March 31    objective
                                 2009         2008       change         2009
    -------------------------------------------------------------------------
    Capital spending           $3,300       $8,000         -59%      $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

    On April 7th, the Andalucian Regional Ministry of Innovation, Science and
Business (CICE) issued a resolution to approve the lifting of the suspension
of mining imposed at Las Cruces in May 2008.
    Las Cruces has completed all activities required to fulfill the
pre-conditions and is awaiting receipt of final verification from CICE which
would enable Las Cruces to resume mining in the pit.

    Preparation for first copper

    Construction of the process plant has been completed and commissioned to
the extent possible without ore. It is ready to start up as soon as ore is
delivered, which we expect would be about four weeks after Las Cruces receives
the final verification from CICE that would enable it to resume mining. First
copper should be produced approximately eight days after the start of
production.

    2009 outlook for development and production

    Las Cruces construction is complete. To date, (euro)477 million has been
spent on construction capital for the project and (euro)543 million for the
total project.
    The following table shows total spending for the project to the end of
March 2009 and our capital objective for the rest of the year:

    
    -------------------------------------------------------------------------
    (millions)                  up to   January to      revised        total
                             December   March 2009    objective      project
                             31, 2008                  April to  estimate at
                                                       December  December 31,
                                                           2009         2009
    -------------------------------------------------------------------------

    Construction capital    (euro)448     (euro)29     (euro)27    (euro)504
    Mine development                6            4           14           24
    Sustaining capital              -            -           24           24
    Capitalized interest           18            3            5           26
    Pre-operating costs
     capitalized, net of
     sales                          -            -           16           16
    Value added tax                25            5          (30)           -
    Other                           5            -            3            8
    -------------------------------------------------------------------------
    Capital expenditures    (euro)502     (euro)41     (euro)59    (euro)602
    -------------------------------------------------------------------------

    The table below shows expected production for 100 percent of Las Cruces
for 2009 (assuming we start production in June) and for the mine life.

    -------------------------------------------------------------------------
                                                           2009      life of
                                                         target         mine
    -------------------------------------------------------------------------
    Tonnes of ore processed (thousands)                     305       17,492
    -------------------------------------------------------------------------
    Strip ratio                                              40         12.5
    -------------------------------------------------------------------------
    Copper grades                         (percent)         9.8          6.2
    -------------------------------------------------------------------------
    Copper production                     (tonnes)       28,800      997,200
    -------------------------------------------------------------------------
    Cost per tonne of ore processed       (C $)            $195          $87
    -------------------------------------------------------------------------
    

    Expected copper production for 2009 includes 23,400 tonnes of copper
cathode and 5,400 tonnes of copper in ore that, depending on market conditions
and renewal of export permits, 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, which will reduce copper
sales by 5,400 tonnes of copper. We still plan on mining 18,200 tonnes of
copper in ore to ship directly to smelters, however, 12,800 tonnes has been
shifted to 2010.
    Based on the 2009 production targets and the assumptions laid out on page
13, we estimate the following operating earnings and cash flow in 2009.

    
    100%
    -----------------------------------------------------  ------------------
    (millions of Canadian dollars unless                   revised objective
     otherwise stated)                                                  2009
    -----------------------------------------------------  ------------------
    Copper sales (tonnes)                                             28,800
                                                           ------------------
    Gross copper sales                                                   $77
    Smelter processing charges and freight                               (14)
    -----------------------------------------------------  ------------------
    Net sales                                                            $63
    -----------------------------------------------------  ------------------
    Tonnes of ore milled (thousands)                                     305
    Direct production costs ($ per tonne)                               $195
    -----------------------------------------------------  ------------------
    Direct production costs                                              $39
    Change in inventory                                                   (6)
    Depreciation and other non-cash costs                                 14
    -----------------------------------------------------  ------------------
    Operating costs                                                      $47
    -----------------------------------------------------  ------------------
    Operating earnings                                                   $16
    -----------------------------------------------------  ------------------
    Operating cash flow                                                  $32
    -----------------------------------------------------  ------------------
    

    Petaquilla

    Quarterly development update

    We have three main activities at Petaquilla: drilling, social and
environmental impact assessment and engineering.

    Drilling

    We drilled 18,000 metres in the first quarter of 2009, bringing total
resource drilling to approximately 39,000 metres. We expect to achieve our
project mineral reserve targets by mid-2009. Our drill programme was expanded
to nine rigs from eight in the first quarter to ensure we reach our reserve
target on schedule. Work is progressing well to expand reserves to ensure a
minimum mine life of 30 years at a throughput rate of 150,000 tonnes per day.

    Social and environmental impact assessment and community development

    Baseline studies are substantially completed, and we are moving to the
impact assessment stage. We expect to submit an impact assessment (EsIA) to
the Panamanian environmental authorities by the end of 2009.
    We have been active in supporting sustainable businesses to support our
activities, including carpentry projects to supply core boxes, poultry
production within communities to supply our camps, a contractor maintenance
cooperative to ensure our access road is in good condition and experts to
improve agricultural practices and yields. We will continue to fund these
programs until they become fully sustainable.
    Other initiatives, such as local scholarship programs and meal programs
that we inherited, are being continued with success.

    Engineering

    We continued with engineering work and expect to complete the final
front-end engineering and design (FEED) study by the end of 2009. The base
case for the FEED study is a throughput rate of 150,000 tonnes per day, which
equates to an average annual production of 275,000 tonnes of copper for the
first 10 years. We intend to select an independent producer that would
construct a facility to provide the power required for the operation.

    2009 outlook for development

    By the end of 2009, once the final FEED study is complete and the EsIA is
submitted, we expect to begin detailed engineering. At the same time, we
intend to seek approval of the EsIA and begin the permitting process for
construction. If permits are received in a timely manner, construction should
be completed in 2014.
    We expect to spend approximately $94 million in 2009 to fund this work.
    We have commenced the process of meeting potential partners for the
development of this project and expect to develop partnerships over the next
12 months.

    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 March 31
    (millions)                                             2009         2008
    -------------------------------------------------------------------------
    CASH FROM OPERATING ACTIVITIES
    Cayeli                                                  $(9)         $15
    Pyhasalmi                                                (2)          31
    Troilus                                                  49            6
    Ok Tedi                                                 (14)          39
    Corporate development and exploration not
     included in operations' cash flow                       (2)          (2)
    General and administration                               (4)          (4)
    Other                                                    (1)          (8)
    -------------------------------------------------------------------------
                                                             17           77
    -------------------------------------------------------------------------
    CASH FROM INVESTING AND FINANCING
    Capital spending                                        (95)        (111)
    Long-term debt - borrowings                               -           50
                   - repayments                              (8)           -
    Funding bynon-controlling shareholder                    16           15
    Foreign exchange on cash held in foreign
     currency                                                 6           37
    Other                                                    (2)          (3)
    -------------------------------------------------------------------------
                                                            (83)         (12)
    -------------------------------------------------------------------------
    Increase (decrease) in cash                             (66)          65
    Cash and short-term investments
      Beginning of period                                   573          841
    -------------------------------------------------------------------------
      End of period                                        $507         $906
    -------------------------------------------------------------------------

    OPERATING ACTIVITIES

    Key components of the change in operating cash flows
    -------------------------------------------------------------------------
                                                          three months ended
    (millions)                                                      March 31
    -------------------------------------------------------------------------
    Lower earnings from operations (see page 4)                         $(51)
    Non-cash changes in operating earnings:
    Add back higher non-cash charges included in earnings from
     operations                                                            8
    Lower tax expense                                                     21
    Lower interest income                                                 (7)
    Changes in working capital                                           (29)
    Other                                                                 (2)
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2008                         $(60)
    -------------------------------------------------------------------------
    

    Operating cash flows are lower than they were in 2008 because of lower
operating earnings and a large outflow of cash related to working capital.
First quarter cash flow was reduced by approximately $48 million to repay
smelters for the excess provisional payments they made in 2008, before copper
prices dropped.

    2009 outlook for cash from operating activities

    Volatile markets make it 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                                                               99
    Ok Tedi                                                               70
    Las Cruces                                                            32
    -------------------------------------------------------------------------
                                                                        $285
    -------------------------------------------------------------------------

    INVESTING AND FINANCING

    Capital spending
    -------------------------------------------------------------------------
                                                                     revised
                                    three months ended March 31    objective
    (millions)                             2009            2008         2009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Cayeli                                  $ 3            $  6         $ 22
    Pyhasalmi                                 1               2           11
    Troilus                                   -               -            -
    Ok Tedi                                   3               8           26
    Las Cruces                               65              92          156
    Cerattepe                                 -               3            -
    Petaquilla                               23               -           94
    -------------------------------------------------------------------------
                                            $95            $111         $309
    -------------------------------------------------------------------------
    

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

    Long-term debt repayments

    In 2009, Las Cruces repaid (euro) 5 million under Tranche B of its credit
facility which is equal to the amount of subsidies received. We expect to
receive the remaining subsidies in the second quarter, and will fully repay
Tranche B at that time.

    
    2009 outlook for investing and financing

    We expect capital spending to be $309 million in 2009. The more
significant items include:
    -  $84 million on completion of the 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 an underground
       drainage tunnel 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) 40 million in subsidies, but we must
meet certain conditions before we can receive the funds (mainly specific
levels of employment and completing construction of the plant, which we
believe have been met).

    Financial condition

    CASH

    Our cash and cash equivalents balance at March 31, 2009 was $507 million.
This included cash and money market instruments that mature in 90 days or
less, 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
to minimize the risk associated with these investments. We base our decisions
about the length of maturities on our cash flow requirements, rates of return
and other factors.
    General worldwide economic conditions have weakened dramatically since
the end of the third quarter of 2008. In response, we have adjusted our
investment positions and are now mainly invested in treasury funds to minimize
liquidity risk until normal market conditions return. At March 31, 2009, we
held cash and short-term investments in the following:
    
    -  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.

    See note 4 on page 41 in the consolidated financial statements for more
details about where our cash is invested.
    Our restricted cash balance of $71 million included:
    -  $18 million in trust for future reclamation at Ok Tedi
    -  $16 million of cash collateralized letters of credit for Inmet
    -  $35 million related to issuing letters of credit to suppliers at
       Las Cruces and for its labour bond to the government
    -  $2 million for future reclamation at Pyhasalmi


    COMMON SHARES

    -------------------------------------------------------------------------
    Common shares outstanding as of
      March 31, 2009 and April 28, 2009                           48,281,909
    -------------------------------------------------------------------------
    Deferred share units outstanding as of
      March 31, 2009
    (redeemable on a one-for-one basis for common shares)             85,563
    -------------------------------------------------------------------------

    Dividend Declaration

    The board of directors has declared an eligible dividend of $0.10 per
common share payable on June 15, 2009 to common shareholders of record as at
May 31, 2009.

    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 this quarter.

    -------------------------------------------------------------------------
                                                               C$ marked-to-
                                                                 market gain
    Type of                                                        (loss) at
     contract      Expiry      Quantity         Price         March 31, 2009
    -------------------------------------------------------------------------
    Ok Tedi copper
     forward sales  2009   2.4 million lbs  US $2.41 per lb   $2.0 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. ($2.5 million)(2)

    Las Cruces      2009  US $179 million       5.2 percent   ($20.6 million)
     interest    to 2014     (reducing in
     rate                     conjunction
     swaps                      with debt
                                repayment
                                schedule)
    -------------------------------------------------------------------------
    (1) At a copper price of US $1.84 per pound.
    (2) At a gold price of US $937 per ounce.
    


    Accounting changes

    We adopted a new section of the CICA Handbook:

    
    Emerging Issues Committee (EIC) 173 - Credit Risk and the fair value of
    financial assets and financial liabilities
    

    Section 3855, (Financial instruments-recognition and measurement)
requires certain financial assets and financial liabilities to be measured at
fair value, taking into account the credit quality of the financial
instrument.
    The EIC reached a consensus that an entity's own credit risk and the
credit risk of the counterparty should both be taken into account in
determining the fair value of financial assets and financial liabilities,
including derivative instruments, for presentation and disclosure purposes.
    We have adopted this standard retrospectively, without restatement. The
adoption of EIC 173 did not have an impact on our consolidated financial
statements.

    Section 3064 - Goodwill and Intangible Assets

    Effective January 1, 2009, we adopted CICA Handbook Section 3064,
Goodwill and Intangible Assets, which replaces Section 3062 - Goodwill and
Other Intangible Assets and Section 3450 - Research and Development Costs.
This new standard establishes standards for the recognition, measurement,
presentation and disclosure of goodwill subsequent to its initial recognition
and of intangible assets. It provides guidance for recognizing 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. The adoption of this standard did not impact on our
consolidated financial statements.

    
    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.
    To date, we have completed an initial draft for the majority of our
significant accounting policies. Over the next several months we will quantify
and prepare the calculations to adjust our financial statements using these
initial new policies. This exercise will either validate our accounting policy
choices or require reconsideration of our choices. The work prepared to date
has indicated that we are not expecting significant changes to the carrying
values of property, plant and equipment, but based on current IFRS we would
expect significant effects on our accounting for business combinations on a
going forward basis. Current exposure drafts on accounting for joint venture
interests, which currently includes our investment in Ok Tedi, and future
income taxes could also have significant effects on our financial statements.
We will continue to monitor these exposure drafts.
    For the remainder of 2009, we will complete and finalize our accounting
policies under IFRS, calculate all differences and document new internal
controls. Our goal is to restate our December 31, 2009 Canadian GAAP balance
sheet to IFRS in the first quarter of 2010.

    Supplementary financial information

    Page 31 includes supplementary financial information about 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

    
    Annual general meeting
    Will be held on
    -  Tuesday, April 28, 2009
    -  2:30 p.m. Eastern Time
    -  webcast available at
    http://w.on24.com/r.htm?e=141502&s=1&k=F7A8F940C6062080C2DF292F43696FF2
    or www.inmetmining.com.

    You can also dial in by calling
    -  Local or international: +1.416.644.3417
    -  Toll-free within North America: +1.800.732.6179

    Starting 5:00 p.m. (ET) Tuesday April 28, 2009, conference call replay
    will be available
    -  Local or international: +1.416.640.1917 passcode 21302880 followed by
       the number sign
    -  Toll-free within North America: +1.877.289.8525 passcode 21302880
       followed by the number sign


    First quarter conference call
    Will be held on
    -  Wednesday, April 29, 2009
    -  8:30 a.m. Eastern Time
    -  webcast available at
    www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2610080 or
    www.inmetmining.com.

    You can also dial in by calling
    -  Local or international: +1.416.644.3421
    -  Toll-free within North America: +1.800.732.0232

    Starting 10:30 a.m. (ET) Wednesday April 29, 2009, conference call replay
    will be available
    -  Local or international: +1.416.640.1917 passcode 21302881 followed by
       the number sign
    -  Toll-free within North America: +1.877.289.8525 passcode 21302881
       followed by the number sign



    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs
    2009 For the three months ended March 31
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars)

    Direct production costs    $0.97      $1.60    $1.32     $1.24      $258
    Royalties and variable
     compensation               0.09          -    (0.05)     0.02         -
    Smelter processing
     charges and freight        1.02       0.68     0.39      0.71        84
    Metal credits              (1.10)     (2.04)   (1.40)    (1.41)     (222)
                            ----------------------------- --------- ---------

    Cash cost                  $0.98      $0.24    $0.26     $0.56      $120
                            ----------------------------- --------- ---------
                            ----------------------------- --------- ---------

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

    Direct production costs   $1.06      $1.90     $1.27     $1.30      $567
    Royalties and variable
     compensation              0.24          -      0.11      0.15         -
    Smelter processing
     charges and freight       1.19       1.16      0.55      0.95        62
    Metal credits             (1.86)     (3.90)    (1.37)    (2.07)     (237)
                            ----------------------------- --------- ---------

    Cash cost                 $0.63     ($0.84)    $0.56     $0.33      $392
                            ----------------------------- --------- ---------
                            ----------------------------- --------- ---------

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

    Reconciliation of cash costs to statements of earnings
    2009 For the three months ended March 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 15    page 17  page 21             page 19

    Direct production costs      $20        $16      $23       $59       $19
    Smelter processing
     charges and freight          19          9        6        34         6
    By product sales             (23)       (17)     (24)      (64)      (17)
    Adjust smelter processing
     and freight, and sales
     to production basis           3         (6)       -        (3)        -
                             --------- ---------- -------- -------- ---------
    Operating costs net of
     metal credits               $19         $2       $5       $26        $8
    US $ to C$ exchange rate   $1.24      $1.24    $1.24     $1.24     $1.24
    Inmet's share of
     production (000's)       15,500      7,900   14,600    38,000    58,100
                             -------------------------------------- ---------
    Cash cost                  $0.98      $0.24    $0.26     $0.56      $120
                             -------------------------------------- ---------
                             -------------------------------------- ---------


    2008 For the three months ended March 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 15    page 17  page 21             page 19
    Direct production costs      $23        $15      $20       $58       $20
    Smelter processing
     charges and freight          22         11        9        42         2
    By product sales             (37)       (27)     (18)      (82)       (8)
    Adjust smelter processing
     and freight, and sales
     to production basis           3         (5)      (2)       (4)        -
                             --------- ---------- -------- -------- ---------
    Operating costs net of
     metal credits               $11        ($6)      $9       $14       $14
    US $ to C$ exchange rate   $1.00      $1.00    $1.00     $1.00     $1.00
    Inmet's share of
     production (000's)       18,000      7,800   14,800    40,600    35,000
                             -------------------------------------- ---------
    Cash cost                  $0.63     ($0.84)   $0.56     $0.33      $392
                             -------------------------------------- ---------
                             -------------------------------------- ---------



    Quarterly review

    INMET MINING CORPORATION
    Quarterly review
    (unaudited)

    Latest Four Quarters
    -------------------------------------------------------------------------
    (thousands of Canadian          2009        2008        2008        2008
     dollars, except per           First      Fourth       Third      Second
     share amounts)              quarter     quarter     quarter     quarter
    -------------------------------------------------------------------------

    STATEMENTS OF EARNINGS
    Gross sales               $  239,152  $  139,626  $  247,495  $  281,463
    Smelter processing
     charges and freight         (40,540)    (32,870)    (49,502)    (53,209)
    Cost of sales                (89,904)    (91,715)    (84,948)    (89,893)
    Depreciation                 (15,679)    (14,844)    (11,395)     (9,195)
                              -----------------------------------------------
                                  93,029         197     101,650     129,166
    Corporate development
     and exploration              (3,232)     (1,971)     (3,548)     (2,483)
    General and administration    (4,124)     (3,289)     (3,411)     (2,790)
    Investment and other
     income (expense)            (11,203)      8,057      (5,467)    (11,358)
    Asset impairment              (6,419)    (36,275)          -           -
    Interest expense                (492)       (490)       (476)       (471)
    Capital tax expense             (125)     (1,304)       (125)       (124)
    Income tax expense           (18,890)        767     (17,379)    (44,333)
    Non-controlling interest       2,783       1,794       3,813          98
                              -----------------------------------------------
    Net income (loss)         $   51,327    ($32,514) $   75,057  $   67,705
                              -----------------------------------------------
    Net income (loss) per
     common share             $     1.06      ($0.67) $     1.55  $     1.40
                              -----------------------------------------------
    Diluted net income (loss)
     per common share         $     1.06      ($0.67) $     1.55  $     1.40
                              -----------------------------------------------


    Previous Four Quarters
    -------------------------------------------------------------------------
    (thousands of Canadian          2008        2007        2007        2007
     dollars, except per           First      Fourth       Third      Second
     share amounts)              quarter     quarter     quarter     quarter
    -------------------------------------------------------------------------

    STATEMENTS OF EARNINGS
    Gross sales               $  276,281  $  224,773  $  272,293  $  320,018
    Smelter processing
     charges and freight         (44,157)    (43,902)    (42,557)    (55,413)
    Cost of sales                (79,246)    (78,809)    (72,057)    (78,181)
    Depreciation                  (9,170)     (9,480)     (8,739)     (8,039)
                              -----------------------------------------------
                                 143,708      92,582     148,940     178,385
    Corporate development
     and exploration              (2,618)     (3,510)     (2,475)     (2,086)
    General and
     administration               (3,648)    (12,622)     (2,674)     (2,162)
    Investment and other
     income                       14,754       5,968       9,224      13,665
    Interest expense                (447)       (407)       (424)       (424)
    Capital tax (expense)
     recovery                       (126)        212        (273)       (274)
    Income tax expense           (44,744)    (18,551)    (37,649)    (48,509)
    Non-controlling interest        (205)        (27)        167        (545)
                              -----------------------------------------------
    Net income                $  106,674  $   63,645  $  114,836  $  138,050
                              -----------------------------------------------
    Net income per
     common share             $     2.21  $     1.32  $     2.38  $     2.86
                              -----------------------------------------------
    Diluted net income
     per common share         $     2.21  $     1.32  $     2.37  $     2.86
                              -----------------------------------------------



    Consolidated financial statements
    INMET MINING CORPORATION
    Consolidated balance sheets

                                                       March 31  December 31
    (thousands of Canadian dollars)                        2009         2008
    -------------------------------------------------------------------------
                                                     (unaudited)

    Assets
    Current assets:
      Cash and short-term investments (note 4)       $  506,939   $  572,733
      Restricted cash (note 5)                            8,056        8,311
      Accounts receivable                               171,145      135,742
      Inventories                                        72,731       74,362
      Future income tax asset                            14,110       14,311
                                                     ------------------------
                                                        772,981      805,459

    Restricted cash (note 5)                             62,715       52,893
    Property, plant and equipment                     2,043,727    1,950,535
    Investments (note 6)                                 21,134       17,514
    Future income tax asset                              11,134        5,499
    Derivatives (note 7)                                  1,959        4,327
    Other assets                                          4,942        5,031
                                                     ------------------------
                                                     $2,918,592   $2,841,258
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities:
      Accounts payable and accrued liabilities       $ 136,950    $  212,527
      Derivatives (note 7)                               8,575         8,693
      Future income tax liabilities                      2,915             -
      Current portion of long-term debt                111,954       109,666
                                                     ------------------------
                                                       260,394       330,886

    Long-term debt (note 8)                            419,187       384,848
    Asset retirement obligations                       130,522       126,782
    Derivatives (note 7)                                14,508        16,417
    Other liabilities (note 10)                         59,879        27,122
    Future income tax liabilities                       17,599        15,971
    Non-controlling interest                            67,434        71,449
                                                     ------------------------
                                                       969,523       973,475
                                                     ------------------------

    Commitments (note 9)

    Shareholders' equity

    Share capital                                      337,464       337,464
    Contributed surplus                                 62,421        61,925
    Stock based com pensation                            2,775         2,688
    Retained earnings                                1,334,401     1,283,074
    Accumulated other comprehensive loss (note 11)     212,008       182,632
                                                    ------------------------
                                                     1,949,069     1,867,783
                                                    ------------------------
                                                    $2,918,592    $2,841,258
    -------------------------------------------------------------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented balance sheets

    2009 As at March 31

    (unaudited)                CORPORATE      CAYELI   PYHASALMI     TROILUS
    -------------------------------------------------------------------------

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

    Assets

    Cash and short-term
     investments                $227,130    $187,444     $58,123         $ -
    Other current assets          11,645      52,393      46,376      33,486
    Restricted cash               16,410           -       2,011           -
    Property, plant
     and equipment                   990     146,265      71,919      24,193
    Investments                   21,134           -           -           -
    Other non-current assets       1,752         417           -       1,825
                              -----------------------------------------------
                                $279,061    $386,519    $178,429     $59,504
                              -----------------------------------------------

    Liabilities

    Current liabilities          $23,359     $34,294     $11,160     $11,605
    Long-term debt                19,628           -           -           -
    Asset retirement
     obligations                  23,841      10,132      16,321      12,731
    Derivatives                        -           -           -           -
    Other liabilities              4,865       4,903           -       1,856
    Future income tax
     liabilities                   3,952       4,335       9,094           -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------
                                 $75,645     $53,664     $36,575     $26,192
                              -----------------------------------------------


    2009 As at March 31

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

    Assets

    Cash and short-term
     investments                 $20,389      $9,707      $4,146    $506,939
    Other current assets          46,947      74,344         851     266,042
    Restricted cash               17,746      26,548           -      62,715
    Property, plant
     and equipment               105,686   1,125,175     569,499   2,043,727
    Investments                        -           -           -      21,134
    Other non-current assets       7,392       6,649           -      18,035
                              ----------------------- ----------- -----------
                                $198,160  $1,242,423    $574,496  $2,918,592
                              ----------------------- ----------- -----------

    Liabilities

    Current liabilities          $19,035    $152,830      $8,111    $260,394
    Long-term debt                     -     399,559           -     419,187
    Asset retirement
     obligations                  26,119      41,378           -     130,522
    Derivatives                    2,453      12,055           -      14,508
    Other liabilities              2,011      46,244           -      59,879
    Future income tax
     liabilities                       -         218           -      17,599
    Non-controlling interest           -      67,434           -      67,434
                              ----------------------- ----------- -----------
                                 $49,618    $719,718      $8,111    $969,523
                              -----------------------------------------------



    2008 As at December 31

                               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           -           -           -
    Other non-current 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
    ------------------------------------------------- ----------- -----------
                             (Papua New
    (thousands of Canadian       Guinea)     (Spain)    (Panama)
     dollars)

    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
    Other non-current assets       7,039       2,356           -      14,857
                              -----------------------------------------------
                                $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
                              -----------------------------------------------



    INMET MINING CORPORATION
    Consolidated statements of earnings
    (unaudited)

    (thousands of Canadian dollars               Three Months Ended March 31
     except per share amounts)                              2009        2008
    -------------------------------------------------------------------------

    Gross sales                                         $239,152    $276,281

    Smelter processing charges and freight               (40,540)    (44,157)

    Cost of sales                                        (89,904)    (79,246)

    Depreciation                                         (15,679)     (9,170)

    -------------------------------------------------------------------------
                                                          93,029     143,708

    Corporate development and exploration                 (3,232)     (2,618)

    General and administration                            (4,124)     (3,648)

    Investment and other income (expense) (note 12)      (11,203)     14,754

    Asset impairment (note 15)                            (6,419)          -

    Interest expense                                        (492)       (447)

    Capital tax expense                                     (125)       (126)

    Income tax expense (note 13)                         (18,890)    (44,744)

    Non-controlling interest                               2,783        (205)

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

    Net income                                           $51,327    $106,674
    -------------------------------------------------------------------------

    Basic and diluted net income per
     common share (note 14)                                $1.06       $2.21
    -------------------------------------------------------------------------

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



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2009 For the three months ended March 31

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

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

    Gross sales                      $ -     $60,021     $33,981     $86,990
    Smelter processing
     charges and freight               -     (19,076)     (8,991)     (6,260)
    Cost of sales                   (484)    (22,571)    (15,845)    (22,827)
    Depreciation                       -      (3,473)     (2,602)     (3,419)
                              -----------------------------------------------
                                    (484)     14,901       6,543      54,484

    Corporate development
     and exploration              (1,848)       (494)       (890)          -
    General and administration    (4,124)          -           -           -
    Investment and other
     income (expense)                451       2,867           -         284
    Asset impairment charges           -      (6,419)
    Interest expense                (492)          -           -           -
    Capital tax expense             (125)          -           -           -
    Income tax (expense)
     recovery                    (16,531)        581        (435)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------

    Net income (loss)           ($23,153)    $11,436      $5,218     $54,768
                              -----------------------------------------------


    2009 For the three months ended March 31

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

    Gross sales                  $58,160         $ -         $ -    $239,152
    Smelter processing
     charges and freight          (6,213)          -           -     (40,540)
    Cost of sales                (28,177)          -           -     (89,904)
    Depreciation                  (6,185)          -           -     (15,679)
                              -----------------------------------------------
                                  17,585           -           -      93,029

    Corporate development
     and exploration                   -           -           -      (3,232)
    General and administration         -           -           -      (4,124)
    Investment and other
     income (expense)             (1,372)    (13,433)          -     (11,203)
    Asset impairment charges                                   -      (6,419)
    Interest expense                   -           -           -        (492)
    Capital tax expense                -           -           -        (125)
    Income tax (expense)
     recovery                     (6,540)      4,035           -     (18,890)
    Non-controlling interest           -       2,783           -       2,783
                              -----------------------------------------------

    Net income (loss)             $9,673     ($6,615)        $ -     $51,327
                              -----------------------------------------------



    2008 For the three months ended March 31

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

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

    Gross sales                      $ -    $100,616     $54,908     $34,251
    Smelter processing
     charges and freight               -     (22,013)    (10,820)     (2,187)
    Cost of sales                   (494)    (22,575)    (13,944)    (21,011)
    Depreciation                       -      (2,373)     (2,150)     (2,418)
                              -----------------------------------------------
                                    (494)     53,655      27,994       8,635

    Corporate development
     and exploration              (1,977)        (70)       (566)         (5)
    General and administration    (3,648)          -           -           -
    Investment and other
     income (expense)             10,561       4,861           -       1,361
    Interest expense                (447)          -           -           -
    Capital tax expense             (126)          -           -           -
    Income tax expense                 -     (19,124)     (6,023)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------

    Net income                    $3,869     $39,322     $21,405      $9,991
                              -----------------------------------------------


    2008 For the three months ended March 31

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

    Gross sales                  $86,506         $ -         $ -    $276,281
    Smelter processing
     charges and freight          (9,137)          -           -     (44,157)
    Cost of sales                (21,222)          -           -     (79,246)
    Depreciation                  (2,229)          -           -      (9,170)
                              -----------------------------------------------
                                  53,918           -           -     143,708

    Corporate development
     and exploration                   -           -           -      (2,618)
    General and administration         -           -           -      (3,648)
    Investment and other
     income (expense)             (2,862)        833           -      14,754
    Interest expense                   -           -           -        (447)
    Capital tax expense                -           -           -        (126)
    Income tax expense           (19,347)       (250)          -     (44,744)
    Non-controlling interest           -        (205)          -        (205)
                              -----------------------------------------------

    Net income                    $31,709       $378         $ -    $106,674
                              -----------------------------------------------



    INMET MINING CORPORATION
    Consolidated statements of cash flows
    (unaudited)

                                                 Three Months Ended March 31
    (thousands of Canadian dollars)                         2009        2008
    -------------------------------------------------------------------------

    Cash provided by (used in)
     operating activities(1)
    Net income                                           $51,327    $106,674
    Add (deduct) items not affecting cash:
      Depreciation                                        15,679       9,170
      Future income tax                                   (2,233)      2,917
      Accretion expense on asset
       retirement obligations                              1,267       1,021
      Non-controlling interest                            (2,783)        205
      Asset impairment (note 15)                           6,419           -
      Foreign exchange loss (gain)                        10,940      (7,436)
      Other                                                2,496       1,742
    Settlement of asset retirement obligations              (447)       (521)
    Net change in non-cash working capital (note 3)      (65,568)    (37,022)
                                                   --------------------------
                                                          17,097      76,750
                                                   --------------------------

    Cash provided by (used in) investing activities

    Capital spending                                     (94,859)   (111,414)
    Disposition of investments                                 -       1,521
    Sale of short-term investments                         2,431     300,424
                                                   --------------------------
                                                         (92,428)    190,531
                                                   --------------------------

    Cash provided by (used in) financing activities

    Long-term debt:
      Borrowings (note 8)                                      -      50,346
      Repayments (note 8)                                 (8,328)          -
    Funding by non-controlling shareholder                15,672      15,129
    Financial assurance deposits                          (9,440)     (7,494)
    Subsidies received                                     8,609       3,233
    Other                                                    (45)        (46)
                                                   --------------------------
                                                           6,468      61,168
                                                   --------------------------

    Foreign exchange change on cash held                   5,500      37,196
                                                   --------------------------
      in foreign currency                                (63,363)    365,645

    Increase (decrease) in cash
    Cash:
      Beginning of period                                537,059     522,505
                                                   --------------------------
      End of period                                      473,696     888,150
                                                   --------------------------
                                                          33,243      17,894
                                                   --------------------------

    Short-term investments                              $506,939    $906,044
      -----------------------------------------------------------------------

    Cash and short-term investments
    (see accompanying notes)
    (1) Supplementary cash flow information:
        Cash interest paid                                $4,725     $3,398
        Cash taxes paid                                   $5,848    $15,212
      -----------------------------------------------------------------------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2009 For the three months ended March 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working capital ($13,532)    $11,597      $5,660     $59,716
      Net change in non-cash
       working capital             6,979     (20,543)     (7,446)    (10,990)
                              -----------------------------------------------
                                  (6,553)     (8,946)     (1,786)     48,726
                              -----------------------------------------------
    Cash provided by (used in)
      investing activities
      Capital spending               184      (3,567)       (772)          -
      Sale of short-term
       investments                 2,431           -           -           -
                              -----------------------------------------------
                                   2,615      (3,567)       (772)          -
                              -----------------------------------------------
    Cash provided by (used in)
     financing activities           (110)          -           -           -
                              -----------------------------------------------
      Foreign exchange
       change on cash
       held in foreign currency        -       6,681      (1,143)          -
                              -----------------------------------------------
    Intergroup funding
     (distributions)              (7,629)        395      (4,152)    (48,726)
                              -----------------------------------------------

    Increase (decrease) in cash  (11,677)     (5,437)     (7,853)          -
    Cash:
      Beginning of period        205,564     192,881      65,976           -
                              -----------------------------------------------
      End of period              193,887     187,444      58,123           -
    Short-term investments        33,243           -           -           -
                              -----------------------------------------------

    Cash and short-term
     investments                $227,130    $187,444     $58,123         $ -
                              -----------------------------------------------


    2009 For the three months ended March 31

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working capital  $19,224         $ -         $ -     $82,665
      Net change in non-cash
       working capital           (33,568)          -           -     (65,568)
                              -----------------------------------------------
                                 (14,344)          -           -      17,097
                              -----------------------------------------------
    Cash provided by (used in)
      investing activities
      Capital spending            (3,321)    (64,551)    (22,832)    (94,859)
      Sale of short-term
       investments                     -           -           -       2,431
                              -----------------------------------------------
                                  (3,321)    (64,551)    (22,832)    (92,428)
                              -----------------------------------------------
    Cash provided by (used in)
     financing activities           (773)      7,351           -       6,468
                              -----------------------------------------------
      Foreign exchange
       change on cash
       held in foreign currency    1,086      (1,668)        544       5,500
                              -----------------------------------------------
    Intergroup funding
     (distributions)                 194      34,594      25,324           -
                              -----------------------------------------------

    Increase (decrease) in cash  (17,158)    (24,274)      3,036     (63,363)
    Cash:
      Beginning of period         37,547      33,981       1,110     537,059
                              -----------------------------------------------
      End of period               20,389       9,707       4,146     473,696
    Short-term investments             -           -           -      33,243
                              -----------------------------------------------

    Cash and short-term
     investments                 $20,389      $9,707       $4,146   $506,939
                              -----------------------------------------------



    2008 For the three months ended March 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working capital  ($2,672)    $40,914     $24,114     $12,675
      Net change in non-cash
       working capital           (12,077)    (25,914)      7,124      (6,197)
                              -----------------------------------------------
                                 (14,749)     15,000      31,238       6,478
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending               (32)     (8,883)     (1,759)       (247)
      Sale of short-term
       investments                 1,521           -           -           -
      Other                      300,424           -           -           -
                              -----------------------------------------------
                                 301,913      (8,883)     (1,759)       (247)
                              -----------------------------------------------
    Cash provided by (used in)
     financing activities            (45)          -           -           -
                              -----------------------------------------------

    Foreign exchange
     change on cash
     held in foreign currency          -       15,933     15,375           -
                              -----------------------------------------------

    Intergroup funding
     (distributions)              18,038      (42,773)    (4,625)     (6,231)
                              -----------------------------------------------

    Increase (decrease) in cash  305,157      (20,723)     40,229          -
    Cash:
      Beginning of period         41,041      333,671     111,492          -
                              -----------------------------------------------
      End of period              346,198      312,948     151,721          -
    Short-term investments        17,894            -           -          -
                              -----------------------------------------------

    Cash and short-term
     investments                $364,092     $312,948    $151,721        $ -
                              -----------------------------------------------


    2008 For the three months ended March 31

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working capital  $38,741         $ -         $ -    $113,772
      Net change in non-cash
       working capital                42           -           -     (37,022)
                              -----------------------------------------------
                                  38,783           -           -      76,750
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending            (7,959)    (92,534)          -    (111,414)
      Sale of short-term
       investments                     -           -           -       1,521
      Other                            -           -           -     300,424
                              -----------------------------------------------
                                  (7,959)    (92,534)          -     190,531
                              -----------------------------------------------
    Cash provided by (used in)
     financing activities           (615)     61,828           -      61,168
                              -----------------------------------------------

    Foreign exchange
     change on cash
     held in foreign currency      1,143       4,745           -      37,196
                              -----------------------------------------------

    Intergroup funding
     (distributions)                 118      35,473           -           -
                              -----------------------------------------------

    Increase (decrease) in cash   31,470       9,512           -     365,645
    Cash:
      Beginning of period         13,473      22,828           -     522,505
                              -----------------------------------------------
      End of period               44,943      32,340           -     888,150
    Short-term investments             -           -           -      17,894
                              -----------------------------------------------

    Cash and short-term
     investments                 $44,943     $32,340         $ -    $906,044
                              -----------------------------------------------



    INMET MINING CORPORATION
    Consolidated statements of retained earnings
    (unaudited)

                                                 Three Months Ended March 31
    (thousands of Canadian dollars)                         2009        2008
    -------------------------------------------------------------------------

    Retained earnings, beginning of period            $1,283,074  $1,074,762

    Net income                                            51,327     106,674
    -------------------------------------------------------------------------
    Retained earnings, end of period                  $1,334,401  $1,181,436
    -------------------------------------------------------------------------
    (see accompanying notes)


    Consolidated statements of comprehensive income
    (unaudited)

                                                 Three Months Ended March 31
    (thousands of Canadian dollars)                         2009        2008
    -------------------------------------------------------------------------

    Net income                                           $51,327    $106,674
                                                      -----------------------

    Other comprehensive income (loss) for the period :
      Changes in fair value of gold forward
       sales contracts                                      (761)     (9,925)
      Changes in fair value of interest
       rate swap contracts                                 1,740      (4,722)
      Changes in fair value of foreign exchange
       forward contracts                                       -      12,272
      Changes in fair value of investments                 3,620      (7,419)
      Currency translation adjustments                    27,045      75,369
    Reclassification to net income of
     gains/losses realized:
      Gain on sale of investment                               -        (256)
      Troilus gold hedge loss                                  -       6,997
      Ok Tedi gold hedge loss                                  -       1,013
      Amortization of gain on foreign exchange
       forward contracts                                  (1,508)          -
      Foreign exchange loss on reduction of net
       investment in self-sustaining foreign
       operations (note 12)                                    -       5,514
    Income tax expense related to other
     comprehensive income (note 16)                       (1,039)     (1,263)
                                                       ----------------------
                                                          29,097      77,580
                                                       ----------------------

    Comprehensive income                                 $80,424    $184,254
    -------------------------------------------------------------------------
    (see accompanying notes)



    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 2008 Annual Review.

    2.  Changes in accounting policies

        Section 3064 - Goodwill and Intangible Assets

        Effective January 1, 2009, we adopted CICA Handbook Section 3064,
        Goodwill and Intangible Assets, which replaces Section 3062 -
        Goodwill and Other Intangible Assets and Section 3450 - Research and
        Development Costs. This new standard establishes standards for the
        recognition, measurement, presentation and disclosure of goodwill
        subsequent to its initial recognition and of intangible assets. It
        provides guidance for recognizing 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. The adoption of this standard did not have an
        impact on our consolidated financial statements.

        Emerging Issues Committee 173 - Credit Risk and the fair value of
        financial assets and financial liabilities

        Effective January 1, 2009, we adopted EIC-173, Credit Risk and the
        Fair Value of Financial Assets and Financial Liabilities
        retroactively, without restatement. This EIC provides guidance on how
        to take into account credit risk of an entity and counterparty when
        determining the fair value of financial assets and financial
        liabilities, including derivative instruments. The adoption of EIC
        173 did not have a significant impact on our consolidated financial
        statements.

    3.  Statement of cash flows

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

        For the three months ended March 31, 2009
        ---------------------------------------------------------------------

        (thousands)               Corporate     Cayeli  Pyhasalmi    Troilus
        ---------------------------------------------------------------------
        Accounts receivable(1)        ($148)  ($24,517)    $1,120   ($13,785)
        Inventories                       -      1,218       (407)     2,940
        Accounts payable and
         accrued liabilities           (734)    (1,851)      (221)     1,546
        Taxes                         7,872      4,553     (7,938)         -
        Other                           (11)        54          -     (1,691)
        ---------------------------------------------------------------------
                                     $6,979   ($20,543)   ($7,446)  ($10,990)
        ---------------------------------------------------------------------


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

        (thousands)                 Ok Tedi      Total
        -----------------------------------------------
        Accounts receivable(1)     ($39,433)  ($76,763)
        Inventories                   1,388      5,139
        Accounts payable and
         accrued liabilities         (1,419)    (2,679)
        Taxes                         5,204      9,691
        Other                           692       (956)
        -----------------------------------------------
                                   ($33,568)  ($65,568)
        -----------------------------------------------
        (1) Includes changes in accounts payable related to metal sales.


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

        (thousands)               Corporate     Cayeli  Pyhasalmi    Troilus
        ---------------------------------------------------------------------
        Accounts receivable             $15   ($33,374)   $12,299    ($3,091)
        Inventories                       -     (2,747)    (1,464)    (2,687)
        Accounts payable and
         accrued liabilities        (11,804)    (1,589)    (1,475)      (419)
        Taxes                          (284)    11,676     (2,236)         -
        Other                            (4)       120          -          -
        ---------------------------------------------------------------------
                                   ($12,077)  ($25,914)    $7,124    ($6,197)
        ---------------------------------------------------------------------


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

        (thousands)                 Ok Tedi      Total
        -----------------------------------------------
        Accounts receivable         ($9,061)  ($33,212)
        Inventories                     100     (6,798)
        Accounts payable and
         accrued liabilities         (5,537)   (20,824)
        Taxes                        15,681     24,837
        Other                        (1,141)    (1,025)
        -----------------------------------------------
                                        $42   ($37,022)
        -----------------------------------------------

    4.  Cash and short-term investments

        At period end, our cash and short-term investments are held in:

        ---------------------------------------------------------------------
                                                       March 31  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Cash:
        Liquidity funds                                $239,176     $276,301
        Bankers' acceptances                             44,103       64,293
        Money market funds                               38,408       38,683
        Corporate                                        36,855            -
        Term deposits                                    29,528       78,041
        Overnight deposits                               15,334       14,684
        Bank deposits                                    58,876       52,429
        Other                                            11,416       12,628
                                            ---------------------------------
                                                        473,696      537,059
        Short-term investments:
        Asset backed securities                          12,669            -
        Provincial short-term notes                           -       35,674
        Other                                            20,574            -
        ---------------------------------------------------------------------
                                                         33,243       35,674
        ---------------------------------------------------------------------
        Total cash and short-term investments          $506,939     $572,733
        ---------------------------------------------------------------------

    5.  Restricted cash

        The table below shows our restricted cash balances.
        ---------------------------------------------------------------------
                                                       March 31  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Collateralized cash for letter of
         credit facility                                $16,410      $16,343
        In trust for Ok Tedi rehabilitation              17,746       16,667
        Collateralized cash for letters of
         credit - Las Cruces                             34,604       26,090
        Collateralized cash for Pyhasalmi reclamation     2,011        2,104
        ---------------------------------------------------------------------
                                                         70,771       61,204
        Less current portion:
          Collateralized cash for letters of
           credit - Las Cruces                           (8,056)      (8,311)
        ---------------------------------------------------------------------
                                                        $62,715      $52,893
        ---------------------------------------------------------------------

        During the quarter, Las Cruces' restricted cash which secures a
        restoration bond increased by (euro) 5.4 million (note 9).

    6.  Investments

        The table below shows our investments.

        ---------------------------------------------------------------------
                                                       March 31  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Available-for-sale equity securities:
          Premier Gold Mines Ltd.                       $18,900      $15,309
          Other                                           2,234        2,205
        ---------------------------------------------------------------------
                                                        $21,134      $17,514
        ---------------------------------------------------------------------

    7.  Derivatives

        The table below shows our derivatives.

        ---------------------------------------------------------------------
                                                       March 31  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Derivative asset:
          Ok Tedi copper forward sales contracts         $1,959       $4,327
        ---------------------------------------------------------------------
        Derivative liabilities:
          Ok Tedi gold forward sales contracts           $2,453       $1,670
          Las Cruces interest rate swap contracts        20,630       23,440
        ---------------------------------------------------------------------
                                                        $23,083      $25,110
        ---------------------------------------------------------------------

    8.  Long-term debt

        ---------------------------------------------------------------------
                                                       March 31  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Credit facility   - Tranche A                  $270,735     $262,504
                          - Tranche B                    70,358       80,364
        Promissory note                                  19,628       19,741
        Loans from non-controlling shareholder          170,420      131,905
        ---------------------------------------------------------------------
                                                        531,141      494,514
        Less current portion:
        Credit facility   - Tranche A                   (41,596)     (29,302)
                          - Tranche B                   (70,358)     (80,364)
        ---------------------------------------------------------------------
                                                       $419,187     $384,848
        ---------------------------------------------------------------------

        Credit facility

        This quarter, Las Cruces repaid (euro) 5.3 million under Tranche B
        equal to subsidies 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) 32 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)
        102 million, is reflected in long-term debt at March 31, 2009. Loans
        from non-controlling shareholders approximate fair value because the
        loans accrue interest at prevailing market rates.

    9.  Commitments

        Our operations have the following capital commitments as at March 31,
        2009:

        -  Ok Tedi has committed approximately $110.9 million (our
           proportionate share is $20.0 million) to capital expenditures
           related to the mine waste management project.

        -  Las Cruces has committed $26.8 million for engineering,
           procurement and construction management related to the process
           plant.

        -  Petaquilla has committed $174.9 million for the design and supply
           of certain mill equipment.

        During the quarter, Las Cruces' restoration bond was increased by
        (euro) 5.4 million to (euro) 20.2 million as a result of development
        activities, which took place during 2008.

    10. Leases

        Effective during the first quarter, Las Cruces committed to a
        contract for the supply of oxygen from a plant owned and operated by
        a third party and located at the mine site. This arrangement contains
        a capital lease with minimum lease payments of:

        2009                          $2,001
        2010                           2,668
        2011                           2,668
        2012                           2,668
        2013                           2,668
        Thereafter                    27,348
        -------------------------------------
        Total                        $40,021
        -------------------------------------

        The oxygen plant has been recognized in property, plant and equipment
        at $23 million based on the total minimum future lease payments
        discounted at Las Cruces' incremental rate of borrowing of 8.2
        percent. Capital lease obligations of $23 million have been
        recognized in other liabilities. The oxygen plant will be depreciated
        over its estimated useful life of 15 years once Las Cruces is
        substantially complete.

    11. Accumulated other comprehensive 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 $1,030)                                      ($2,402)
        Unrealized gains on foreign exchange forward contract(1)      21,023
        Unrealized losses on interest rate swap contracts(2)          (9,962)
        Unrealized gains on investments (net of tax of $667)           3,314
        Currency translation adjustment                              170,659
        ---------------------------------------------------------------------
        AOCI, December 31, 2008                                     $182,632
        Impact on adoption of EIC 173 - January 1, 2009 (note 2)         279
        Other comprehensive income for the three months ending
         March 31, 2009                                               29,097
        ---------------------------------------------------------------------
        AOCI, March 31, 2009                                        $212,008
        ---------------------------------------------------------------------

        AOCI March 31, 2009 comprises:
        Unrealized losses on gold forward sales contracts
         (net of tax of $2,460)                                      ($2,936)
        Unrealized gains on foreign exchange forward contract(3)      19,515
        Unrealized losses on interest rate swap contract(4)           (8,603)
        Unrealized gains on investments (net of tax of $1,273)         6,328
        Currency translation adjustment                              197,704
        ---------------------------------------------------------------------
        AOCI, March 31, 2009                                        $212,008
        ---------------------------------------------------------------------

        1. Net of tax of $12,792 and non-controlling interest of $8,956.
        2. Net of tax of $6,102 and non-controlling interest of $4,270.
        3. Net of tax of $11,874 and non-controlling interest of $8,315.
        4. Net of tax of $5,271 and non-controlling interest of $3,688.


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

        ---------------------------------------------------------------------
                                                       March 31  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Pyhasalmi (euro functional currency)            $14,123      $17,480
        Las Cruces (euro functional currency)            53,402       57,947
        Cayeli (US dollar functional currency)           35,883       24,751
        Ok Tedi (US dollar functional currency)          11,148        6,224
        Petaquilla (US dollar functional currency)       83,148       64,257
        ---------------------------------------------------------------------
                                                       $197,704     $170,659
        ---------------------------------------------------------------------

        The US dollar to Canadian dollar exchange rate was $1.26 at March 31,
        2009 and $1.22 at December 31, 2008. The euro to Canadian dollar
        exchange rate was $1.68 at March 31, 2009 and $1.70 at December 31,
        2008.

    12. Investment and other income

        Investment and other income are summarized as follows:

        ---------------------------------------------------------------------
                                                          three months ended
                                                                    March 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------

        Interest income                                  $2,042       $8,723
        Dividend and royalty income                           -            -
        Foreign exchange gain (loss)                    (10,098)       6,858
        Mark to market on Ok Tedi copper forward
         contracts                                       (1,419)      (2,849)
        Other                                            (1,728)       2,022
        ---------------------------------------------------------------------
                                                       ($11,203)     $14,754
        ---------------------------------------------------------------------

        Foreign exchange
        For transactions with foreign currencies we use:
        -  the exchange rates in effect at period-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 gain (loss) is a result of:

        ---------------------------------------------------------------------
                                                          three months ended
                                                                    March 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Translation of foreign-denominated cash         ($1,595)      $1,256
        Translation of Las Cruces' US dollar -
         denominated debt (note 8)                      (11,465)           -
        Translation of other-monetary assets and
         liabilities                                      2,962       11,116
        Reduction in our net investments                      -       (5,514)
        ---------------------------------------------------------------------
                                                       ($10,098)      $6,858
        ---------------------------------------------------------------------

    13. Income tax expense

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

    For the three months ended March 31, 2009
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current income
     taxes          $7,655    $7,806      $428    $5,234       $ -   $21,123
    Future income
     taxes           8,876    (8,387)        7     1,306    (4,035)   (2,233)
    -------------------------------------------------------------------------
                   $16,531     ($581)     $435    $6,540   ($4,035)  $18,890
    -------------------------------------------------------------------------

    For the three months ended March 31, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current income
     taxes             $ -   $18,550    $5,972   $17,305       $ -   $41,827
    Future income
     taxes               -       574        51     2,042       250     2,917
    -------------------------------------------------------------------------
                       $ -   $19,124    $6,023   $19,347      $250   $44,744
    -------------------------------------------------------------------------

    14. Net income per share

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

        ---------------------------------------------------------------------
                                                          three months ended
                                                                    March 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------

        Net income available to common shareholders     $51,327     $106,674
        ---------------------------------------------------------------------


        ---------------------------------------------------------------------
                                                          three months ended
                                                                    March 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------

        Weighted average common shares outstanding       48,282       48,282
        Plus incremental shares from assumed
         conversions:
          Deferred share units                               86           76
          Long term incentive plan units                     43            -
        ---------------------------------------------------------------------
        Diluted weighted average common shares
         outstanding                                     48,411       48,358
        ---------------------------------------------------------------------


        ---------------------------------------------------------------------
                                                          three months ended
                                                                    March 31
        (Canadian dollars per share)                       2009         2008
        ---------------------------------------------------------------------
        Basic and diluted net income per common share     $1.06        $2.21
        ---------------------------------------------------------------------

    15. Asset impairment

        We made a decision in 2008 not to proceed with the Cerattepe project.
        All work has ceased on the project. This quarter, we recognized an
        asset impairment charge of $6 million and an associated tax recovery
        of $6 million.

    16. Income taxes included in other comprehensive income The table below
        shows the breakdown by component of the income tax recovery (expense)
        included in other comprehensive income:

        ---------------------------------------------------------------------
                                                          three months ended
                                                                    March 31
                                                           2008         2007
        ---------------------------------------------------------------------
        Changes in fair value of gold forward sales
         contracts                                         $227         $291
        Changes in fair value of interest rate swap
         contracts                                         (660)       1,793
        Changes in fair value of foreign exchange forward
         contracts                                            -       (4,660)
        Changes in fair value of investments               (606)       1,313
        ---------------------------------------------------------------------
                                                        ($1,039)     $(1,263)
        ---------------------------------------------------------------------
    





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