Inmet announces fourth quarter 2007 earnings of $1.32 per share



    All amounts in Canadian dollars unless indicated otherwise

    TORONTO, Feb. 12 /CNW/ -

    
    Highlights

    -   Lower net income per share

        Net income per share of $1.32 this quarter was lower than the same
        period in 2006, mainly because of lower realized Canadian dollar
        denominated base metal prices. The copper price was down 15 percent
        at C$2.70 per pound compared to C$3.16 per pound in the prior year
        quarter. The zinc price was down 55 percent at C$1.08 per pound
        compared to C$2.42 per pound. This included negative settlement
        adjustments, which reduced sales by $17 million this quarter.

    -   Strong production this quarter

        Copper and zinc production was strong
        this quarter partly because of record production levels at Cayeli.
        Cayeli was producing ore this quarter at an annualized rate of more
        than 1.1 million tonnes.

    -   Strong operating cash flow per share

        Operating cash flow was $76 million or $1.58 per common share
        compared to $81 million or $1.69 per share for the same period in
        2006.

    -   2008 production estimates

        We expect copper production to increase by approximately 40 percent
        in 2008 to 112,000 tonnes once Las Cruces begins production and gold
        production to increase by 28 percent to 285,000 ounces because of
        higher grades mined at Troilus and Ok Tedi. We expect zinc production
        to be slightly lower in 2008 at 79,000 tonnes.

    -   Las Cruces remains on target

        Las Cruces is on target to achieve first copper production from its
        metallurgical plant in the fourth quarter of 2008. Capital cost
        estimates to complete the project remain unchanged. Negotiations are
        well underway with smelters to sell 130,000 tonnes of high grade ore
        starting in May.

    -   Work advancing on Cerattepe

        Construction work at Cerattepe is progressing well and we expect
        production to start in the second quarter of 2009, subject to the
        court decisions on the status of the project's operating licences and
        related matters.

    -   Revised capital and operating costs for Petaquilla

        The front-end engineering and design study for Petaquilla has revised
        the capital cost estimates to $3.5 billion and cash costs to
        US $0.85 per pound of copper produced. A project review team is
        currently studying opportunities to reduce the capital costs.

    Key financial data
    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
                      2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    FINANCIAL
     HIGHLIGHTS
     (thousands,
     except per
     share amounts)
    Sales
    Gross sales   $224,773    $258,911   -13%  $1,103,698  $1,087,869    +1%

    Net income
    Net income     $63,645     $97,420   -35%    $417,609    $420,653    -1%
    Net income
     per share       $1.32       $2.02   -35%       $8.65       $8.73    -1%

    Cash flow
    Cash flow
     provided by
     operating
     activities    $76,325     $81,360    -6%    $427,351    $438,129    -2%
    Cash flow
     provided by
     operating
     activities
     per share (1)   $1.58       $1.69    -6%       $8.85       $9.09    -2%

    Capital
     spending      $93,989     $45,759  +105%    $345,892    $132,799  +160%
    -------------------------------------------------------------------------

    OPERATING
     HIGHLIGHTS
    Production(2)
      Copper
       (tonnes)     21,700      20,400    +6%      79,300      81,300    -2%
      Zinc (tonnes) 26,000      21,300   +22%      85,100      74,400   +14%
      Gold (ounces) 57,200      64,100   -11%     223,300     246,900   -10%

    Cash costs
      Copper(US $
       per pound)(3) $0.29      $(0.25) +216%       $0.20       $0.20      -
      Gold (US $
       per ounce)(3)  $552        $406   +36%        $421        $365   +15%
    -------------------------------------------------------------------------


                                                    as at              as at
                                              December 31        December 31
    FINANCIAL CONDITION                              2007               2006
                                          -----------------------------------
    Current ratio                                5.6 to 1           5.1 to 1
    Long-term debt to total capitalization            18%                10%
    Net working capital balance (millions)   $855 million       $666 million
    Cash balance (millions)                  $841 million       $640 million
    Shareholders' equity (millions)        $1,392 million     $1,073 million
    -------------------------------------------------------------------------
    (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 31, 33 and 34.



    Fourth quarter press release


    Where to find it

    Our financial results ..........................  4
    Key changes in 2007 ............................  5
    Understanding our performance ..................  5
      Earnings from operations .....................  7
      Corporate costs .............................. 11
    Results of our operations ...................... 14
      Cayeli ....................................... 14
      Pyhasalmi .................................... 16
      Troilus ...................................... 18
      Ok Tedi ...................................... 20
    Status of our development projects ............. 22
      Las Cruces ................................... 22
      Cerattepe .................................... 24
      Petaquilla ................................... 25
    Managing our liquidity ......................... 26
    Financial condition ............................ 27
    Accounting changes ............................. 28
    Managing risk .................................. 30
    Supplementary financial information ............ 33
    Quarterly review ............................... 35
    Consolidated financial statements .............. 36


    In this press release, Inmet means Inmet Mining Corporation and we, us and
our mean Inmet and/or its subsidiaries and joint ventures. This year refers to
calendar year 2007 and this quarter refers to the three months ended December
31, 2007.

    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

    -------------------------------------------------------------------------
    (thousands,
     except
     per share
     amounts)  three months ended December 31         year ended December 31
                      2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------

    EARNINGS
     FROM
     OPERATIONS(1)
    Cayeli         $36,138     $42,214   -14%    $223,892    $192,524   +16%
    Pyhasalmi       28,149      46,172   -39%     138,582     140,260    -1%
    Troilus            345         740   -53%       9,828       5,545   +77%
    Ok Tedi         28,441      28,431      -     182,774     192,091    -5%
    Other             (491)       (576)  -15%      (1,953)     (1,944)     -
    -------------------------------------------------------------------------
                    92,582     116,981   -21%     553,123     528,476    +5%
    -------------------------------------------------------------------------

    DEVELOPMENT
     AND
     EXPLORATION
    Corporate
     development
     and
     exploration    (3,510)     (4,136)  -15%      (9,083)     (9,754)   -7%
    -------------------------------------------------------------------------

    CORPORATE
     COSTS
    General and
     administra-
     tion          (12,622)     (6,128) +106%     (20,298)    (13,740)  +48%
    Investment
     and other
     income          5,968      17,972   -67%      36,454      47,757   -24%
    Interest
     expense          (407)       (425)   -4%      (1,693)     (1,619)   +5%
    Income and
     capital
     taxes         (18,339)    (26,679)  -31%    (140,694)   (130,467)   +8%
    Non-
     controlling
     interest          (27)       (165)  -84%        (200)          -  +100%
    -------------------------------------------------------------------------
                   (25,427)    (15,425)  +65%    (126,431)    (98,069)  +29%
    -------------------------------------------------------------------------
    Net income     $63,645     $97,420   -35%    $417,609    $420,653    -1%
    -------------------------------------------------------------------------
    Basic net
     income per
     share           $1.32       $2.02   -35%       $8.65       $8.73    -1%
    -------------------------------------------------------------------------
    Diluted net
     income per
     share           $1.32       $2.02   -35%       $8.64       $8.71    -1%
    -------------------------------------------------------------------------

    Weighted
     average
     shares
     outstanding    48,282      48,278      -      48,279      48,212      -

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



    Key changes in 2007

    -------------------------------------------------------------------------
                                       three months ended  year ended    see
    (millions)                                December 31 December 31   page
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS
    Sales
    Lower metal prices denominated in
     Canadian dollars                                $(96)       $(73)     7
    Higher sales volumes                               33          47      8
    Costs
    Lower smelter processing charges
     and freight                                       44          69      9
    Higher operating costs, including costs
     that vary with income and cash flows              (5)        (15)    10
    Other                                               -          (3)
    ------------------------------------------------------------------
    Increase (decrease) in earnings
     from operations, compared to 2006               $(24)        $25

    CORPORATE COSTS
    Change in taxes from change in income              10          10     13
    Change in tax rates                                (1)        (20)    13
    Corporate bonus                                    (6)         (6)    11
    Gain on sale of Wolfden                             -          12     12
    Gain on sale of Izok recorded in the
     previous year                                      -         (25)    12
    Interest income                                     4          18     12
    Foreign exchange                                  (10)        (18)    12
    Other                                              (7)          1     12
    ------------------------------------------------------------------
    Decrease in net income, compared to 2006         $(34)        $(3)
    ------------------------------------------------------------------

    Understanding our performance

    Metal prices

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

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
                      2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    US dollar
     metal prices
      Copper
      (per pound) US $2.75    US $2.77    -1%    US $3.22    US $3.21      -
      Zinc
      (per pound) US $1.10    US $2.12   -48%    US $1.39    US $1.54   -10%
      Gold
      (per ounce)  US $664     US $525   +26%     US $594     US $514   +16%
    -------------------------------------------------------------------------
    Canadian dollar
     metal prices
      Copper
      (per pound)  C $2.70     C $3.16   -15%     C $3.45     C $3.64    -5%
      Zinc
      (per pound)  C $1.08     C $2.42   -55%     C $1.49     C $1.75   -15%
      Gold
      (per ounce)   C $651      C $599    +9%      C $636      C $581    +9%
    -------------------------------------------------------------------------

    Exchange rates

    Canadian dollar revenue and earnings were lower this quarter and for the
year compared to the same periods last year because of the significant
increase in the value of the Canadian dollar relative to the US dollar. This
lowered gross sales by $37 million this quarter and by $56 million for the
year. It also lowered net income this quarter by $22 million and $37 million
for the year.

    The following table shows the average exchange rates we realized.

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
                      2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Exchange rates
      1 US$ to C$    $0.98       $1.14   -14%       $1.07       $1.13    -5%
      1 euro to C$   $1.42       $1.47    -3%       $1.46       $1.42    +3%
    -------------------------------------------------------------------------

    Treatment charges and freight

    Treatment charges are one component of smelter processing charges. We also
pay smelters for content losses and price participation. Copper treatment
charges were lower in 2007 than they were in 2006 because of more favourable
contract terms with smelters. Zinc treatment charges, as expected, have been
significantly higher in 2007 than they were in 2006, but lower price
participation more than offset these charges.

    The following table shows the average smelter processing charges we
realized.

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

               three months ended December 31         year ended December 31
                      2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Treatment
     charges
      Copper (per
       dry metric
       tonne of
       concentrate) US $58      US $90   -36%      US $60      US $88   -32%
      Zinc (per dry
       metric tonne
       of concen-
       trate)      US $295     US $125  +136%     US $258     US $110  +135%
    -------------------------------------------------------------------------
    Price
     participation
      Copper (per
       pound)     US $0.05    US $0.17   -71%    US $0.08    US $0.16   -50%
      Zinc (per
       pound)(1) US $(0.05)   US $0.40  -113%    US $0.01    US $0.29   -97%
    -------------------------------------------------------------------------
    Freight
     charges
      Copper (per
       dry metric
       tonne of
       concen-
       trate)       US $41      US $47   -13%      US $44      US $42    +5%
      Zinc (per
       dry metric
       tonne of
       concen-
       trate)       US $36      US $21   +71%      US $29      US $16   +81%
    -------------------------------------------------------------------------
    (1) Zinc price participation is based on a zinc price of US $1,400 per
        tonne in 2007.

    Statutory tax rates

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

    -------------------------------------------------------------------------
                                                     2007        2006 change
    -------------------------------------------------------------------------
    Statutory tax rates
      Cayeli                                          27%         20%    +7%
      Pyhasalmi                                       26%         26%      -
      Ok Tedi                                         37%         37%      -
    -------------------------------------------------------------------------

    The increase in tax rate at Cayeli in 2007 is because we have returned to
accruing for withholding taxes on net income in anticipation of dividend
payments.

    EARNINGS FROM OPERATIONS

    We calculate earnings from operations by taking the revenues generated
from the sale of metals, less the costs associated with those sales, and
subtracting depreciation charges for capital investments and provisions for
mine rehabilitation.

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
    (thousands)       2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Gross sales   $224,773    $258,911   -13%  $1,103,698  $1,087,869    +1%
    Smelter
     processing
     charges       (43,902)    (65,005)  -32%    (206,478)   (240,605)  -14%
    Cost of sales:
      Direct
       production
       costs       (79,588)    (72,255)  +10%    (295,896)   (280,186)   +6%
      Inventory
       changes       2,239       6,544   -66%      (3,264)      3,042  -207%
      Provisions
       for mine
       rehabilita-
       tion and
       other non-
       cash charges (1,460)     (2,157)  -32%      (9,264)     (8,072)  +15%
    Depreciation    (9,480)     (9,057)   +5%     (35,673)    (33,572)   +6%
    -------------------------------------------------------------------------
    Earnings from
     operations    $92,582    $116,981   -21%    $553,123    $528,476    +5%
    -------------------------------------------------------------------------

    Gross sales revenues were 13 percent lower this quarter ...

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
    (thousands)       2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Gross sales by
     operation
      Cayeli       $81,088     $87,867    -8%    $418,694    $370,561   +13%
      Pyhasalmi     58,672      88,170   -33%     260,246     273,848    -5%
      Troilus       27,317      26,365    +4%     108,378     103,880    +4%
      Ok Tedi(1)    57,696      56,509    +2%     316,380     339,580    -7%
    -------------------------------------------------------------------------
                  $224,773    $258,911   -13%  $1,103,698  $1,087,869    +1%
    -------------------------------------------------------------------------
    Gross sales by
     metal
      Copper      $120,705    $127,092    -5%    $627,424    $638,209    -2%
      Zinc          53,246      83,677   -36%     280,713     266,114    +5%
      Gold          38,313      35,577    +8%     150,228     141,385    +6%
      Other         12,509      12,565      -      45,333      42,161    +8%
    -------------------------------------------------------------------------
                  $224,773    $258,911   -13%  $1,103,698  $1,087,869    +1%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's sales.

    ... because copper and zinc prices were lower

    -------------------------------------------------------------------------
                                             three months ended   year ended
    (millions)                                      December 31  December 31
    -------------------------------------------------------------------------
    Lower copper prices, denominated in C$                 $(24)        $(40)
    Lower zinc prices, denominated in C$                    (75)         (49)
    Higher gold prices and other metal prices,
     denominated in C$                                        3           16
    Higher sales volumes                                     62           89
    -------------------------------------------------------------------------
    Increase (decrease) in gross sales,
     compared to 2006                                      $(34)         $16
    -------------------------------------------------------------------------

    We record sales using the metal price received for sales settled 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 metal's forward price
at the end of the reporting period. We recognize the difference between our
estimate and the final price received by adjusting our gross sales in the
period we settle the sale (finalization adjustment).
    We made the following finalization adjustments for sales recorded in the
third quarter of 2007 that were settled in the fourth quarter:

    -   we decreased copper sales by $14 million
    -   we decreased zinc sales by $3 million.

    These sales were recorded at a price of US $3.64 per pound for copper and
US $1.40 per pound for zinc. The average LME price for copper this quarter was
US $3.28 per pound and for zinc was US $1.20 per pound. The copper price
fluctuated widely between US $2.85 per pound and US $3.77 per pound.
    At the end of this quarter, the following sales had not been settled:

    -   36 million pounds of copper provisionally priced at US $3.02 per
        pound
    -   16 million pounds of zinc provisionally priced at US $1.07 per pound.

    The finalization adjustment we record for these sales will depend on the
actual price we receive on final settlement, which can range from one to
five months after we initially record the sale.

    Higher sales volumes of copper and zinc reduced the impact


               three months ended December 31         year ended December 31
                      2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Sales volumes
      Copper
       (tonnes)     21,000      18,400   +14%      82,900      79,300    +5%
      Zinc (tonnes) 24,400      16,100   +52%      87,200      70,000   +25%
      Gold (ounces) 57,900      59,600    -3%     234,200     241,900    -3%
    -------------------------------------------------------------------------

    Our sales volumes are directly affected by the amount of production from
our mines, and our ability to ship to our customers.
    Sales this quarter were in line with production compared to the same
period last year when shipping at Cayeli and Ok Tedi was delayed from the
fourth quarter to the first quarter of 2007.

    Production
    -------------------------------------------------------------------------
                        three months ended               year ended
    Inmet's                    December 31              December 31 objective
     share           2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
    Copper (tonnes)
      Ok Tedi       8,700    8,800     -1%  30,400   35,000    -13%   31,300
      Cayeli        9,100    7,700    +18%  32,500   30,400     +7%   33,600
      Pyhasalmi     3,300    3,200     +3%  13,600   13,000     +5%   13,000
      Las Cruces        -        -       -       -        -       -   27,000
      Troilus         600      700    -14%   2,800    2,900     -3%    7,000
    -------------------------------------------------------------------------
                   21,700   20,400     +6%  79,300   81,300     -2%  111,900
    -------------------------------------------------------------------------
    Zinc (tonnes)
      Cayeli       13,600   12,100    +12%  46,200   38,700    +19%   47,800
      Pyhasalmi    12,400    9,200    +35%  38,900   35,700     +9%   30,900
    -------------------------------------------------------------------------
                   26,000   21,300    +22%  85,100   74,400    +14%   78,700
    -------------------------------------------------------------------------
    Gold (ounces)
      Troilus      33,700   39,300    -14% 138,400  147,900     -6%  163,200
      Ok Tedi      23,500   24,800     -5%  84,900   99,000    -14%  121,300
    -------------------------------------------------------------------------
                   57,200   64,100    -11% 223,300  246,900    -10%  284,500
    -------------------------------------------------------------------------
    Pyrite (tonnes)
      Pyhasalmi   182,000  177,000     +3% 486,000  512,000     -5%  505,000
    -------------------------------------------------------------------------

    This quarter:
    -   copper production was higher than the same period last year because
        of higher throughput and grades at Cayeli
    -   zinc production was higher mainly because of higher grades and higher
        throughput at Cayeli and Pyhasalmi
    -   gold production was lower because throughput was down at both Troilus
        and Ok Tedi.

    2008 outlook for sales

    We expect sales of all metals for the year to be consistent with our 2008
production estimates, as shown in the chart above. The increase in copper
production reflects the expected start of production at Las Cruces.
    The total amount we will receive in Canadian dollars will be affected by
US dollar denominated metal prices and the exchange rate between the US dollar
and the Canadian dollar.

    Smelter processing charges and freight were substantially less this year

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
    (thousands)       2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Smelter
     processing
     charges and
     freight by
     operation
      Cayeli       $19,756     $26,959   -27%     $94,700     $99,462    -5%
      Pyhasalmi     15,384      26,035   -41%      62,081      75,342   -18%
      Troilus        1,798       2,898   -38%       7,989      11,112   -28%
      Ok Tedi(1)     6,964       9,113   -24%      41,708      54,689   -24%
    -------------------------------------------------------------------------
                   $43,902     $65,005   -32%    $206,478    $240,605   -14%
    -------------------------------------------------------------------------
    Smelter
     processing
     charges and
     freight by
     metal
      Copper       $19,910     $28,508   -30%     $97,071    $126,347   -23%
      Zinc          20,682      33,807   -39%      97,141     104,111    -7%
      Other          3,310       2,690   +23%      12,266      10,147   +21%
    -------------------------------------------------------------------------
                   $43,902     $65,005   -32%    $206,478    $240,605   -14%
    -------------------------------------------------------------------------
    Smelter
     processing
     charges by type
     and freight
      Copper treat-
       ment and
       refining
       charges      $7,577     $12,094   -37%     $33,439     $51,941   -36%
      Zinc treat-
       ment charges 13,444       4,319  +211%      46,058      16,610  +177%
      Copper price
       participation 2,461       7,019   -65%      13,763      27,650   -50%
      Zinc escala-
       tion clauses (2,535)     14,211  -118%       2,529      43,958   -94%
      Content
       losses       15,062      18,361   -18%      74,112      68,078    +9%
      Other           (163)      2,030  -108%       4,369       6,709   -35%
      Freight        8,056       6,971   +16%      32,208      25,659   +26%
    -------------------------------------------------------------------------
                   $43,902     $65,005   -32%    $206,478    $240,605   -14%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's smelter processing charges and
        freight.
    

    Copper treatment charges were lower this quarter and for the year
compared to 2006 because of more favourable contract terms with smelters. Zinc
smelter processing charges were lower in the fourth quarter and for the year
despite higher sales volumes, because the lower zinc price reduced our price
participation charges.

    2008 outlook for smelter processing charges and freight

    Copper treatment and refining charges have been on a downward trend since
2005 and we expect this trend to continue as all forecasts point to a third
consecutive year of concentrate deficits.
    We sell approximately 90 percent of our copper concentrate under
long-term contracts. We are estimating long-term treatment costs of US $50 per
dry metric tonne and spot treatment costs as low as US $25 per dry metric
tonne. We also expect there will continue to be little to no price
participation.
    The output of zinc concentrates has increased over the year, which has
created a large surplus in the zinc concentrate market. We therefore expect to
see another increase in zinc treatment charges in 2008 to about US $325 per
dry metric tonne. Price escalation/de-escalation is expected to continue for
zinc concentrates. This should be approximately US $0.10 per dry metric tonne
for zinc prices greater than US $3,000 per tonne ($1.36 per pound), and
(US $0.06) per dry metric tonne for zinc prices less than US $3,000 per tonne.
    Production will begin at Las Cruces in 2008. For the first five months,
Las Cruces plans to sell crushed ore 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 impurity levels in this ore.
    We expect copper cathode production to start in the fourth quarter. This
copper cathode will be sold directly to buyers, bypassing the smelters and
eliminating smelter and refining treatment charges.

    
    Direct production costs and cost of sales

    Our cost of sales was higher this year...

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
    (thousands)       2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Direct production
     costs by
     operation
      Cayeli       $23,913     $20,741   +15%     $86,978     $72,517   +20%
      Pyhasalmi     13,589      12,915    +5%      50,043      47,826    +5%
      Troilus       21,173      19,793    +7%      77,643      76,973    +1%
      Ok Tedi(1)    20,913      18,806   +11%      81,232      82,870    -2%
    -------------------------------------------------------------------------
    Total direct
     production
     costs          79,588      72,255   +10%     295,896     280,186    +6%
    Inventory
     change         (2,239)     (6,544)  -66%       3,264      (3,042) +207%
    Reclamation,
     accretion and
     other non-cash
     expenses        1,460       2,157   -32%       9,264       8,072   +15%
    -------------------------------------------------------------------------
    Total cost of
     sales         $78,809     $67,868   +16%    $308,424    $285,216    +8%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's direct production costs.

    ...mainly because of higher labour and consumable costs

    -------------------------------------------------------------------------
                                             three months ended   year ended
    (millions)                                      December 31  December 31
    -------------------------------------------------------------------------
    Volume                                                   $2           $1
    Labour costs                                              3            9
    Consumables                                               3           11
    Costs that vary with income and cash flow                (1)          (5)
    -------------------------------------------------------------------------
    Increase in direct production costs,
     compared to 2006                                        $7          $16
    -------------------------------------------------------------------------

    Depreciation is higher for the year

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
    (thousands)       2007        2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Depreciation by
     operation
      Cayeli        $2,635      $1,872   +41%      $8,857      $7,418   +19%
      Pyhasalmi      1,881       2,333   -19%       8,439       8,617    -2%
      Troilus        2,620       2,838    -8%      10,120      10,912    -7%
      Ok Tedi        2,344       2,014   +16%       8,257       6,625   +25%
    -------------------------------------------------------------------------
                    $9,480      $9,057    +5%     $35,673     $33,572    +6%
    -------------------------------------------------------------------------
    

    Depreciation this year included a full year of the shaft development at
Cayeli, compared to only four months in 2006. Ok Tedi has increased
depreciation because of the spending on mine equipment replacements and other
sustaining capital over the last few years.

    2008 outlook for depreciation

    We expect depreciation to be higher in 2008 because production at Las
Cruces will begin and Ok Tedi will begin depreciating the capital for its mine
waste tailings project. Depreciation is estimated at about $50 million for
2008.

    CORPORATE COSTS

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

    General and administration costs almost 50 percent higher

    General and administration costs are largely for management remuneration,
governance and corporate development. Inmet has not granted stock options to
management since 2001. In recognition of this, the Board determined that the
2007 performance bonus should reflect not only the performance of the 2007
corporate objectives but also the creation of long-term shareholder value that
has been achieved by management, particularly over the past five years. Costs
in 2007 were $7 million higher than in 2006 mainly because of the higher
performance bonus.

    2008 outlook for general and administration

    Our general and administration costs have been increasing over the last
few years mainly because of performance-based bonuses. Our long-term incentive
plans should result in more consistent general and administration costs in the
future.
    In December 2007, the Board approved a new management performance share
unit plan. Units awarded under the plan are redeemable for Inmet common shares
issued from treasury on a one-to-one basis upon the successful completion of
specified growth projects. 500,000 Inmet common shares have been reserved for
issuance under the plan. An initial award, comprised of three tranches
totaling 215,000 units relating to completion of the Las Cruces, Cerattepe and
Petaquilla projects, has been made. The plan is subject to shareholder
approval, which will be sought at Inmet's Annual and Special Meeting of
Shareholders (ASM) to be held on Tuesday, April 29, 2008. Details of the plan
will be set out in the management proxy circular to be mailed to shareholders
in connection with the ASM.
    For 2008, we expect general and administration costs of approximately
$15 million.

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

    -------------------------------------------------------------------------
                      three months ended December 31  year ended December 31
    (thousands)                     2007        2006        2007        2006
    -------------------------------------------------------------------------
    Gain on sale of Izok              $-          $-          $-     $23,905
    Gain on sale of Wolfden            -           -      11,730           -
    Interest income                9,703       5,479      32,647      14,199
    Dividend income and royalty    1,677       5,700       5,748       5,700
    Foreign exchange gain (loss)  (2,969)      7,137     (14,519)      3,770
    Settlement of pension
     liability                    (2,034)          -      (2,034)          -
    Other                           (409)       (344)      2,882         183
    -------------------------------------------------------------------------
                                  $5,968     $17,972     $36,454     $47,757
    -------------------------------------------------------------------------
    

    In 2006, we sold our interest in the Izok development property to Wolfden
Resources Inc., and recorded a gain of $23.9 million. In exchange, we received
13.5 million common shares of Wolfden and 9.5 million common shares of Premier
Gold Mining Ltd. In May 2007, we disposed of our shares in Wolfden to Zinifex
Canadian Enterprises Inc. for cash proceeds of $51.4 million or $3.81 per
share, and recorded a gain of $11.7 million.
    Interest income was higher this quarter and this year compared to the
same periods last year because of higher cash balances in 2007.
    We recorded a foreign exchange loss of $3.0 million this quarter and
$14.5 million this year because we revalued some of our foreign currency
denominated accounts and cash balances, and recognized deferred foreign
exchange losses from dividends from Ok Tedi. We recorded foreign exchange
gains on the revaluation of intergroup loans in 2006.

    2008 outlook for investment and other income

    Investment and other income is affected by cash balances, interest rates
and exchange rates.
    We plan to repatriate approximately $300 million in cash from Cayeli in
the first half of the year. Assuming US dollar parity to the Canadian dollar
we would expect to record a foreign exchange loss of about $30 million in the
first half of 2008. We also plan to repatriate Pyhasalmi's 2007 distributable
earnings in the second quarter of 2008. These earnings were accumulated at an
average exchange rate of C $1.46 to the euro. If this exchange does not change
significantly, the foreign exchange impact should be minimal. Because Ok Tedi
distributes its earnings more frequently, the effect of repatriation is
normally not significant.
    At December 31, 2007, we only held cash of (euro) 5 million in Canada
that could be affected by foreign exchange gains or losses.

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

    -------------------------------------------------------------------------
               three months ended December 31         year ended December 31
    (thousands)        2007       2006 change        2007        2006 change
    -------------------------------------------------------------------------
    Cayeli           $5,956     $4,036   +48%     $46,445     $25,846   +80%
    Pyhasalmi         6,200     10,863   -43%      30,911      32,078    -4%
    Ok Tedi          10,822      9,580   +13%      65,745      69,893    -6%
    Las Cruces           32          -  +100%         286           -  +100%
    Corporate        (4,671)     2,200  -312%      (2,693)      2,650  -202%
    -------------------------------------------------------------------------
                    $18,339    $26,679   -31%    $140,694    $130,467    +8%
    -------------------------------------------------------------------------

    Tax expense has fluctuated with earnings. At Corporate, we increased our
Future income tax asset and recorded a recovery of $5 million in earnings in
anticipation of higher earnings at Troilus next year because of the rising
price of gold. We adjust our corporate tax asset when it is more likely than
not that we will recover our tax loss pools. At Cayeli, the statutory tax rate
was higher this year because we have returned to accruing for withholding
taxes on net income in anticipation of dividend payments. The following table
shows Cayeli's tax expense in more detail:

    -------------------------------------------------------------------------
                      three months ended December 31  year ended December 31
    (millions)                      2007        2006        2007        2006
    -------------------------------------------------------------------------
    Current and future income
     tax expense                      $5          $4         $36         $36
    Withholding tax expense            1           -          10           -
    Reduction in tax rate - 2006       -           -           -         (10)
    -------------------------------------------------------------------------
                                      $6          $4         $46         $26
    -------------------------------------------------------------------------

    Cayeli's effective tax rate was 16 percent in the quarter; lower than its
statutory rate of 27 percent because of foreign exchange losses in their
Turkish lira tax accounts. The 2006 tax expense includes the impact of a rate
reduction. In June 2006, the Turkish government enacted tax legislation that
reduced Cayeli's corporate tax rate to 20 percent from 30 percent effective
January 1, 2006.

    2008 outlook for income tax expense

    For 2008, we are expecting our statutory tax rate at Cayeli to be
24 percent. We are not expecting any further changes in statutory tax rates at
our other operations in 2008.

    Results of our operations

    Cayeli

    -------------------------------------------------------------------------
                        three months ended               year ended
                               December 31              December 31 objective
                     2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)   277      246    +13%   1,046      933    +12%    1,100
    Tonnes of ore
     milled per
     day            3,000    2,700    +13%   2,900    2,600    +12%    3,000
    -------------------------------------------------------------------------
    Grades (percent)
      copper          4.2      3.8    +11%     3.8      3.9     -3%      3.8
      zinc            6.8      6.6     +3%     6.3      5.7    +11%      6.0
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      copper           79       82     -4%      82       84     -2%       81
      zinc             72       74     -3%      73       73       -       72
    -------------------------------------------------------------------------
    Production
     (tonnes)
      copper        9,100    7,700    +18%  32,500   30,400     +7%   33,600
      zinc         13,600   12,100    +12%  46,200   38,700    +19%   47,800
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)      $86      $84     +2%     $83      $78     +6%      $71
    -------------------------------------------------------------------------
    

    Cayeli achieved record performance

    Cayeli was producing ore this quarter at an annualized rate of more than
1.1 million tonnes. This was not only 13 percent higher than in the same
period last year, but the highest production rate Cayeli has experienced.
Lower mill recoveries in the quarter and the year were a result of the
difficult ore mineralogy. Metallurgical performance is impacted by the ore
types and relative quantities of these ores delivered to the mill. Through the
year we improved our ability to characterize the ore and predict metallurgy,
and we will continue with improvements in this area during 2008.

    2008 outlook for production and costs

    Cayeli expects to complete improvements to its ore pass system in 2008,
allowing it to mine and process 1.1 million tonnes of ore in 2008. The ore
will come from all areas of the mine as the emphasis on the lower mine
continues to increase. Ore pass performance is critical for efficient material
flow. Development in 2008 will focus on access and level development of the
lower mine ore blocks. This will allow the mine to operate at its maximum
production rate of 1.2 million tonnes in 2009 and beyond.
    We expect costs to be in line with 2007 results. On a unit basis we are
seeing the benefit of higher throughput and a stronger Canadian dollar
relative to Cayeli's US dollar costs. This benefit could be offset if the
Turkish lira also continues to strengthen against the US dollar increasing
Turkish lira based costs such as labour.

    
    Financial review

    Higher sales volumes increase operating earnings and cash flow

    -------------------------------------------------------------------------
    (millions of
     Canadian dollars             three months ended              year ended
     unless otherwise                    December 31             December 31
     stated)                        2007        2006        2007        2006
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)          9,400       7,700      33,600      29,300
    Zinc sales (tonnes)           11,500       5,600      48,200      34,500
                                ---------------------------------------------
    Gross copper sales               $55         $54        $253        $238
    Gross zinc sales                  23          32         155         126
    Other metal sales                  3           2          11           7
                                ---------------------------------------------
    Gross sales                       81          88         419         371
    Smelter processing charges
     and freight                     (20)        (27)        (95)       (100)
    -------------------------------------------------------------------------
    Net sales                        $61         $61        $324        $271
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled
     (thousands)                     277         246       1,047         933
    Direct production costs
     (per tonne)                     $86         $84         $83         $78
    -------------------------------------------------------------------------
    Direct costs of production       $24         $21         $87         $73
    Change in inventory               (2)         (4)          1          (4)
    Depreciation and other
     non-cash costs                    3           2          12          10
    -------------------------------------------------------------------------
    Operating costs                  $25         $19        $100         $79
    -------------------------------------------------------------------------
    Operating earnings               $36         $42        $224        $192
    -------------------------------------------------------------------------
    Operating cash flow              $51         $23        $215        $173
    -------------------------------------------------------------------------


    The table below shows what contributed to the change in operating earnings
and operating cash flow between this year and 2006.

    -------------------------------------------------------------------------
                                             three months ended   year ended
    (millions)                                      December 31  December 31
    -------------------------------------------------------------------------
    Lower metal prices, denominated in
     Canadian dollars                                      $(52)        $(37)
    Higher sales volumes from higher
     production                                              22           43
    Lower smelter processing charges                         25           34
    Higher operating costs from higher
     labour and consumable costs                             (1)          (7)
    Other                                                     -           (1)
    -------------------------------------------------------------------------
    Increase (decrease) in operating earnings,
     compared to 2006                                        (6)          32
    (Higher) lower tax expense                                3           (8)
    Changes in working capital                               28           14
    Other                                                     3            4
    -------------------------------------------------------------------------
    Increase in operating cash flow, compared
     to 2006                                                $28          $42
    -------------------------------------------------------------------------

    The change in working capital this quarter and for the year is from lower
accounts receivable mainly because of the lower sales price used to value year
end receivables.

    Capital spending higher than 2006

    -------------------------------------------------------------------------
                        three months ended               year ended
                               December 31              December 31 objective
                     2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
    Capital
     spending      $2,100   $4,300    -51% $17,700  $15,000    +18%  $23,000
    -------------------------------------------------------------------------

    The shaft extension was completed in the third quarter and almost half of
the capital spending in the year ($7 million) has been for that project.

    2008 outlook for capital spending

    Cayeli expects to spend $23 million in 2008 on a water filtration plant,
ventilation raise, mine equipment and other equipment replacements.

    Pyhasalmi

    -------------------------------------------------------------------------
                        three months ended               year ended
                               December 31              December 31 objective
                     2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)   358      346     +3%   1,377    1,372     +1%    1,370
    Tonnes of ore
     milled per
     day            3,900    3,800     +3%   3,770    3,750     +1%    3,750
    -------------------------------------------------------------------------
    Grades (percent)
      copper          1.0      1.0       -     1.0      1.0       -      1.0
      zinc            3.8      2.9    +31%     3.1      2.8    +11%      2.5
      sulphur          40       38     +5%      40       39     +3%       41
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      copper           96       95     +1%      96       95     +1%       94
      zinc             92       92       -      92       93     -1%       90
    -------------------------------------------------------------------------
    Production
     (tonnes)
      copper        3,300    3,200     +3%  13,600   13,000     +5%   13,000
      zinc         12,400    9,200    +35%  38,900   35,700     +9%   30,900
      pyrite      182,000  177,000     +3% 486,000  512,000     -5%  505,000
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)      $38      $37     +3%     $36      $35     +3%      $36
    -------------------------------------------------------------------------
    

    Pyhasalmi delivers strong results

    Pyhasalmi delivered a solid performance during the year mining higher
grade zinc than in 2006.

    2008 outlook for production and costs

    Pyhasalmi expects to mine 1.4 million tonnes of 1 percent copper and
2.5 percent zinc in 2008, and produce 13,000 tonnes of copper and 30,900
tonnes of zinc. These estimates are lower than 2007 results because of the
grade of the remaining ore.
    To maintain throughput and increase efficiency in both the mine and mill,
Pyhasalmi plans to make improvements to the ore-pass system and replace key
drilling equipment, as well as the primary mill motor and mill flotation
cells. A new mill motor will allow speed to be adjusted more easily, which
will increase throughput capacity in the grinding circuit and reduce energy
costs. This could increase mill throughput by about five percent.
    We expect costs to be maintained at similar levels in 2008.

    
    Financial review

    Higher sales volumes increase operating earnings

    -------------------------------------------------------------------------
    (millions of
     Canadian dollars             three months ended              year ended
     unless otherwise                    December 31             December 31
     stated)                        2007        2006        2007        2006
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)          3,300       3,700      14,000      13,500
    Zinc sales (tonnes)           12,800      10,500      38,900      35,500
    Pyrite sales (tonnes)        133,000     131,000     509,000     495,000
                                ---------------------------------------------
    Gross copper sales               $21         $27        $105        $103
    Gross zinc sales                  30          52         125         140
    Other metal sales                  8           9          30          31
                                ---------------------------------------------
    Gross sales                       59          88         260         274
    Smelter processing charges
     and freight                     (16)        (26)        (62)        (76)
    -------------------------------------------------------------------------
    Net sales                        $43         $62        $198        $198
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled
     (thousands)                     358         346       1,377       1,372
    Direct production costs
     (per tonne)                     $38         $37         $36         $35
    -------------------------------------------------------------------------
    Direct costs of production       $13         $13         $50         $48
    Change in inventory                -           1          (1)          1
    Depreciation and other
     non-cash costs                    2           2          10           9
    -------------------------------------------------------------------------
    Operating costs                  $15         $16         $59         $58
    -------------------------------------------------------------------------
    Operating earnings               $28         $46        $139        $140
    -------------------------------------------------------------------------
    Operating cash flow               $5         $38        $109        $109
    -------------------------------------------------------------------------

    The table below shows what contributed to the change in operating earnings
and operating cash flow between this year and 2006.

    -------------------------------------------------------------------------
                                             three months ended   year ended
    (millions)                                      December 31  December 31
    -------------------------------------------------------------------------
    Lower metal prices, denominated in
     Canadian dollars                                      $(38)        $(31)
    Higher sales volumes                                      6           12
    Lower smelter processing charges and
     freight                                                 14           20
    Higher operating costs from foreign exchange              -           (2)
    -------------------------------------------------------------------------
    Decrease in operating earnings,
     compared to 2006                                       (18)          (1)
    Lower tax expense because of lower
     earnings                                                 4            1
    Changes in working capital                              (21)           -
    Other                                                     1            -
                                             --------------------------------
    Decrease in operating cash flow,
     compared to 2006                                      $(34)           -
    -------------------------------------------------------------------------

    The change in working capital in the quarter is mainly because of the
timing in paying tax instalments.

    Minimal capital spending in 2007 and some deferred until 2008

    -------------------------------------------------------------------------
                        three months ended               year ended
                               December 31              December 31 objective
    (thousands)      2007     2006  change    2007     2006  Change     2008
    -------------------------------------------------------------------------
    Capital
     spending      $1,400   $2,100    -33%  $3,500   $5,500    -36%  $12,000
    -------------------------------------------------------------------------

    2008 outlook for capital spending

    We expect to spend $12 million in 2008, mainly for mine and mill
equipment. In addition the replacement of certain mill equipment expected to
have been spent in 2007 should be spent in 2008.

    TROILUS

    -------------------------------------------------------------------------
                        three months ended               year ended
                               December 31              December 31 objective
                     2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's) 1,440    1,645    -12%   6,000    6,500     -8%    6,600
    Tonnes of ore
     milled per
     day           15,700   17,900    -12%  16,500   17,900     -8%   18,100
    -------------------------------------------------------------------------
    Strip ratio       1.5      1.1    +36%     1.1      1.5    -27%      1.1
    -------------------------------------------------------------------------
    Grades
      gold
       (grams/tonne) 0.89     0.90     -1%    0.87     0.86     +1%     0.93
      copper
       (percent)     0.06     0.05    +20%    0.05     0.05       -     0.11
    -------------------------------------------------------------------------
    Mill
     recoveries
     (percent)
      gold             82       82       -      82       82       -       83
      copper           89       87     +2%      88       87     +1%       92
    -------------------------------------------------------------------------
    Production
      gold
       (ounces)    33,700   39,300    -14% 138,400  147,900     -6%  163,200
      copper
       (tonnes)       600      700    -14%   2,800    2,900     -3%    7,000
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)      $15      $12    +25%     $13      $12     +8%      $12
    -------------------------------------------------------------------------
    

    Mill throughput did not meet expectation

    Throughput was below 2006 levels and below our target because of several
factors, including harder than expected ore from the 87 pit, mechanical
failures and a lack of overall pump capacity in the mill. As a result, gold
production was lower than the prior year. Copper production was consistent
between periods because of improved recoveries.
    In January 2008, Troilus completed its program to upgrade the primary
ball mill pumps to 1,500 horse power and secondary ball mill pumps to
1,000 horsepower. These investments should improve our productivity in 2008.

    2008 outlook for production and costs

    Gold and copper grades will increase significantly in 2008 as we return
to mining in the bottom of the 87 pit after completion of the J-4 pit.
    The mine will continue with its present plan of open pit mining and
stockpile recovery. The J4 pit is expected to be completed in the first
quarter of 2008 while the 87 pit will continue to be mined into the second
quarter of 2009. Stockpile recovery will begin in 2009.
    We have increased our obligation for mine rehabilitation, which is
scheduled to start in 2009, and will accrue the additional accretion and
depreciation over the next two years. We will also start accruing termination
costs in 2008 for employees we expect to remain with the mine until the end of
its life. These two items together will add approximately $4 million to costs
in 2008.

    
    Financial review

    Higher gold prices helped earnings

    -------------------------------------------------------------------------
    (millions of
     Canadian dollars             three months ended              year ended
     unless otherwise                    December 31             December 31
     stated)                        2007        2006        2007        2006
    -------------------------------------------------------------------------
    Sales analysis
    Gold sales (ounces)           36,100      38,800     142,200     144,100
    Copper sales (tonnes)            800         700       2,900       2,900
                                ---------------------------------------------
    Gross gold sales                 $22         $22         $85         $78
    Gross copper sales                 4           4          21          24
    Other metal sales                  1           1           2           2
                                ---------------------------------------------
    Gross sales                       27          27         108         104
    Smelter processing charges
     and freight                      (2)         (3)         (8)        (11)
    -------------------------------------------------------------------------
    Net sales                        $25         $24        $100         $93
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled
     (thousands)                   1,440       1,645       6,000       6,500
    Direct production costs
     (per tonne)                     $15         $12         $13         $12
    -------------------------------------------------------------------------
    Direct costs of production       $21         $20         $78         $77
    Change in inventory                1           -           1          (2)
    Depreciation and other
     non-cash costs                    3           3          11          12
    -------------------------------------------------------------------------
    Operating costs                  $25         $23         $90         $87
    -------------------------------------------------------------------------
    Operating earnings                $-          $1         $10          $6
    -------------------------------------------------------------------------
    Operating cash flow               $5          $5         $15         $17
    -------------------------------------------------------------------------

    The table below shows what contributed to the change in operating earnings
and operating cash flow between this year and 2006.

    -------------------------------------------------------------------------
                                             three months ended   year ended
    (millions)                                      December 31  December 31
    -------------------------------------------------------------------------
    Higher metal prices denominated in
     Canadian dollars                                        $1           $5
    Lower smelter processing charges                          1            3
    Higher operating costs                                   (2)          (4)
    -------------------------------------------------------------------------
    Increase in operating earnings,
     compared to 2006                                         -            4
    Changes in working capital                               (1)          (5)
    Other                                                     1           (1)
    -------------------------------------------------------------------------
    Decrease in operating cash flow,
     compared to 2006                                        $-          $(2)
    -------------------------------------------------------------------------

    The change in working capital is mainly a result of higher accounts
receivable. The increase is because of new payment terms for the smelter,
which began in 2007 and higher gold prices.

    Modest capital spending

    -------------------------------------------------------------------------
                        three months ended               year ended
                               December 31              December 31 objective
    (thousands)      2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
                     $300     $300       -  $1,700   $2,200    -23%    $1,000
    -------------------------------------------------------------------------

    Troilus spent $1.7 million this year on some mill improvements designed to
improve throughput volumes and metal recoveries, and a tailings dam lift.

    OK TEDI

    -------------------------------------------------------------------------
                        three months ended               year ended
                               December 31              December 31 objective
    (100 percent)    2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's) 6,300    6,700     -6%  25,800   27,600     -7%   25,300
    Tonnes of ore
     milled per
     day           68,000   72,800     -6%  71,000   75,600     -7%   69,000
    -------------------------------------------------------------------------
    Strip ratio       1.5      1.4     +7%     1.3      1.6    -19%      1.3
    -------------------------------------------------------------------------
    Grades
      copper
       (percent)      0.9      0.9       -     0.8      0.8       -      0.8
      gold
      (grams/tonne)   1.0      0.9    +11%     0.9      0.9       -      1.2
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      copper           87       86     +1%      86       86       -       85
      gold             63       69     -9%      71       71       -       67
    -------------------------------------------------------------------------
    Production
      copper
       (tonnes)    48,400   49,100     -1% 169,200  194,400    -13%  174,000
      gold
       (ounces)   130,400  138,000     -6% 471,800  550,100    -14%  674,000
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)      $19      $16    +19%     $18      $17     +6%      $18
    -------------------------------------------------------------------------
    

    High fluorine ore lowered throughput this year

    Ok Tedi continued to mine skarn ores in the pit that contained high
levels of fluorine. To reduce the impact, for most of the year Ok Tedi has
been blending lower grade ore with lower levels of fluorine. Lowering
throughput while blending the low grade ore brought the fluorine content in
the concentrate back to acceptable levels. This had the effect, however, of
reducing copper and gold head grades, lowering copper and gold production to
below 2006 levels.
    Ok Tedi has developed a fluorine management plan, which includes
solutions for the pit and the process plant, as well as a sales strategy for
concentrate. The plan includes evaluating the possibility of separating the
fluorine minerals from the concentrate using chemical reagents in the
flotation circuit.
    The mine is also opening additional working faces in the pit, including
areas that are expected to contain lower levels of fluorine. We expect these
areas will be in production in early 2008. At that time, Ok Tedi should be in
a position to blend the ore to bring down fluorine levels in the concentrate.
    Operating costs for Ok Tedi were higher in 2007 compared to 2006 because
of lower tonnes of ore produced and higher labour, contractor and community
payments.

    2008 outlook for production and costs

    Ok Tedi expects a 43 percent increase in its gold production compared to
2007 because of the higher content of skarn ores in the mill feed.
    The fluorine situation is expected to improve in 2008 as Ok Tedi opens
additional working faces in the pit. Recoveries for both copper and gold are
still expected to be somewhat lower in 2008 compared to this year.
    Ok Tedi will mine a significantly higher portion of skarn ore in 2008
than it has in the past. Skarn ores are metallurgically more challenging and
contain more sulphur than the porphyry ores that were predominantly mined in
previous years. Skarn ores will significantly increase sulphur content in the
mill feed (from three percent in 2007 to an average of eight percent in 2008).
It is therefore crucial that the Mine Waste and Tailings Management Plant is
commissioned by the middle of 2008, since it will remove most of the sulphur
in the tailings stream and greatly reduce the environmental risk of acid rock
drainage.

    
    Financial review

    Sales were higher than production, making earnings comparable between
    periods

    -------------------------------------------------------------------------
    (millions of
     Canadian dollars             three months ended              year ended
     unless otherwise                    December 31             December 31
     stated)                        2007        2006        2007        2006
    -------------------------------------------------------------------------
    Sales analysis at 18%
    Copper sales (tonnes)          7,600       6,400      32,500      33,600
    Gold sales (ounces)           21,800      20,800      92,000      97,700
                                ---------------------------------------------
    Gross copper sales               $40         $42        $248        $273
    Gross gold sales                  16          13          65          64
    Other metal sales                  1           1           3           3
                                ---------------------------------------------
    Gross sales                       57          56         316         340
    Smelter processing charges
     and freight                      (7)         (9)        (41)        (55)
    -------------------------------------------------------------------------
    Net sales                        $50         $47        $275        $285
    -------------------------------------------------------------------------
    Cost analysis at 18%
    Tonnes of ore milled
     (thousands)                   1,125       1,200       4,640       4,960
    Direct production costs
     (per tonne)                     $19         $16         $18         $17
    -------------------------------------------------------------------------
    Direct costs of production       $21         $19         $81         $83
    Change in inventory               (1)         (3)          2           2
    Depreciation and other
     non-cash costs                    2           3           9           8
    -------------------------------------------------------------------------
    Operating costs                  $22         $19         $92         $93
    -------------------------------------------------------------------------
    Operating earnings               $28         $28        $183        $192
    -------------------------------------------------------------------------
    Operating cash flow              $23         $12         $98        $151
    -------------------------------------------------------------------------

    The table below shows what contributed to the change in operating earnings
and operating cash flow between this year and 2006.

    -------------------------------------------------------------------------
                                             three months ended   year ended
    (millions)                                      December 31  December 31
    -------------------------------------------------------------------------
    Lower metal prices, denominated in
     Canadian dollars                                       $(7)        $(10)
    Higher (lower) sales volumes                              5           (8)
    Lower smelter processing charges                          4           12
    Lower variable compensation                               -            4
    Higher operating costs                                   (2)          (7)
    -------------------------------------------------------------------------
    Decrease in operating earnings,
     compared to 2006                                         -           (9)
    Decreased tax expense because of
     lower earnings                                           -            3
    Changes in net working capital                           11          (47)
    -------------------------------------------------------------------------
    Increase (decrease) in operating
     cash flow, compared to 2006                            $11         $(53)
    -------------------------------------------------------------------------

    The change in working capital this quarter is mainly because of lower tax
payments. For the year, accounts receivable is higher because of timing of
payments and higher taxes were paid in 2007 compared to 2006.

    Capital spending was higher because of the mine waste management program

    Ok Tedi's capital spending this quarter was mainly for the mine waste
management program.

    -------------------------------------------------------------------------
    (18 percent)        three months ended               year ended
                               December 31              December 31 objective
                     2007     2006  change    2007     2006  change     2008
    -------------------------------------------------------------------------
    Capital
     spending     $10,100   $4,500   +124% $31,500  $11,100   +184%  $23,000
    -------------------------------------------------------------------------

    2008 outlook for capital spending

    Ok Tedi plans to spend $130 million (our 18 percent share is $23 million)
in 2008. Of the $130 million, it will spend an estimated $43 million on the
mine waste management program, $27 million for the pit drainage tunnel, and
the rest for mine equipment and other sustaining capital.

    Status of our development projects

    Las Cruces

    Quarterly development update

    Construction

    By December 31, 2007 Las Cruces had completed the following:
    -   essentially all detailed engineering and procurement
    -   51 percent of construction
    -   71 percent of total physical progress.
    

    At the start of 2008, civil works are nearly complete, and the focus is
shifting to mechanical work and piping installation. Electrical and
instrumentation work is also well underway. Infrastructure projects to supply
and store process water, provide power from the Spanish grid and divert a
number of streams for environmental and safety reasons are essentially
complete.

    Mining progress and direct ore shipping

    A total of 19.9 million bench cubic metres (bcms) of waste were removed
from the mine this year, reaching a total of 27.8 million bcms for the project
to date. A further 2.4 million bcms is to be removed before reaching ore in
late April 2008. Mining costs to date have been 9 percent below budget because
of more efficient blasting and haulage.
    Since the plant is not expected to be ready to process ore until the
fourth quarter of 2008, Las Cruces plans to selectively mine and crush a
subset of approximately 130,000 tonnes of the available ore that averages
14 percent copper, and then ship this ore directly to selected smelters. This
should result in the production of approximately 18,000 tonnes of copper and
should significantly mitigate the financial impact of the delay in
construction. At the same time, ore will be stockpiled in preparation for the
plant start-up in the fourth quarter. The build-up of the stockpile will
permit blending of the ore to ensure optimal feed for start-up.

    Operating costs

    Most cost estimates for consumables are now supported by firm price
quotations and contract values. We expect the life-of-mine operating costs for
Las Cruces to be approximately (euro) 0.49 per pound of copper produced. On an
annual basis they should range from (euro) 0.53 per pound in the early years,
to (euro) 0.44 per pound in later years when the mine's strip ratio decreases.

    Environment

    Las Cruces continued its strict environmental management program this
year and is pleased to report that there were no significant environmental
incidents. Progressive reclamation also continues. Las Cruces' environmental
management system became certified under ISO14001 this year.

    Community relations

    Las Cruces continues to have a very good relationship with the local
communities. At the end of the year, almost 200 local residents were directly
employed by Las Cruces or its contractors, and local groups are visiting the
mine on a regular basis.

    2008 outlook for development and operations

    Las Cruces construction should be complete by the end of the third
quarter and copper production should begin in the fourth quarter. To date,
(euro) 370 million has been spent or committed on the project, and we expect
to spend the balance in 2008. Las Cruces will start generating revenue in 2008
as 130,000 tonnes of high grade copper ore are expected to be shipped to
smelters beginning in May. Copper cathode production is expected to begin in
the fourth quarter.

    The following table shows the spending made and required:

    
    -------------------------------------------------------------------------
    (millions)                  Spending     Lending   Subsidies     Funding
                                               under    received        from
                                           Tranche A                 project
                                           of credit                sponsors
                                            facility
    -------------------------------------------------------------------------
    Up to December 31 2007     (euro)263    (euro)87     (euro)6   (euro)197
    2008                             200          84          47          42
    -------------------------------------------------------------------------
                               (euro)463   (euro)171    (euro)53   (euro)239
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                            2008        2009
                                                          target      target
    -------------------------------------------------------------------------
    Tonnes of ore processed (thousands)                      240         800
    -------------------------------------------------------------------------
    Strip ratio                                               28          32
    -------------------------------------------------------------------------
    Copper grades                        (percent)            12           9
    -------------------------------------------------------------------------
    Copper production                    (tonnes)         27,000      64,000
    -------------------------------------------------------------------------
    Smelter processing charges and
     freight for crushed ore sales       (C $ per tonne)    $277           -
    -------------------------------------------------------------------------
    Direct production cost of ore
     processed                           (C $ per tonne)    $172        $150
    -------------------------------------------------------------------------
    

    CERATTEPE

    Quarterly development update

    All the necessary permits are in place for site construction, which began
in the third quarter. We continue to maintain an active campaign of community
dialogue and engagement to reinforce support for the project.
    The following work was underway this quarter:

    Underground rehabilitation and development

    Work on the decline was completed and the ramp was extended toward the
ore zone. Development will continue in 2008 with anticipation of reaching the
ore body in the first quarter of 2009.

    Aerial tramway

    We have selected the contractor to design, supply and install the
ropeway. Engineering has begun and the tramway should be installed by the end
of 2008.

    Cayeli mill expansion

    This is the single largest cost related to the project. The mill needs to
increase its capacity from 1.2 million tonnes per year to 1.5 million tonnes
per year. This requires a new grinding and flotation section as well as a
small SAG mill and a ball mill. Basic engineering has been completed.

    2008 outlook for development

    Subject to the outcome of current legal proceedings (see Managing Risk -
Cerattepe legal proceedings), we will continue to move the project forward and
hope to start production by the end of the first quarter of 2009. In all,
engineering and construction are on track.

    The following table shows the spending to date and planned:

    
    -------------------------------------------------------------------------
    (millions)                                                      Spending
    -------------------------------------------------------------------------
    Up to December 31 2007                                               $15
    Option payments                                                        9
    2008 development (includes mill expansion at Cayeli)                  44
    2009 development                                                      20
    -------------------------------------------------------------------------
                                                                         $88
    -------------------------------------------------------------------------
    Spending will continue to be funded with cash from Cayeli.
    

    PETAQUILLA

    Quarterly development update

    In May 2007, Teck Cominco, Petaquilla Copper and Inmet agreed to a work
plan to accelerate the development of the Petaquilla copper deposit in Panama
by completing the front-end engineering and design (FEED), progressing the
social and environmental impact assessment, commencing marketing discussions
with our potential customers and advancing financing discussions.
    The interim FEED study was completed and estimates that the capital cost
required to develop the Petaquilla project would be US $3.5 billion (including
a contingency of $515 million but not working capital or escalation). The
capital cost estimate includes approximately $500 million for the construction
of an oil-fired power plant and approximately $280 million for port
facilities. Cash costs, including operating and realization costs net of by-
product credits, in years 1 to 10 of the project are estimated to average
US $0.85 per pound of copper produced. The study is based on the mine plan
developed in 1998, which contemplates a 23-year mine life. The project
includes a concentrator capable of processing 120,000 tonnes per day of ore.
Construction is expected to take approximately 44 months from issuance of
construction permits. Permitting would follow the submission of a social and
environmental impact assessment, expected to be completed in the fourth
quarter of 2008.
    Capital costs for the project have increased substantially over
previously published estimates because of scope changes, including
enhancements in erosion control, water management and other environmental
protection measures, and increases in equipment and construction costs that
have been affecting projects worldwide. Despite the increase in capital costs
required to develop Petaquilla, the shareholders believe that the project
still has the potential to be a world-class mining operation.
    Work is continuing on the FEED study. A project review team is currently
studying opportunities to reduce the capital costs from the interim FEED study
estimate. Several possible opportunities have already been identified in the
area of the grinding circuit, power supply and port infrastructure. The
project review team will evaluate these opportunities over the next six weeks
and, where appropriate incorporate these changes into the capital cost
estimate.

    Managing our liquidity

    
    -------------------------------------------------------------------------
                                    three months ended            year ended
                                           December 31           December 31
    (millions)                         2007       2006       2007       2006
    -------------------------------------------------------------------------
    CASH FROM OPERATING ACTIVITIES
    Cayeli                              $51        $23       $215       $173
    Pyhasalmi                             5         38        109        109
    Troilus                               5          5         15         17
    Ok Tedi                              23         12         98        151
    Corporate development and
     exploration not included in
     operation's cash flow               (2)        (1)        (6)        (3)
    General and administration          (13)        (6)       (20)       (14)
    Other                                 7         10         16          5
    -------------------------------------------------------------------------
                                         76         81        427        438
    -------------------------------------------------------------------------
    CASH FROM INVESTING AND FINANCING
    Capital spending                    (94)       (46)      (346)      (133)
    Long-term borrowings, less
     repayments                          24         36         89         73
    Funding from non-controlling
     shareholder                         16          4         56         13
    Disposition of investments            -          -         50          2
    Foreign exchange on cash held in
     foreign currency                     6         17        (51)        15
    Other                                (2)        (8)       (24)       (20)
    -------------------------------------------------------------------------
                                        (50)         3       (226)       (50)
    -------------------------------------------------------------------------
    Increase in cash                     26         84        201        388
    Cash and short-term investments
      Beginning of period               815        556        640        252
    -------------------------------------------------------------------------
      End of period                    $841       $640       $841       $640
    -------------------------------------------------------------------------



    CASH FROM OPERATING ACTIVITIES

    -------------------------------------------------------------------------
                                             three months ended   year ended
    (millions)                                      December 31  December 31
    -------------------------------------------------------------------------
    Increased (decreased) earnings from
     operations (see page 5)                               $(24)         $25
    Non-cash changes in operating earnings:
      Decreased (increased) tax expense                       6           (4)
      Changes in working capital                             21          (37)
      Other                                                  (8)           5
    -------------------------------------------------------------------------
    Decrease in operating cash flow,
     compared to 2006                                       $(5)        $(11)
    -------------------------------------------------------------------------

    Operating cash flows are lower this quarter compared to 2006 because of
lower earnings offset by an increase in working capital from lower accounts
receivable at Cayeli. The change in working capital this year is largely due
to higher taxes paid in 2007 and lower payables at Cayeli.

    2008 outlook for operating activities

    Based on our outlook for metal prices and production, we expect our
operating cash flows to be in a similar range for 2008 for our operating mines
and we expect operating cash flows from the start of production at Las Cruces.

    CASH FROM INVESTING AND FINANCING

    Capital spending
    -------------------------------------------------------------------------
                         three months ended            year ended
                                December 31           December 31  objective
    (millions)              2007       2006       2007       2006       2008
    -------------------------------------------------------------------------

    Cayeli                    $2         $4        $18        $15        $23
    Pyhasalmi                  2          2          3          6         12
    Troilus                    -          -          2          2          1
    Ok Tedi                   10          5         32         11         23
    Las Cruces                76         32        283         93        342
    Cerattepe                  4          1          8          3         53
    Accruals and other         -          2          -          3          -
    -------------------------------------------------------------------------
                             $94        $46       $346       $133       $454
    -------------------------------------------------------------------------

    Refer to Results of our operations and Status of our development projects
for a discussion of actual results and our 2008 objective.

    Las Cruces borrowed an additional (euro)13 million this quarter, bringing
the total amount borrowed under Tranche A of its credit facility to
(euro)87 million.

    2008 outlook for investing and financing

    We expect capital spending to be $454 million in 2008:
    -   $325 million for the continuing development of the Las Cruces mine
        and $17 million for its sustaining capital
    -   $8 million for the mine waste management program and $5 million for
        drainage tunnel underground works at Ok Tedi.

    The Las Cruces spending will be financed by a combination of debt,
government subsidies and sponsor contributions (see page 23).
    A decision on whether we proceed with development of Petaquilla will be
made by the end of March 2008. At that time we will better be able to assess
our cash and financing requirements over the near term.

    Financial condition

    CASH

    Our cash and equivalents balance of $841 million at December 31, 2007
includes cash and money market instruments that mature in 90 days or less from
the date of acquisition. Short-term investments mature in 91 days to a year.
At December 31, our cash and short-term investments are generally held in:
    -   short term debt instruments issued by Canadian Crown Corporations
    -   AAA rated 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 and term and overnight deposits with leading Canadian and
        international financial institutions.
    Our restricted cash balance of $39 million at December 31, 2007 includes:
    -   $12 million in trust for future rehabilitation at Ok Tedi
    -   $14 million of cash collateralized letters of credit for Inmet
    -   $13 million related to issuing letters of credit to suppliers at Las
        Cruces.

    COMMON SHARES
    -------------------------------------------------------------------------
    Common shares outstanding as of
     December 31, 2007 and February 12, 2008                      48,281,909
    -------------------------------------------------------------------------
    Deferred share units outstanding as of
     December 31, 2007                                                75,215
    (redeemable on a one-for-one basis for common shares)
    -------------------------------------------------------------------------

    FINANCIAL INSTRUMENTS

    The following table shows gold forward sales at Troilus, gold and copper
forward sales at Ok Tedi, the currency and interest rate hedges related to Las
Cruces, and their respective marked-to-market valuations recorded on our
consolidated balance sheet as at December 31, 2007.

    -------------------------------------------------------------------------
    Type of       Expiry     Quantity          Price           C$ marked-to-
     contract                                              market gain (loss)
                                                              at December 31,
                                                                        2007
    -------------------------------------------------------------------------
    Copper forward
     sales
      Ok Tedi      2008  3.2 million lbs  US $2.78 per lb
                   2009  3.2 million lbs  US $2.41 per lb
                  ----------------------------------------
                         6.4 million lbs  US $2.60 per lb   $(2.4 million)(1)

    Gold forward
     sales
      Troilus      2008    58,200 ounces   US $352 per oz. $(26.9 million)(2)


      Ok Tedi      2008     6,800 ounces   US $372 per oz.
                   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.
                  -----------------------------------------------------------
                           19,400 ounces   US $639 per oz.  $(6.6 million)(3)

    Currency forward
     sales
      Las Cruces   2008  US $215 million (euro)171.80 million  $33.6 million
                  -----------------------------------------------------------

    Interest rate
     swaps
      Las Cruces   2008  US $179 million       5.2 percent     $(8.0 million)
                to 2014  (reducing in
                         conjunction with
                         debt repayment
                         schedule)
    -------------------------------------------------------------------------
    (1) At a copper price of US $3.04 per pound.
    (2) At a gold price of US $859 per ounce.
    (3) At a gold price of US $826 per ounce.
    

    Accounting changes

    We adopted several new CICA Handbook sections.

    Section 3855 - Financial instruments - recognition and measurement

    This section establishes standards for recognizing and measuring
financial assets, financial liabilities and non-financial derivatives. It
requires that financial assets and liabilities including derivatives be
recognized on the balance sheet when we become a party to the contractual
provisions of the financial instrument or a non-financial derivative contract.
All financial instruments should be measured at fair value on initial
recognition except for certain related party transactions. Measurement in
subsequent periods depends on whether the financial instruments have been
classified as held-for-trading, available-for-sale, held-to-maturity, loans
and receivables, or other liabilities.
    Effective January 1, 2007, we classify cash and short-term investments,
accounts receivable, investments, restricted cash, accounts payable and
accrued liabilities as held-for-trading and record them on the balance sheet
at fair value. We record long-term debt at amortized cost.

    3865 - Hedges

    This section specifies when and how we can use hedge accounting for
hedging strategies: fair value hedges, cash flow hedges and hedges of a
foreign currency exposure of a net investment in a self-sustaining foreign
operation.
    All of our hedges at January 1, 2007 qualified for cash flow hedge
accounting. The contracts are reflected at fair value on the balance sheet.

    1530 - Comprehensive income

    This section calls for a statement of comprehensive income and its
components. Other comprehensive income includes unrealized gains and losses on
financial assets classified as available-for-sale, unrealized foreign currency
translation amounts arising from self-sustaining foreign operations, and
changes in the fair value of the effective portion of cash flow hedging
instruments.
    Effective January 1, 2007, we include unrealized fair value of our cash
flow hedges, investments and foreign currency translation adjustment in
accumulated other comprehensive income, net of tax. The change in fair value
this quarter of the effective portion of our cash flow hedges, investments and
foreign currency translation adjustments is included in other comprehensive
income for the period, net of tax.
    Turn to note 2 on page 45 in the Interim consolidated financial
statements for more details about the transitional adjustments.

    The CICA also recently issued new accounting pronouncements:

    In December 2006, the CICA issued Handbook Section 3862, Financial
Instruments - Disclosure and Section 3863, Financial Instruments -
Presentation. This section replaces the disclosure portion of Section 3861. It
increases the emphasis on disclosing the nature and extent of risks arising
from both recognized and unrecognized financial instruments, and how these
risks are managed. Section 3863 carries forward the presentation requirements
from Section 3861.
    In December 2006, the CICA issued Handbook Section 1535, Capital
Disclosures. This section establishes standards for disclosing qualitative and
quantitative information about capital and how it is managed. Its goal is to
make it easier for readers to use the financial statements to evaluate a
company's objectives, policies and processes for managing capital.
    In June 2007, the CICA issued Handbook Section 3031, Inventories. This
section requires companies to record their inventory at the lower of cost or
net realizable value. This is our current accounting policy. The section also
clarifies the allocation of fixed production overhead, requires consistent use
of either first-in, first-out or weighted average to measure inventories, and
requires that any previous write-downs be reversed when the value of
inventories increases. The amount of the reversal is limited to the amount of
the original write-down.
    The above standards will become effective for us beginning on January 1,
2008. We are assessing the impact these changes in accounting policy will have
on our consolidated financial statements.

    Managing risk

    The following is an update to the discussion, only where required, of the
key risks associated with our business and the strategies we use to manage
them. You can find the full discussion in the annual Management's discussion
and analysis in Inmet's 2006 annual report.

    Development at Las Cruces

    Las Cruces is a development project, and while we are confident that the
project will add value as planned, there is still significant uncertainty,
particularly in the ability of Las Cruces' contractors to meet critical
construction milestones. While there are rigorous controls on the contractors'
performance, progress depends on the abilities of the Las Cruces owner's team
and construction manager to hire the necessary resources and effectively
manage them.
    A local non-governmental group has initiated several legal proceedings
claiming that various governmental approvals for the project were not granted
according to regulatory requirements. We believe these claims are without
merit and are vigourously defending against them. Two of these proceedings
were dismissed in 2006. The other two proceedings are outstanding.

    Cerattepe legal proceedings

    Prior to April 2007, Cerattepe was affected by a local administrative
court decision that governmental authorities had incorrectly exempted the
project operating licences from environmental assessment regulations. In April
2007, the Danistay (Turkish Administrative Supreme Court) directed the lower
court to review its decision and re-instated the validity of the licences on
procedural grounds. In June, the local court confirmed its agreement with the
Danistay's decision. The plaintiff in the prior proceedings has since re-filed
its applications to have the licences cancelled, and has also made
applications to stop work on the property and to cancel a lease of the land on
which the bottom ropeway terminus will be located. We have applied to join the
proceedings as an intervenor and together with the Turkish Ministry of Energy
and Natural Resources have filed defences to the applications which we
continue to believe are without merit.
    The decision of the Danistay did not finally resolve the status of the
operating licences but they remain valid pending receipt of any new decision
from the local administrative court. As a result, we resumed permitting and
on- site work in April 2007 and have continued with such efforts. Any adverse
ruling in the future could have a negative impact on, or stop our ability to
progress, the project.

    Sensitivity analysis

    The table below shows you the effect of key variables on our net income,
based on our 2008 objectives.

    
    -------------------------------------------------------------------------
                                                                Would change
                                                  Would change  our 2007 net
                                                  our 2007 net    income per
                                    A change of:    income by:     share by:
    -------------------------------------------------------------------------
    Metal prices
    Copper (per pound)                  US $0.10   $16 million         $0.32
    Zinc (per pound)                    US $0.05    $4 million         $0.08
    Gold (per ounce)(1)                   US $10    $2 million         $0.03
    -------------------------------------------------------------------------
    Exchange rates
    Canadian dollar per US dollar         C$0.05   $30 million         $0.61
    Canadian dollar per euro              C$0.05    $2 million         $0.05
    -------------------------------------------------------------------------
    Treatment and refining charges
    Copper treatment charge per tonne     US $10
     and copper refining charge per
     pound                              US $0.10    $4 million         $0.08
    Zinc treatment charge per tonne       US $10    $1 million         $0.02
    -------------------------------------------------------------------------
    Freight and energy costs
    Concentrate freight per tonne            10%    $3 million         $0.07
    Fuel price per litre                   $0.10    $4 million         $0.08
    Electricity per kilowatt hour          $0.01    $5 million         $0.09
    -------------------------------------------------------------------------
    (1) Calculations include hedging in place at December 31, 2007.

    Supplementary financial information

    Pages 33 and 34 include supplementary financial information on cash costs.
These are non-generally accepted accounting principle measures.
    We use unit cash cost information as a key performance indicator, both on
a segment basis and consolidated basis. We have included cash costs as
supplementary information because we believe our key stakeholders use this
measure 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 is not a recognized measure under Canadian generally
accepted accounting principles it should not be considered in isolation of
earnings or cash flows. There is also no standard way to calculate them, 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 Cerattepe, and one pre- development
property, Petaquilla.

    This press release is also available at www.inmetmining.com

    Fourth quarter conference call

    Will be held on
    -   Wednesday, February 13, 2008
    -   11:00 a.m. (ET)
    webcast available at
    www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2143900 or
    www.inmetmining.com.

    You can also dial in by calling
    -   Local or international: +1.416.644.3415
    -   Toll-free within North America: +1.800.733.7560

    Starting 1 p.m. (ET) Wednesday February 13, 2008, conference call replay
will be available
    -   Local or international: +1.416.640.1917 passcode 21260197 followed by
        the number sign.
    -   Toll-free within North America: +1.877.289.8525 passcode 21260197
        followed by the number sign.



    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs
    2007 For the year ended December 31

                                                                    per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars)

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

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

    2006 For the year ended December 31

                                                                    per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars per pound)


    Direct production costs    $0.80     $1.48     $0.86     $0.94      $459
    Royalties and variable
     compensation               0.14         -      0.09      0.09         -
    Smelter processing
     charges and freight        1.48      2.07      0.64      1.20        68
    Metal credits              (2.15)    (5.11)    (0.79)    (2.03)     (162)
                            ----------------------------- --------- ---------

    Cash cost                  $0.27    ($1.56)    $0.80     $0.20      $365
                            ----------------------------- --------- ---------
                            ----------------------------- --------- ---------

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



    Reconciliation of cash costs to statements of earnings
    2007 For the year ended December 31

                                                                    per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise note)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 15   page 17   page 21             page 19

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

    2006 For the year ended December 31

                                                                    per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise note)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 15   page 17   page 21             page 19

    Direct production costs      $73       $48       $83      $204       $77
    Smelter processing
     charges and freight         100        76        55       231        11
    By product sales            (133)     (171)      (67)     (371)      (26)
    Adjust smelter processing
     and freight, and sales
     to production basis         (20)       (3)       (1)      (24)       (1)
                            --------- --------- --------- --------- ---------
    Operating costs net
     of metal credits            $20      ($50)      $70       $40       $61
    US $ to C$ exchange rate   $1.13     $1.13     $1.13     $1.13     $1.13
    Inmet's share of
     production (000's)       67,000    28,700    77,000   172,700   147,900
                            --------------------------------------- ---------
    Cash cost                  $0.27    ($1.56)    $0.80     $0.20      $365
                            --------------------------------------- ---------
                            --------------------------------------- ---------



    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs
    2007 For the three months ended December 31

                                                                    per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars)

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

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

    2006 For the three months ended December 31

                                                                    per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    (US dollars per pound)

    Direct production costs    $0.89      $1.62    $0.92     $1.02      $442
    Royalties and variable
     compensation               0.14          -     0.02      0.06         -
    Smelter processing
     charges and freight        1.96       2.72     0.60      1.48        66
    Metal credits              (3.38)     (7.08)   (0.79)    (2.83)     (102)
                            ----------------------------- --------- ---------

    Cash cost                 ($0.39)    ($2.74)   $0.75    ($0.27)     $406
                            ----------------------------- --------- ---------
                            ----------------------------- --------- ---------

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



    Reconciliation of cash costs to statements of earnings
    2007 For the three months ended December 31

                                                                    per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise note)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 15   page 17   page 21             page 19

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

    2006 For the three months ended December 31

                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise note)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ----------------------------------------------------- --------- ---------
    GAAP reference           page 15   page 17   page 21             page 19

    Direct production costs      $21       $13       $19       $53       $20
    Smelter processing
     charges and freight          27        26         9        62         3
    By product sales             (34)      (61)      (14)     (109)       (5)
    Adjust smelter processing
     and freight, and sales
     to production basis         (22)        -         3       (19)        -
    Operating costs net     --------- --------- --------- --------- ---------
     of metal credits            ($8)     ($22)      $17      ($13)      $18
    US $ to C$ exchange rate   $1.14     $1.14     $1.14     $1.14     $1.14
    Inmet's share of
     production (000's)       17,100     7,100    19,500    43,700    39,300
                            --------------------------------------- ---------
    Cash cost                 ($0.39)   ($2.74)    $0.75    ($0.27)     $406
                            --------------------------------------- ---------
                            --------------------------------------- ---------



    INMET MINING CORPORATION
    Quarterly review
    (unaudited)

    Latest Four Quarters
    -------------------------------------------------------------------------
                                       2007       2007       2007       2007
    (thousands of Canadian dollars,  Fourth      Third     Second      First
     except per share amounts)      quarter    quarter    quarter    quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS

    Gross sales                   $ 224,773  $ 272,293  $ 320,018  $ 286,614
    Smelter processing
     charges and freight            (43,902)   (42,557)   (55,413)   (64,606)
    Cost of sales                   (78,809)   (72,057)   (78,181)   (79,377)
    Depreciation                     (9,480)    (8,739)    (8,039)    (9,415)
                                  -------------------------------------------
                                     92,582    148,940    178,385    133,216
    Corporate development
     and exploration                 (3,510)    (2,895)    (1,836)      (842)
    General and administration      (12,622)    (2,674)    (2,162)    (2,840)
    Investment and other income       5,968      9,644     13,415      7,427
    Interest expense                   (407)      (424)      (424)      (438)
    Capital tax (expense) recovery      212       (273)      (274)      (274)
    Income tax expense              (18,551)   (37,649)   (48,509)   (35,376)
    Non-controlling interest            (27)       167       (545)       205
                                  -------------------------------------------
    Net income                    $  63,645  $ 114,836  $ 138,050  $ 101,078
                                  -------------------------------------------
    Net income per common share   $    1.32  $    2.38  $    2.86  $    2.09
                                  -------------------------------------------
    Diluted net income
     per common share             $    1.32  $    2.37  $    2.86  $    2.09
                                  -------------------------------------------


    Previous Four Quarters
    -------------------------------------------------------------------------
                                       2006       2006       2006       2006
    (thousands of Canadian dollars,  Fourth      Third     Second      First
     except per share amounts)      quarter    quarter    quarter    quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS

    Gross sales                   $ 258,911  $ 301,100  $ 317,624  $ 210,234
    Smelter processing
     charges and freight            (65,005)   (60,270)   (63,668)   (51,662)
    Cost of sales                   (67,868)   (73,394)   (78,778)   (65,176)
    Depreciation                     (9,057)    (9,025)    (8,225)    (7,265)
                                  -------------------------------------------
                                    116,981    158,411    166,953     86,131
    Corporate development
     and exploration                 (4,136)    (2,708)    (1,456)    (1,454)
    General and administration       (6,128)    (2,618)    (2,624)    (2,370)
    Investment and other income      17,972      1,759      2,940     25,086
    Interest expense                   (425)      (412)      (391)      (391)
    Capital tax (expense) recovery        -         41       (246)      (245)
    Income tax expense              (26,679)   (42,902)   (33,240)   (27,196)
    Non-controlling interest           (165)        11        154          -
                                  -------------------------------------------
    Net income                    $  97,420  $ 111,582  $ 132,090  $  79,561
                                  -------------------------------------------
    Net income per common share   $    2.02  $    2.31  $    2.74  $    1.65
                                  -------------------------------------------
    Diluted net income
     per common share             $    2.02  $    2.31  $    2.74  $    1.64
                                  -------------------------------------------



    INMET MINING CORPORATION
    Consolidated balance sheets

                                                   December 31   December 31
    (thousands of Canadian dollars)                       2007          2006
    -------------------------------------------------------------------------
                                                    (unaudited)

    Assets

    Current assets:
      Cash and short-term investments                 $840,823      $640,186
      Restricted cash (note 6)                           1,569             -
      Accounts receivable                              131,197       122,645
      Inventories                                       52,725        58,323
      Future income tax asset                           14,515         7,567
                                                    -------------------------
                                                     1,040,829       828,721

    Restricted cash (note 6)                            37,205        35,759
    Property, plant and equipment                      870,965       548,637
    Investments (note 7)                                32,266        53,002
    Future income tax asset                              7,884        21,750
    Deferred charges                                         -         2,408
    Derivatives (note 8)                                33,565             -
    Other assets                                        25,751        42,663
                                                    -------------------------

                                                    $2,048,465    $1,532,940
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities:
      Accounts payable and accrued liabilities        $172,800      $163,106
      Current portion of long-term debt                 12,971             -
                                                    -------------------------
                                                       185,771       163,106

    Long-term debt (note 9)                            234,317       109,080
    Reclamation liabilities (note 10)                   84,017        65,812
    Derivatives (note 8)                                43,960             -
    Other liabilities                                   19,249        30,617
    Future income tax liabilities                       37,084        42,366
    Non-controlling interest                            51,574        49,125
                                                    -------------------------
                                                       655,972       460,106
                                                    -------------------------
    Commitments (note 11)

    Shareholders' equity

    Share capital                                      337,464       337,338
    Contributed surplus                                 60,722        66,999
    Stock based compensation                             1,085           915
    Retained earnings                                1,076,958       669,385
    Accumulated other comprehensive loss (note 12)     (83,736)       (1,803)
                                                    -------------------------

                                                     1,392,493     1,072,834
                                                    -------------------------

                                                    $2,048,465    $1,532,940
    -------------------------------------------------------------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented balance sheets

    2007 As at December 31

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

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

    Assets
    Cash and short-term
     investments                $359,359    $333,671    $111,492          $-
    Other current assets          23,455      29,384      55,069      23,644
    Restricted cash               14,444           -           -           -
    Property, plant and
     equipment                       629     115,064      63,147      28,413
    Investments                   32,266           -           -           -
    Derivatives                        -           -           -           -
    Other assets                  22,343         441           -       6,289
                               ----------------------------------------------
                                $452,496    $478,560    $229,708     $58,346
                               ----------------------------------------------
                               ----------------------------------------------

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


    2007 As at December 31

    (unaudited)                 OK TEDI   LAS CRUCES     TOTAL
    ------------------------------------------------- -----------

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

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

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



    2006 As at December 31

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

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

    Assets
    Cash and short-term
     investments                $267,277    $176,676    $119,260          $-
    Other current assets           9,690      55,776      68,897      18,104
    Restricted cash               14,300           -           -           -
    Property, plant and
     equipment                       570     117,464      74,873      33,277
    Investments                   53,002           -           -           -
    Deferred charges                   -           -           -       2,408
    Other assets                  32,052         486           -       6,245
                               ----------------------------------------------
                                $376,891    $350,402    $263,030     $60,034
                               ----------------------------------------------
                               ----------------------------------------------

    Liabilities
    Current liabilities          $11,698     $37,879     $35,130     $19,780
    Long-term debt                16,786           -           -           -
    Reclamation liabilities       25,507       3,467      13,175       4,268
    Other liabilities              8,035       3,891           -       8,657
    Future income tax
     liabilities                       -      20,433       7,025           -
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------
                                 $62,026     $65,670     $55,330     $32,705
                               ----------------------------------------------
                               ----------------------------------------------


    2006 As at December 31

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

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

    Assets
    Cash and short-term
     investments                 $44,689     $32,284    $640,186
    Other current assets          26,157       9,911     188,535
    Restricted cash               10,982      10,477      35,759
    Property, plant and
     equipment                    42,489     279,964     548,637
    Investments                        -           -      53,002
    Deferred charges                   -           -       2,408
    Other assets                     805      24,825      64,413
                               ---------------------- -----------
                                $125,122    $357,461  $1,532,940
                               ---------------------- -----------
                               ---------------------- -----------

    Liabilities
    Current liabilities          $37,391     $21,228    $163,106
    Long-term debt                     -      92,294     109,080
    Reclamation liabilities       17,568       1,827      65,812
    Other liabilities              1,572       8,462      30,617
    Future income tax
     liabilities                   2,186      12,722      42,366
    Non-controlling interest           -      49,125      49,125
                               ---------------------- -----------
                                 $58,717    $185,658    $460,106
                               ---------------------- -----------
                               ---------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of earnings
    (unaudited)

    (thousands of Canadian        Three Months Ended              Year Ended
     dollars except per                  December 31             December 31
     share amounts)                 2007        2006        2007        2006
    ------------------------------------------------- -----------------------

    Gross sales                 $224,773    $258,911  $1,103,698  $1,087,869

    Smelter processing
     charges and freight         (43,902)    (65,005)   (206,478)   (240,605)

    Cost of sales                (78,809)    (67,868)   (308,424)   (285,216)

    Depreciation                  (9,480)     (9,057)    (35,673)    (33,572)
    ------------------------------------------------- -----------------------

                                  92,582     116,981     553,123     528,476


    Corporate development
     and exploration              (3,510)     (4,136)     (9,083)     (9,754)

    General and administration   (12,622)     (6,128)    (20,298)    (13,740)

    Investment and other
     income (note 13)              5,968      17,972      36,454      47,757

    Interest expense                (407)       (425)     (1,693)     (1,619)

    Capital tax (expense) recovery   212           -        (609)       (450)

    Income tax expense
     (note 14)                   (18,551)    (26,679)   (140,085)   (130,017)

    Non-controlling interest         (27)       (165)       (200)          -

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

    Net income                   $63,645     $97,420    $417,609    $420,653
    ------------------------------------------------- -----------------------

    Basic net income per
     common share (note 15)        $1.32       $2.02       $8.65       $8.73
    ------------------------------------------------- -----------------------

    Diluted net income per
     common share (note 15)        $1.32       $2.02       $8.64       $8.71
    ------------------------------------------------- -----------------------

    Weighted average shares
         outstanding (000's)      48,282      48,278      48,279      48,212
    ------------------------------------------------- -----------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2007 For the year ended December 31

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

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

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

    Corporate development
     and exploration              (5,590)     (1,686)     (2,077)        270
    General and administration   (20,298)          -           -           -
    Investment and other
     income (expense)             34,807      (2,004)          -       5,549
    Interest expense              (1,693)          -           -           -
    Capital tax expense             (609)          -           -           -
    Income tax expense             3,302     (46,445)    (30,911)
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------

    Net income                    $7,966    $173,757    $105,594     $15,647
                               ----------------------------------------------
                               ----------------------------------------------


    2007 For the year ended December 31

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

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

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

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

    Net income                  $114,179        $466    $417,609
                               ---------------------- -----------
                               ---------------------- -----------



    2006 For the year ended December 31

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

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

    Gross sales                       $-    $370,561    $273,848    $103,880
    Smelter processing
     charges and freight               -     (99,462)    (75,342)    (11,112)
    Cost of sales                 (1,944)    (71,157)    (49,629)    (76,311)
    Depreciation                       -      (7,418)     (8,617)    (10,912)
                               ----------------------------------------------
                                  (1,944)    192,524     140,260       5,545

    Corporate development
     and exploration              (2,955)     (1,454)     (1,993)     (3,352)
    General and administration   (13,740)          -           -           -
    Investment and other income   46,340       1,417           -           -
    Interest expense              (1,619)          -           -           -
    Capital tax expense             (450)          -           -           -
    Income tax expense            (2,200)    (25,846)    (32,078)          -
                               ----------------------------------------------

    Net income                   $23,432    $166,641    $106,189      $2,193
                               ----------------------------------------------
                               ----------------------------------------------


    2006 For the year ended December 31

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

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

    Gross sales                 $339,580          $-  $1,087,869
    Smelter processing
     charges and freight         (54,689)          -    (240,605)
    Cost of sales                (86,175)          -    (285,216)
    Depreciation                  (6,625)          -     (33,572)
                               ---------------------- -----------
                                 192,091           -     528,476

    Corporate development
     and exploration                   -           -      (9,754)
    General and administration         -           -     (13,740)
    Investment and other income        -           -      47,757
    Interest expense                   -           -      (1,619)
    Capital tax expense                -           -        (450)
    Income tax expense           (69,893)          -    (130,017)
                               ---------------------- -----------

    Net income                  $122,198          $-    $420,653
                               ---------------------- -----------
                               ---------------------- -----------



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2007 For the three months ended December 31

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

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

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

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

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


    2007 For the three months ended December 31

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

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

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

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

    Net income (loss)            $16,261         $46     $63,645
                               ---------------------- -----------
                               ---------------------- -----------


    2006 For the three months ended December 31

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

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

    Gross sales                       $-     $87,867     $88,170     $26,365
    Smelter processing
     charges and freight               -     (26,959)    (26,035)     (2,898)
    Cost of sales                   (576)    (16,822)    (13,630)    (19,889)
    Depreciation                       -      (1,872)     (2,333)     (2,838)
                               ----------------------------------------------
                                    (576)     42,214      46,172         740
                               ----------------------------------------------
                               ----------------------------------------------

    Corporate development
     and exploration              (1,268)       (610)       (400)     (2,408)
    General and administration    (6,128)          -           -           -
    Investment and other
     income (expense)             17,960          12           -           -
    Interest expense                (425)          -           -           -
    Capital tax expense                -           -           -           -
    Income tax expense            (2,200)     (4,036)    (10,863)          -
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------

    Net income (loss)             $7,363     $37,580     $34,909     ($1,668)
                               ----------------------------------------------
                               ----------------------------------------------


    2006 For the three months ended December 31

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

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

    Gross sales                  $56,509          $-    $258,911
    Smelter processing
     charges and freight          (9,113)          -     (65,005)
    Cost of sales                (16,951)          -     (67,868)
    Depreciation                  (2,014)          -      (9,057)
                               ---------------------- -----------
                                  28,431           -     116,981
                               ---------------------- -----------
                               ---------------------- -----------

    Corporate development
     and exploration                   -         550      (4,136)
    General and administration         -           -      (6,128)
    Investment and other
     income (expense)                  -           -      17,972
    Interest expense                   -           -        (425)
    Capital tax expense                -           -           -
    Income tax expense            (9,580)          -     (26,679)
    Non-controlling interest           -        (165)       (165)
                               ---------------------- -----------

    Net income (loss)            $18,851        $385     $97,420
                               ---------------------- -----------
                               ---------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of cash flows
    (unaudited)

                                  Three Months Ended              Year Ended
    (thousands of Canadian               December 31             December 31
     dollars)                       2007        2006        2007        2006
    ------------------------------------------------- -----------------------

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

    Net income                   $63,645     $97,420    $417,609    $420,653
    Add (deduct) items not
     affecting cash:
      Gain on disposition of
       investments (note 13)           -           -     (11,730)    (24,291)
      Depreciation                 9,480       9,057      35,673      33,572
      Future income tax           (4,217)     (2,380)     (5,724)    (11,823)
      Loss on settlement
       of pension liability
       (note 13)                   2,034           -       2,034           -
      Accretion expense on
       reclamation liabilities       899         925       3,609       3,500
      Deferred revenue                 -       1,053           -       3,126
      Non-controlling interest        27         165         200           -
      Other                        5,419      (3,562)     10,439        (126)
    Reclamation costs             (1,460)     (1,049)     (3,410)     (2,519)
    Net change in non-cash
     working capital (note 4)        498     (20,269)    (21,349)     16,037
    ------------------------------------------------- -----------------------
                                  76,325      81,360     427,351     438,129
    ------------------------------------------------- -----------------------

    Cash provided by (used in)
     investing activities

    Capital spending             (93,889)    (45,759)   (345,892)   (132,799)
    Acquisition and disposition
     of investments, net               -           -      50,170       2,105
    Purchase of short-term
     investments                 (29,363)    (21,199)    (64,949)   (254,826)
    Other                              -        (118)        (43)      1,249
    ------------------------------------------------- -----------------------
                                (123,252)    (67,076)   (360,714)   (384,271)
    ------------------------------------------------- -----------------------

    Cash provided by (used in)
     financing activities

    Long-term debt:
      Borrowings (note 9)         23,599      35,870      97,537      72,921
      Repayment (note 9)               -           -      (8,604)          -
    Funding by non-controlling
     shareholder                  16,277       4,071      55,805      13,317
    Financial assurance deposits   8,487      (4,814)     (4,164)    (11,718)
    Dividends paid on
     common shares                (4,828)     (4,827)     (9,656)     (9,654)
    Settlement of pension
     liability (note 13)          (3,266)          -      (3,266)          -
    Other                         (1,322)       (495)     (5,406)       (835)
    ------------------------------------------------- -----------------------
                                  38,947      29,805     122,246      64,031
    ------------------------------------------------- -----------------------


    Foreign exchange change
     on cash held
    in foreign currency            5,602      16,884     (50,988)     14,826
    ------------------------------------------------- -----------------------

     Increase (decrease) in cash  (2,378)     60,973     137,895     132,715

    Cash:
      Beginning of period        524,883     323,637     384,610     251,895
    ------------------------------------------------- -----------------------
      End of period              522,505     384,610     522,505     384,610

    Short-term investments       318,318     255,576     318,318     255,576
    ------------------------------------------------- -----------------------

    Cash and short-term
     investments                $840,823    $640,186    $840,823    $640,186
    ------------------------------------------------- -----------------------
    (see accompanying notes)


    (1) Supplementary cash
         flow information:

          Cash interest paid      $1,557          $-      $7,119      $1,196
          Cash taxes paid        $58,076     $41,261    $173,645    $119,600
    ------------------------------------------------- -----------------------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2007 For the year ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change
       in non-cash working
       capital                   ($1,583)   $191,754    $114,982     $19,584
      Net change in non-cash
       working capital            (7,210)     22,773      (6,470)     (4,935)
                               ----------------------------------------------
                                  (8,793)    214,527     108,512      14,649
                               ----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending              (191)    (26,073)     (3,451)     (1,742)
      Acquisition and
       disposition of
       investments, net           50,170           -           -           -
      Sale (purchase) of
       short-term investments    (90,940)     16,113           -           -
      Other                            -           -           -         (43)
                               ----------------------------------------------
                                 (40,961)     (9,960)     (3,451)     (1,785)
                               ----------------------------------------------
    Cash provided by
     (used in) financing
     activities                  (14,472)          -           -      (4,000)
                               ----------------------------------------------

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

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

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

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


    2007 For the year ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change
       in non-cash working
        capital                 $123,963          $-    $448,700
      Net change in non-cash
       working capital           (25,507)          -     (21,349)
                               ---------------------- -----------
                                  98,456           -     427,351
                               ---------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending           (31,527)   (282,908)   (345,892)
      Acquisition and
       disposition of
       investments, net                -           -      50,170
      Sale (purchase) of
       short-term investments      9,878           -     (64,949)
      Other                            -           -         (43)
                               ---------------------- -----------
                                 (21,649)   (282,908)   (360,714)
                               ---------------------- -----------
    Cash provided by
     (used in) financing
     activities                   (1,609)    142,327     122,246
                               ---------------------- -----------

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

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

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

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



    2006 For the year ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change
       in non-cash working
       capital                   ($3,530)   $163,616    $115,832     $17,394
      Net change in non-cash
       working capital            (8,244)      8,952      (6,600)         96
                               ----------------------------------------------
                                 (11,774)    172,568     109,232      17,490
                               ----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending               (94)    (19,987)     (5,760)     (2,665)
      Acquisition and
       disposition of
       investments, net                -           -       2,105           -
      Purchase of short-term
       investments              (227,378)    (17,016)          -           -
      Other                        1,629           -           -        (380)
                               ----------------------------------------------
                                (225,843)    (37,003)     (3,655)     (3,045)
                               ----------------------------------------------
    Cash provided by
     (used in) financing
     activities                  (12,881)          -           -           -
                               ----------------------------------------------

      Foreign exchange change
       on cash held in
       foreign currency                -       3,149      11,545           -
                               ----------------------------------------------

    Intergroup funding
     (distributions)             166,554     (16,097)    (56,000)    (14,445)
                               ----------------------------------------------

    Increase (decrease)
     in cash                     (83,944)    122,617      61,122           -
    Cash:
      Beginning of period        123,843      36,578      58,138           -
                               ----------------------------------------------
      End of period               39,899     159,195     119,260           -
    Short-term investments       227,378      17,481           -           -
                               ----------------------------------------------

    Cash and short-term
     investments                $267,277    $176,676    $119,260          $-
                               ----------------------------------------------
                               ----------------------------------------------


    2006 For the year ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change
       in non-cash working
       capital                  $128,780          $-    $422,092
      Net change in non-cash
       working capital            21,833           -      16,037
                               ---------------------- -----------
                                 150,613           -     438,129
                               ---------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending           (11,110)    (93,183)   (132,799)
      Acquisition and
       disposition of
       investments, net                -           -       2,105
      Purchase of short-term
       investments               (10,432)          -    (254,826)
      Other                            -           -       1,249
                               ---------------------- -----------
                                 (21,542)    (93,183)   (384,271)
                               ---------------------- -----------
    Cash provided by
     (used in) financing
     activities                   (1,712)     78,624      64,031
                               ---------------------- -----------

      Foreign exchange change
       on cash held in
       foreign currency           (1,045)      1,177      14,826
                               ---------------------- -----------

    Intergroup funding
     (distributions)            (108,373)     28,361           -
                               ---------------------- -----------

    Increase (decrease)
     in cash                      17,941      14,979     132,715
    Cash:
      Beginning of period         16,031      17,305     251,895
                               ---------------------- -----------
      End of period               33,972      32,284     384,610
    Short-term investments        10,717           -     255,576
                               ---------------------- -----------

    Cash and short-term
     investments                 $44,689     $32,284    $640,186
                               ---------------------- -----------
                               ---------------------- -----------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2007 For the three months ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                   ($7,167)    $33,684     $23,976      $3,260
      Net change in non-cash
       working capital               234      16,910     (19,143)      1,866
                               ----------------------------------------------
                                  (6,933)     50,594       4,833       5,126
                               ----------------------------------------------
    Cash provided by
     (used in) investing
     activities
      Capital spending               (46)     (5,814)     (1,380)       (285)
      Purchase of short-term
       investments               (28,617)       (462)          -           -
      Other                            -           -           -      -    -
                               ----------------------------------------------
                                 (28,663)     (6,276)     (1,380)       (285)
                               ----------------------------------------------
    Cash provided by
     (used in) financing
     activities                   (8,000)          -           -      (1,000)
                               ----------------------------------------------

      Foreign exchange change
       on cash held in
       foreign currency                -        (448)      2,863           -
                               ----------------------------------------------

    Intergroup funding
     (distributions)               2,312       4,068      (3,775)     (3,841)
                               ----------------------------------------------

    Increase (decrease)
     in cash                     (41,284)     47,938       2,541           -
    Cash:
      Beginning of period         82,325     285,733     108,951           -
                               ----------------------------------------------
      End of period               41,041     333,671     111,492           -
    Short-term investments       318,318           -           -           -
                               ----------------------------------------------

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


    2007 For the three months ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                   $22,074          $-     $75,827
      Net change in non-cash
       working capital               631           -         498
                               ---------------------- -----------
                                  22,705           -      76,325
                               ---------------------- -----------
    Cash provided by
     (used in) investing
     activities
      Capital spending           (10,113)    (76,251)    (93,889)
      Purchase of short-term
       investments                  (284)          -     (29,363)
      Other                            -           -           -
                               ---------------------- -----------
                                 (10,397)    (76,251)   (123,252)
                               ---------------------- -----------
    Cash provided by
     (used in) financing
     activities                       50      47,897      38,947
                               ---------------------- -----------

      Foreign exchange change
       on cash held in
       foreign currency              973       2,214       5,602
                               ---------------------- -----------

    Intergroup funding
     (distributions)             (36,041)     37,277           -
                               ---------------------- -----------

    Increase (decrease)
     in cash                     (22,710)      11,137     (2,378)
    Cash:
      Beginning of period         36,183      11,691     524,883
                               ---------------------- -----------
      End of period               13,473      22,828     522,505
    Short-term investments             -           -     318,318
                               ---------------------- -----------

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



    2006 For the three months ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                    $4,822     $34,113     $36,796      $2,638
      Net change in non-cash
       working capital            (2,633)    (10,732)      1,619       2,859
                               ----------------------------------------------
                                   2,189      23,381      38,415       5,497
                               ----------------------------------------------
    Cash provided by
     (used in) investing
     activities
      Capital spending                (9)     (5,882)     (3,191)       (240)
      Sale (purchase) of
       short-term investments   (101,924)     91,157           -           -
      Other                            -           -           -        (118)
                               ----------------------------------------------
                                (101,933)     85,275      (3,191)       (358)
                               ----------------------------------------------
    Cash provided by
     (used in) financing
     activities                   (8,387)          -           -           -
                               ----------------------------------------------

      Foreign exchange change
       on cash held in
       foreign currency                -       5,040       9,429           -
                               ----------------------------------------------

    Intergroup funding
     (distributions)              54,838      (1,516)    (42,857)     (5,139)
                               ----------------------------------------------

    Increase (decrease)
     in cash                     (53,293)    112,180       1,796           -
    Cash:
      Beginning of period         93,192      47,015     117,464           -
                               ----------------------------------------------
      End of period               39,899     159,195     119,260           -
    Short-term investments       227,378      17,481           -           -
                               ----------------------------------------------

    Cash and short-term
     investments                $267,277    $176,676    $119,260          $-
                               ----------------------------------------------
                               ----------------------------------------------


    2006 For the three months ended December 31

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

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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                   $22,710        $550    $101,629
      Net change in non-cash
       working capital           (10,832)       (550)    (20,269)
                               ---------------------- -----------
                                  11,878           -      81,360
                               ---------------------- -----------
    Cash provided by
     (used in) investing
     activities
      Capital spending            (4,505)    (31,932)    (45,759)
      Sale (purchase) of
       short-term investments    (10,432)          -     (21,199)
      Other                            -           -        (118)
                               ---------------------- -----------
                                 (14,937)    (31,932)    (67,076)
                               ---------------------- -----------
    Cash provided by
     (used in) financing
     activities                        -      38,192      29,805
                               ---------------------- -----------

      Foreign exchange change
       on cash held in
       foreign currency            1,478         937      16,884
                               ---------------------- -----------

    Intergroup funding
     (distributions)              (8,813)      3,487           -
                               ---------------------- -----------

    Increase (decrease)
     in cash                     (10,394)     10,684      60,973
    Cash:
      Beginning of period         44,366      21,600     323,637
                               ---------------------- -----------
      End of period               33,972      32,284     384,610
    Short-term investments        10,717           -     255,576
                               ---------------------- -----------

    Cash and short-term
     investments                 $44,689     $32,284    $640,186
                               ---------------------- -----------
                               ---------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of retained earnings
    (unaudited)

                                  Three Months Ended              Year Ended
    (thousands of Canadian               December 31             December 31
     dollars)                       2007        2006        2007        2006
    ------------------------------------------------- -----------------------

    Retained earnings,
     beginning of period,
     as previously reported   $1,018,141    $576,792    $669,385    $258,386

    Adjustment for financial
     instruments (note 2)              -           -        (381)          -
                              ----------------------- -----------------------

    Retained earnings,
     restated                  1,018,141     576,792     669,004     258,386

    Net income                    63,645      97,420     417,609     420,653

    Dividends on common shares    (4,828)     (4,827)     (9,655)     (9,654)
    ------------------------------------------------- -----------------------

    Retained earnings,
     end of period             $1,076,958   $669,385  $1,076,958    $669,385
    ------------------------------------------------- -----------------------
    (see accompanying notes)



    Consolidated statements of comprehensive income
    (unaudited)

                                  Three Months Ended              Year Ended
    (thousands of Canadian               December 31             December 31
     dollars)                       2007        2006        2007        2006
    ------------------------------------------------- -----------------------

    Net income                   $63,645     $97,420    $417,609    $420,653
                              ----------------------- -----------------------

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

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

      Changes in fair value
       of foreign exchange
       forward contracts           2,193           -       8,264           -

      Changes in fair value
       of investments              2,820           -      23,202           -

      Currency translation
       adjustments                10,907      34,973     (88,296)     40,640

    Reclassification to net
     income of gains/losses
     realized:
      Gain on sale of
       investment (note 13)            -           -     (11,730)          -

      Troilus gold hedge loss      4,872           -      15,689           -

      Ok Tedi gold hedge loss      3,595           -       3,595           -

      Foreign exchange loss on
       reduction of net
       investment in
       self-sustaining foreign
       operations (note 13)        2,083           -       5,394       3,286
                              ----------------------- -----------------------
                                  18,061      34,973     (56,387)     43,926
                              ----------------------- -----------------------

    Comprehensive income         $81,706    $132,393    $361,222    $464,579
    -------------------------------------------------------------------------
    (see accompanying notes)

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



    INMET MINING CORPORATION
    Notes to the consolidated financial statements

    1.  Significant accounting policies

        Our interim consolidated financial statements do not include all of
        the disclosure required for annual financial statements under
        generally accepted accounting principles (GAAP), and they have not
        been reviewed by our external auditors. These statements do, however,
        follow the same accounting policies and methods of application used
        in our most recent annual consolidated financial statements, except
        for the differences explained in note 2. You should read our interim
        statements in conjunction with our annual statements, which you can
        find in our 2006 annual report.

    2.  Changes in accounting policies

        Effective January 1, 2007, we adopted the following new CICA Handbook
        sections:

        Section 1506 - Accounting changes

        This section specifies that a voluntary change in accounting
        principles:

        (a)   can only be made if the change results in more reliable and
              relevant information

        (b)   must be accompanied by restated amounts for prior periods and
              the reasons for the change

        (c)   must describe the nature and amount of the change, if it is a
              change to an estimate.

        We have not made any voluntary change in accounting principles since
        we adopted these standards.

        The following three sections do not permit us to restate prior
        periods.

        Section 3855 - Financial instruments - recognition and measurement

        This section establishes standards for recognizing and measuring
        financial assets, financial liabilities and non-financial
        derivatives. It requires companies to recognize financial assets and
        liabilities, including derivatives, on the balance sheet when we
        become a party to the contractual provisions of a financial
        instrument or a non-financial derivative contract. All financial
        instruments should be measured at fair value on initial recognition
        except for certain related party transactions. Fair value is the
        amount at which an item could be exchanged between willing parties.

        Measurement in subsequent periods depends on whether the financial
        instruments have been classified as held-for-trading, available-for-
        sale, held- to-maturity, loans and receivables, or other liabilities.
        We have classified our financial instruments as follows, and applied
        the following accounting principles:

        Cash and short-term investments, accounts receivable, restricted cash
        and accounts payable and accrued liabilities

        These are classified as held-for-trading and recorded at fair value.
        We record any changes in their fair value in net income. We calculate
        fair value using published price quotations in an active market,
        where there is one. Our December 31, 2006 carrying values for these
        assets and liabilities already approximated fair value, because of
        their short terms to maturity, and we did not make any adjustments to
        the opening values.

        Most of our sales contracts set prices on a specified future date
        based upon market commodity prices. Variations between the prices
        recorded on the date of revenue recognition and the actual final
        price due to changes in market prices result in the existence of an
        embedded derivative in accounts receivable. We adjust accounts
        receivable every period to reflect the change in the value of the
        contract based on forward market metal prices at period end, and then
        record the final change in fair value in revenue once the contract
        has settled.

        At December 31, 2007, we had recorded $125 million in revenues that
        was waiting final settlement. This included:

        -  36 million pounds of copper valued using a forward rate of
           US $3.02 per pound

        -  16 million pounds of zinc valued using a forward rate of US $1.07
           per pound.

        At December 31, 2006, we had recorded $110 million in revenues that
        was waiting final settlement. This included:

        -  28 million pounds of copper valued using a forward rate of
           US $2.87 per pound

        -  15 million pounds of zinc valued using a forward rate of US $1.95
           per pound.

        Investments

        Our investments are classified as available-for-sale and recorded at
        fair value. We record changes in their fair value net of tax in other
        comprehensive income. The change in fair value of an investment
        appears in net income only when it is sold or impaired. We calculate
        fair value using the bid price of the investment as quoted in an
        active market. We capitalize transaction costs related to purchasing
        investments and include these costs in the initial carrying value. We
        have made adjustments to the opening values of our investments
        (note 7).

        Long-term debt

        All of our long-term debt is classified as other than held-for-
        trading and is accounted for at amortized cost. At December 31, 2006
        our long-term debt approximated amortized cost, and we did not make
        any adjustments to the opening values (note 9).

        We previously capitalized any costs spent to issue debt to Other
        assets. Effective January 1, 2007, we will record transaction costs
        related to issuing debt in net income or, for development properties,
        capitalize them to Property, plant and equipment.

        Derivative and other contracts

        Non-financial derivative contracts are recorded at fair value on the
        balance sheet. We include marked-to-market adjustments on these
        instruments in net income, unless the instruments are designated as
        part of a cash flow hedge relationship. We identify and separately
        account for embedded derivatives in contracts that were entered into
        or substantively modified on or after January 1, 2003. We use
        settlement date accounting for all contracts to buy or sell financial
        assets.

        3865 - Hedges

        This section specifies when and how we can use hedge accounting for
        the following hedging strategies: fair value hedges, cash flow hedges
        and hedges of a foreign currency exposure of a net investment in a
        self-sustaining foreign operation.

        We only have cash flow hedging relationships. We recognize the
        effective portion of a change in fair value in Other comprehensive
        income, and then classify the accumulated amount to net income as the
        gains or losses are realized. We recognize the ineffective portion of
        a change in fair value in net income.

        On January 1, 2007, we designated our existing derivative contracts
        related to gold forward sales contracts at Troilus and Ok Tedi, the
        foreign exchange forward and the interest rate swap contracts at Las
        Cruces, as part of a cash flow hedge relationship. The fair values of
        these contracts are recorded on the balance sheet (note 8).

        1530 - Comprehensive income

        This section calls for a statement of comprehensive income and its
        components. Other comprehensive income (OCI) includes unrealized
        gains and losses on our investments, unrealized foreign currency
        translation arising from self-sustaining foreign operations, and
        changes in the fair value of the effective portion of cash flow
        hedging instruments.

        The table below shows you the effect of adopting these standards on
        our balance sheet as at January 1. We have not restated prior
        periods.


        (thousands of            December 31       January 1       January 1
         Canadian dollars)              2006            2007            2007
        ---------------------------------------------------------------------
                                                 Adjustments
                                                 on adoption        Restated
                                                      of new         opening
                                 As reported       standards  Ref   balances

        Assets
        Current assets:
          Cash and short-term
           investments              $640,186            $ -    a    $640,186
          Accounts receivable        122,645              -    a     122,645
          Inventories                 58,323              -           58,323
          Future income tax asset      7,567              -            7,567
                                 --------------------------------------------
                                     828,721              -          828,721
        Restricted cash               35,759              -           35,759
        Property, plant and
         equipment                   548,637         13,795    b     562,432
        Investments (note 7)          53,002          3,677    c      56,679
        Future income tax asset       21,750         (5,696)   e      16,054
        Deferred charges               2,408         (2,408)   d           -
        Derivatives (note 8)               -         17,965    d      17,965
        Other assets                  42,663        (13,795)   b      28,868
                                 --------------------------------------------
                                  $1,532,940        $13,538       $1,546,478
        ---------------------------------------------------------------------
        Liabilities
        Accounts payable and
         accrued liabilities        $163,106         (5,444)  a,d   $157,662
        Long-term debt               109,080              -    a     109,080
        Reclamation liabilities       65,812              -           65,812
        Derivatives (note 8)               -         51,494    d      51,494
        Other liabilities             30,617         (7,958)   d      22,659
        Future income tax
         liabilities                  42,366         (2,166)   e      40,200
        Non-controlling interest      49,125          3,539    e      52,664
                                 --------------------------------------------
                                     460,106         39,465          499,571
                                 --------------------------------------------

        Shareholders' equity
        Share capital                337,338              -          337,338
        Contributed surplus           66,999              -           66,999
        Stock based compensation         915              -              915
        Retained earnings            669,385           (381)   e     669,004
        Accumulated other
         comprehensive
         loss (note 12)                    -        (27,349)   e     (27,349)
        Foreign currency translation
         account                      (1,803)         1,803    f           -
                                 --------------------------------------------
                                   1,072,834        (25,927)       1,046,907
                                 --------------------------------------------
                                  $1,532,940        $13,538       $1,546,478
        ---------------------------------------------------------------------

        (a)   The carrying values for cash, accounts receivable and accounts
              payable approximated fair value because of their short terms to
              maturity, and we did not make any adjustments to the opening
              values. The carrying value of our long-term debt approximated
              amortized cost, and we did not make any adjustments to the
              opening values.

        (b)   We reclassified the cost of issuing debt for the Las Cruces
              credit facility to Property, plant and equipment. These costs
              were previously capitalized as Other assets.

        (c)   We have designated investments we previously accounted for at
              cost as available for sale, and recorded them at fair value.

        (d)   We have reflected derivatives that were previously off balance
              sheet at fair value. We have recorded the accumulated
              ineffective portion of the hedges in opening retained earnings.
              Deferred amounts related to hedging of Troilus gold productions
              have been included in Accumulated other comprehensive loss.

        (e)   All adjustments are net of tax and non-controlling interest.

        (f)   We have reclassified the foreign currency translation account
              to Accumulated other comprehensive loss.

    3.  Recently issued accounting pronouncements

        (a)   In December 2006, the CICA issued Handbook Section 3862,
              Financial Instruments - Disclosure and Section 3863, Financial
              Instruments - Presentation. Section 3862 replaces the
              disclosure portion of Section 3861. It places increased
              emphasis on disclosing the nature and extent of risks arising
              from both recognized and unrecognized financial instruments,
              and how these risks are managed. Section 3863 carries forward
              the presentation requirements from Section 3861.

        (b)   Additionally in December 2006, the CICA issued Handbook Section
              1535, Capital Disclosures. This Section establishes standards
              for disclosing qualitative and quantitative information about
              an entity's capital and how it is managed in order to enable
              users of its financial statements to evaluate the entity's
              objectives, policies and processes for managing capital.

        (c)   In June 2007, the CICA issued Handbook Section 3031,
              Inventories. This Section requires inventory to be recorded at
              the lower of cost or net realizable value, which is our current
              accounting policy. The section also clarifies the allocation of
              fixed production overhead, requires consistent use of either
              first-in, first-out or weighted average to measure inventories,
              requires insurance and capital spares be accounted for as
              property, plant and equipment and requires that any previous
              write-downs be reversed when the value of inventories
              increases. The amount of the reversal is limited to the amount
              of the original write-down.

        The above standards will become effective for us beginning on
        January 1, 2008. We are assessing the impact, if any; these changes
        will have on our consolidated financial statements.


    4.  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 and year ending
        December 31.


        For the year ended December 31, 2007
        ---------------------------------------------------------------------

        (thousands)               Corporate     Cayeli  Pyhasalmi    Troilus
        ---------------------------------------------------------------------

        Accounts receivable         $(4,814)   $17,032    $14,383    $(7,685)
        Inventories                       -        557       (853)     1,814
        Accounts payable and
         accrued liabilities          5,927     (2,707)        94        936
        Taxes payable                (3,905)     7,920    (20,094)         -
        Other                        (4,418)       (29)         -          -
        ---------------------------------------------------------------------
                                    $(7,210)   $22,773    $(6,470)   $(4,935)
        ---------------------------------------------------------------------

        For the year ended December 31, 2007
        ----------------------------------------------------------
                                                Las
        (thousands)                 Ok Tedi     Cruces      Total
        ----------------------------------------------------------

        Accounts receivable        $(14,877)       $ -     $4,039
        Inventories                  (1,362)         -        156
        Accounts payable and
         accrued liabilities          2,528          -      6,778
        Taxes payable                (8,450)         -    (24,529)
        Other                        (3,346)         -     (7,793)
        ----------------------------------------------------------
                                   $(25,507)       $ -   $(21,349)
        ----------------------------------------------------------


        For the year ended December 31, 2006
        ---------------------------------------------------------------------

        (thousands)               Corporate     Cayeli  Pyhasalmi    Troilus
        ---------------------------------------------------------------------

        Accounts receivable         $(6,017)   $(9,038)  $(20,271)    $2,667
        Inventories                       -     (4,497)       591     (1,389)
        Accounts payable and
         accrued liabilities            276     16,980        440     (1,182)
        Taxes payable                   446      5,504     12,640          -
        Other                        (2,949)         3          -          -
        ---------------------------------------------------------------------
                                    $(8,244)    $8,952    $(6,600)       $96
        ---------------------------------------------------------------------

        For the year ended December 31, 2006
        ----------------------------------------------------------
                                                Las
        (thousands)                 Ok Tedi     Cruces      Total
        ----------------------------------------------------------
        Accounts receivable         $15,199        $ -   $(17,460)
        Inventories                     (60)         -     (5,355)
        Accounts payable and
         accrued liabilities          5,085          -     21,599
        Taxes payable                 1,758          -     20,348
        Other                          (149)         -     (3,095)
        ----------------------------------------------------------
                                    $21,833        $ -    $16,037
        ----------------------------------------------------------


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

        (thousands)               Corporate     Cayeli  Pyhasalmi    Troilus
        ---------------------------------------------------------------------

        Accounts receivable         $(2,061)  $ 16,777    $(3,436)   $(2,613)
        Inventories                       -       (690)      (149)     3,619
        Accounts payable and
         accrued liabilities          7,052      3,617        280        860
        Taxes payable                  (357)    (2,783)   (15,838)         -
        Other                        (4,400)       (11)         -          -
        ---------------------------------------------------------------------
                                       $234    $16,910   $(19,143)    $1,866
        ---------------------------------------------------------------------

        For the three months ended December 31, 2007
        ----------------------------------------------------------
                                                Las
        (thousands)                 Ok Tedi     Cruces      Total
        ----------------------------------------------------------

        Accounts receivable          $7,923        $ -    $16,590
        Inventories                  (1,845)         -        935
        Accounts payable and
         accrued liabilities          5,317          -     17,126
        Taxes payable                (8,871)         -    (27,849)
        Other                        (1,893)         -     (6,304)
        ----------------------------------------------------------
                                       $631        $ -       $498
        ----------------------------------------------------------


        For the three months ended December 31, 2006
        ---------------------------------------------------------------------

        (thousands)               Corporate     Cayeli  Pyhasalmi    Troilus
        ---------------------------------------------------------------------

        Accounts receivable         $(6,120)  $(15,832)   $(2,952)    $1,755
        Inventories                       -     (4,574)       684      1,050
        Accounts payable and
         accrued liabilities          2,979      9,118     (1,881)        54
        Taxes payable                 2,694        560      5,768          -
        Other                        (2,186)        (4)         -          -
        ---------------------------------------------------------------------
                                    $(2,633)  $(10,732)    $1,619     $2,859
        ---------------------------------------------------------------------

        For the three months ended December 31, 2006
        ----------------------------------------------------------
                                                   Las
        (thousands)                 Ok Tedi     Cruces      Total
        ----------------------------------------------------------
        Accounts receivable         $10,804        $ -   $(12,345)
        Inventories                  (3,666)         -     (6,506)
        Accounts payable and
         accrued liabilities          2,945       (550)    12,665
        Taxes payable               (21,220)         -    (12,198)
        Other                           305          -     (1,885)
        ----------------------------------------------------------
                                   $(10,832)     $(550)  $(20,269)
        ----------------------------------------------------------

    5.  Cash and short-term investments

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

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2007    31 2006
        ---------------------------------------------------------------------
        Cash:
        Liquidity funds                                  $424,390          -
        Term deposits                                      22,186    313,054
        Corporate                                               -     15,203
        Overnight deposits                                 50,822     35,386
        Other                                              25,549     20,967
                                                          522,947    384,610
        Short-term investments:
        Federal and crown corporation investments         317,876    188,411
        Corporate                                               -     38,967
        Term deposits                                           -     28,198
        ---------------------------------------------------------------------
                                                          317,876    255,576
        ---------------------------------------------------------------------
        Total cash and short-term investments            $840,823   $640,186
        ---------------------------------------------------------------------

    6.  Restricted cash

        The table below shows our restricted cash balances.

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2007    31 2006
        ---------------------------------------------------------------------
        Collateralized cash for letter of
         credit facility                                  $14,444    $14,300
        In trust for Ok Tedi rehabilitation (note 11)      11,836     10,982
        Collateralized cash for letters
         of credit - Las Cruces                            12,494     10,477
        ---------------------------------------------------------------------
                                                           38,774     35,759
        Less current portion:
          Collateralized cash for letters
           of credit - Las Cruces                          (1,569)         -
        ---------------------------------------------------------------------
                                                          $37,205    $35,759
        ---------------------------------------------------------------------


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

        -  (euro)3.1 million to secure payments that will ultimately be for
           the use of an electrical substation
        -  (euro)2.5 million to secure payments to local townships that it
           will owe once certain licences are granted
        -  (euro)3.1 million for dewatering and other purposes.

    7.  Investments

        The table below shows our investments.

        ---------------------------------------------------------------------
                                 December 31       January 1     December 31
                                        2007            2007            2006
                                 (fair value)    (fair value     (historical
                                                  - adjusted)      cost - as
        (thousands)                                                 reported)
        ---------------------------------------------------------------------
        Wolfden Resources Inc.
         (note 13)                         -         $39,690         $39,705
        Premier Gold Mines Ltd.       22,680          13,041          10,920
        Other                          9,586           3,948           2,377
        ---------------------------------------------------------------------
                                     $32,266         $56,679         $53,002
        ---------------------------------------------------------------------


    8.  Derivatives

        The table below shows the fair value of our derivatives.

        ---------------------------------------------------------------------
                                 December 31       January 1     December 31
                                        2007            2007            2006
                                 (fair value)    (fair value     (historical
                                                  - adjusted)      cost - as
        (thousands)                                                 reported)
        ---------------------------------------------------------------------
        Derivative asset:
          Las Cruces currency
           forward sale              $33,565         $17,965               -
        ---------------------------------------------------------------------
        Derivative liabilities:
          Troilus gold forward
           sales                     $26,889         $43,156               -
          Ok Tedi gold and copper
           forward sales               9,034           7,220               -
          Las Cruces interest
           rate swaps                  8,037           1,118               -
        ---------------------------------------------------------------------
                                     $43,960         $51,494               -
        ---------------------------------------------------------------------

    9.  Long-term debt

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2007    31 2006
        ---------------------------------------------------------------------
        Credit facility - Tranche A                      $125,776    $53,792
                        - Tranche B                        34,656     23,054
        Promissory note                                    16,267     16,786
        Loans from non-controlling shareholder             70,589     15,448
        ---------------------------------------------------------------------
                                                          247,288    109,080
        Less current portion:
        Credit facility - Tranche B                       (12,971)         -
        ---------------------------------------------------------------------
                                                         $234,317   $109,080
        ---------------------------------------------------------------------

        Credit facility

        This quarter, Las Cruces borrowed an additional (euro)13 million
        ((euro)52 million for the year) under Tranche A, the US $240 million
        senior secured facility, and an additional (euro)4 million
        ((euro)15 million for the year) under Tranche B, the (euro)69 million
        senior secured bridge financing facility. During the third quarter,
        Las Cruces repaid (euro)6 million under Tranche B equal to value-
        added tax refunds received. The credit facility loans approximate
        fair value because the loans accrue interest at prevailing market
        rates.

        Loans from non-controlling shareholder

        This quarter, Las Cruces received (euro)39 million ((euro)129 million
        for the year) of intercompany loan advances. These loans bear
        interest at EURIBOR plus 8.55 percent and are due to be repaid on
        February 25, 2020. The non-controlling portion of these loans,
        (euro)38.7 million, is reflected in long-term debt at December 31,
        2007. Loans from non-controlling shareholders approximate fair value
        because the loans accrue interest at prevailing market rates.

    10. Reclamation liabilities

        During the year, we recorded additional liabilities of $14.4 million
        at Las Cruces ($1.8 million in 2006) as a result of development
        activities that took place. On December 31, 2007, we recognized
        additional liabilities of $4.3 million at Ok Tedi and $3.2 million at
        Troilus mainly because of cost escalation.


    11. Commitments

        Capital commitments

        Our operations have the following capital commitments as at
        December 31, 2007:

        -  Ok Tedi has committed approximately $55.4 million (our
           proportionate share is $10.0 million) to capital expenditures for
           the mine waste tailings project.

        -  Las Cruces has committed $142.7 million to engineering,
           procurement and construction management and additional
           construction work related to the development of the mine and
           process plant.

        -  Cayeli has committed $1.7 million for the purchase of mining
           equipment.

        -  Cerattepe has committed approximately $6.8 million for
           construction of a ropeway.

        Community mine continuation agreements

        In 2007, Ok Tedi signed a new memorandum of agreement with most of
        the affected communities. In this agreement, Ok Tedi has increased
        direct compensation funds to US $18 million per year or four times
        the previous level. Inmet's share of the payments under the new
        agreement is US $3 million per year for the next six years, compared
        to approximately US $1 million per year under the previous agreement.
        Total payments to be made to these communities over the remaining six
        years of the mine life, at December 31, 2007, are approximately
        US $107 million (our proportionate share is US $19 million).

        Las Cruces - royalty payment

        Las Cruces is responsible for payment of a royalty associated with
        the sale of its copper production if the average price for copper is
        higher than US $0.80 per pound in the month the sale is completed. It
        is calculated as 1.5 percent of copper sold at US $0.80 or more,
        multiplied by the number of pounds sold.

        Freight, insurance and other costs associated with the sale are
        deducted in calculating the royalty to be paid. When partially
        processed copper is sold, smelting and refining charges and other
        similar charges are also deducted in calculating the royalty.

    12. Accumulated other comprehensive loss (AOCL)

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

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

        (thousands)
        ---------------------------------------------------------------------
        Unrealized losses on gold forward sales contracts
         (net of tax of $2,166)                                     $(48,208)
        Deferred Troilus gold hedges                                  10,993
        Unrealized gains on foreign exchange forward contract(1)       8,803
        Unrealized losses on interest rate swap contracts(2)            (168)
        Unrealized gains on investments (net of tax of $643)           3,034
        Currency translation adjustment                               (1,803)
        ---------------------------------------------------------------------
        AOCL, January 1, 2007                                       $(27,349)
        Other comprehensive loss for the year ending
         December 31, 2007                                           (56,387)
        ---------------------------------------------------------------------
        AOCL, December 31, 2007                                     $(83,736)
        ---------------------------------------------------------------------

        AOCL December 31, 2007 comprises:
        Unrealized losses on gold forward sales
         contracts (net of tax of $2,169)                           $(31,951)
        Deferred Troilus gold hedges                                   5,444
        Unrealized gains on foreign exchange forward contract(3)      17,067
        Unrealized losses on interest rate swap contract(4)           (4,097)
        Unrealized gains on investments (net of tax of $2,951)        14,506
        Currency translation adjustment                              (84,705)
        ---------------------------------------------------------------------
        AOCL, December 31, 2007                                     $(83,736)
        ---------------------------------------------------------------------

        1. Net of tax of $5,389 and non-controlling interest of $3,773.
        2. Net of tax of $103 and non-controlling interest of $72.
        3. Net of tax of $10,448 and non-controlling interest of $7,315.
        4. Net of tax of $2,510 and non-controlling interest of $1,756.

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

        ---------------------------------------------------------------------
                                                         December   December
        (thousands)                                       31 2007    31 2006
        ---------------------------------------------------------------------
        Pyhasalmi (euro functional currency)              $(1,466)    $5,637
        Las Cruces (euro functional currency)              (1,919)     8,095
        Cayeli (US dollar functional currency)            (65,822)    (9,278)
        Ok Tedi (US dollar functional currency)           (15,498)    (6,257)
        ---------------------------------------------------------------------
                                                         $(84,705)   $(1,803)
        ---------------------------------------------------------------------

        The US dollar to Canadian dollar exchange rate was $0.99 at
        December 31, 2007 and $1.17 at December 31, 2006. The euro to
        Canadian dollar exchange rate was $1.45 at December 31, 2007 and
        $1.54 at December 31, 2006.

    13. Investment and other income

        Investment and other income are summarized as follows:

        ---------------------------------------------------------------------
                                    three months ended            year ended
                                           December 31           December 31
        (thousands)                    2007       2006       2007       2006
        ---------------------------------------------------------------------
        Gain on sale of Izok            $ -        $ -        $ -    $23,905
        Gain on sale of Wolfden           -          -     11,730          -
        Interest income               9,703      5,479     32,647     14,199
        Dividend and royalty income   1,677      5,700      5,748      5,700
        Foreign exchange gain (loss) (2,969)     7,137    (14,519)     3,770
        Loss on settlement of pension
         liability                   (2,034)               (2,034)         -
        Other                          (409)      (344)     2,882        183
        ---------------------------------------------------------------------
                                     $5,968    $17,972    $36,454    $47,757
        ---------------------------------------------------------------------

        Gain on sale of investments

        In 2006, we sold our interest in the Izok development property to
        Wolfden Resources Inc., and recorded a gain of $23.9 million. In
        exchange, we received 13.5 million common shares of Wolfden and
        9.5 million common shares of Premier Gold Mines Ltd. In the second
        quarter, we sold our shares in Wolfden to Zinifex Canadian
        Enterprises Inc. for cash proceeds of $51.4 million or $3.81 per
        share, and recorded a gain of $11.7 million.

        Interest income

        Interest and dividend income was higher in the fourth quarter and for
        the year compared to the same periods in 2006 because of higher cash
        balances.

        Foreign exchange

        We recorded a foreign exchange loss of $3.0 million during the
        quarter because of the revaluation of some of our foreign currency
        denominated accounts and cash balances, and the recognition of
        deferred foreign exchange losses from dividends from Ok Tedi.

        Settlement of US pension liability

        During the quarter, we settled our US defined benefit pension
        liability by buying annuities for retirees in the plan. We purchased
        the annuities using the assets of the plan with a fair value at the
        time of settlement of US $16.3 million and a cash payment of
        US $3.3 million. We recorded a $2.0 million loss on settlement of the
        US pension plan, representing the difference between the
        US $3.3 million payment made and the liability we had recorded of
        $1.2 million.

    14. Income tax expense

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

    For the year ended December 31, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes   $1,698   $45,866   $30,117   $68,128       $ -  $145,809
    Future
     income taxes   (5,000)      579       794    (2,383)      286    (5,724)
    -------------------------------------------------------------------------
                   $(3,302)  $46,445   $30,911   $65,745      $286  $140,085
    -------------------------------------------------------------------------

    For the year ended December 31, 2006
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes   $2,200   $37,858   $31,063   $70,719       $ -  $141,840
    Future
     income taxes        -   (12,012)    1,015      (826)        -   (11,823)
     -------------------------------------------------------------------------
                    $2,200   $25,846   $32,078   $69,893       $ -  $130,017
    -------------------------------------------------------------------------

    For the three months ended December 31, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes     $541    $5,735    $5,569   $10,923       $ -   $22,768
    Future
     income taxes   (5,000)      221       631      (101)       32    (4,217)
    -------------------------------------------------------------------------
                   $(4,459)   $5,956    $6,200   $10,822       $32   $18,551
    -------------------------------------------------------------------------

    For the three months ended December 31, 2006
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes   $2,200    $9,000    $9,920    $7,939       $ -   $29,059
    Future
     income taxes        -    (4,964)      943     1,641         -    (2,380)
    -------------------------------------------------------------------------
                    $2,200    $4,036   $10,863    $9,580       $ -   $26,679
    -------------------------------------------------------------------------

        In June 2006, the Turkish government enacted tax legislation that
        reduced Cayeli's corporate tax rate to 20 percent, effective
        January 1, 2006. Cayeli recorded an income tax recovery of
        $10 million in 2006 from a reduction in its future income tax
        liability.

    15. Net income per share

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

        ---------------------------------------------------------------------
                                    three months ended            year ended
                                           December 31           December 31
        (thousands)                    2007       2006       2007       2006
        ---------------------------------------------------------------------
        Net income available to
         common shareholders        $63,645    $97,420   $417,609   $420,653
        ---------------------------------------------------------------------


        ---------------------------------------------------------------------
                                    three months ended            year ended
                                           December 31           December 31
        (thousands)                    2007       2006       2007       2006
        ---------------------------------------------------------------------
        Weighted average common
         shares outstanding          48,282     48,278     48,279     48,212
        Plus incremental shares
         from assumed conversions:
           Deferred share units          75         75         75         75
        ---------------------------------------------------------------------
        Diluted weighted average
         common shares outstanding   48,357     48,353     48,354     48,287
        ---------------------------------------------------------------------


        ---------------------------------------------------------------------
                                    three months ended            year ended
                                           December 31           December 31
        (Canadian dollars per share)   2007       2006       2007       2006
        ---------------------------------------------------------------------
        Basic net income per common
         share                        $1.32      $2.02      $8.65      $8.73
        Dilutive effect from assumed
         conversions of deferred
         share units per common share     -          -      (0.01)     (0.02)
        ---------------------------------------------------------------------
        Diluted net income per common
         share                        $1.32      $2.02      $8.64      $8.71
        ---------------------------------------------------------------------
    





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

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