Inmet announces second quarter 2008 earnings of $1.40 per share



    All amounts in Canadian dollars unless indicated otherwise

    TORONTO, July 29 /CNW/ -

    
    Highlights

    -   Lower net income per share

        Net income per share this quarter was lower than in the second
        quarter of 2007, mainly because lower zinc prices reduced second
        quarter 2008 sales by $53 million. The difference was also the result
        of the recognition of $15 million in foreign exchange losses
        in 2008 from the repatriation of cash from our subsidiaries. A
        $12 million gain on sale of investment was recorded in 2007.

    -   Higher production

        For the second quarter 2008 copper production was similar to 2007,
        while gold and zinc production was higher. Cayeli and Pyhasalmi have
        continued to deliver strong throughput.

    -   Production outlook

        For the year, we expect to produce 93,100 tonnes of copper, 78,700
        tonnes of zinc and 268,400 ounces of gold. This reflects a reduction
        in our original copper estimate because of the current delay in
        direct ore shipping at Las Cruces and a reduction in our gold
        estimate because of lower expected grades at Ok Tedi. We increased
        pyrite projections to 645,000 tonnes to reflect the strong demand for
        this product.

    -   Lower operating cash flow per share

        Operating cash flow this quarter was $115 million or $2.38 per common
        share compared to $138 million or $2.85 per share in the second
        quarter of 2007.

    -   Petaquilla is moving forward

        We began acting as operator, on behalf of Teck Cominco, of the
        Petaquilla project on April 1, and on July 28 formally announced an
        all-cash offer of $2 per share for all of the outstanding common
        shares of Petaquilla Copper Ltd. (PTC). PTC has a 26 percent stake in
        Minera Petaquilla SA, the Panamanian company that holds the project
        concession. The purpose of the offer is to acquire control of PTC in
        order to protect our interest in the Petaquilla Concession and
        advance the development of the copper project.

    -   Las Cruces construction on target subject to regulator consent

        Las Cruces is still on target to begin production in 2008 subject to
        lifting of the suspension of the dewatering system permit. Good
        progress has been made to address the water quality concerns of the
        dewatering system as temporary water treatment facilities are now in
        place. Remediation of the waste dump and residue storage areas are
        underway following a slide of material in July.


    Key financial data
    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
                          2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS
    (thousands, except
     per share amounts)
    Sales
    Gross sales       $281,463  $320,018    -12%  $557,744  $606,632     -8%
    Net income
    Net income         $67,705  $138,050    -51%  $174,379  $239,128    -27%
    Net income
     per share           $1.40     $2.86    -51%     $3.60     $4.95    -27%
    Cash flow
    Cash flow
     provided by
     operating
     activities       $114,797  $137,731    -17%  $195,708  $242,711    -19%
    Cash flow
     provided by
     operating
     activities
     per share(1)        $2.38     $2.85    -17%     $4.05     $5.03    -19%
    Capital
     spending         $121,028   $82,079    +47%  $232,442  $134,014    +73%
    -------------------------------------------------------------------------

    OPERATING
     HIGHLIGHTS
    Production(2)
      Copper (tonnes)   19,300    19,100     +1%    38,600    38,600       -
      Zinc (tonnes)     21,000    16,600    +27%    41,300    38,700     +7%
      Gold (ounces)     59,900    54,800     +9%   116,200   110,800     +5%
    Cash costs
      Copper (US $
       per pound)(3)     $0.65     $0.15   +333%     $0.48     $0.12   +300%
      Gold (US $ per
       ounce)(3)          $360      $338     +7%      $374      $393     -5%
    -------------------------------------------------------------------------


                                                         as at         as at
                                                       June 30   December 31
    FINANCIAL CONDITION                                   2008          2007
                                                    -------------------------
    Current ratio                                     6.0 to 1      5.6 to 1
    Gross debt to total equity(4)                          25%           18%
    Net working capital balance (millions)              $1,034          $855
    Cash balance (millions)                               $999          $841
    Shareholders' equity (millions)                     $1,658        $1,392
    -------------------------------------------------------------------------
    (1) Calculated as cash flow provided by operating activities divided by
        average shares outstanding for the respective period.
    (2) Inmet's share.
    (3) Cash cost per pound of copper and cash cost per ounce of gold are
        non-GAAP measures - see Supplementary financial information on
        pages 29, 30 and 31.
    (4) Gross debt includes long-term debt and current portion of long-term
        debt.


    Second quarter press release

    Where to find it

    Our financial results ..........................  4
    Key changes in 2008 ............................  4
    Understanding our performance ..................  5
      Earnings from operations .....................  7
      Corporate costs .............................. 11
    Results of our operations ...................... 12
      Cayeli ....................................... 12
      Pyhasalmi .................................... 14
      Troilus ...................................... 16
      Ok Tedi ...................................... 18
    Status of our development projects ............. 20
      Las Cruces ................................... 20
      Petaquilla ................................... 22
    Managing our liquidity ......................... 23
    Financial condition ............................ 25
    Managing risk .................................. 26
    Accounting changes ............................. 28
    Supplementary financial information ............ 29
    Quarterly review ............................... 32
    Consolidated financial statements .............. 33
    

    In this press release, Inmet means Inmet Mining Corporation and we, us
and our mean Inmet and/or its subsidiaries and joint ventures. This quarter
refers to the three months ended June 30, 2008.

    Forward-looking information

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


    
    Our financial results

    -------------------------------------------------------------------------
    (thousands,
     except per       three months ended June 30    six months ended June 30
     share amounts)       2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------

    EARNINGS FROM
     OPERATIONS(1)
    Cayeli             $45,262   $64,741    -30%   $98,917  $124,176    -20%
    Pyhasalmi           27,232    44,890    -39%    55,226    76,332    -28%
    Troilus              7,510     3,718   +102%    16,145     6,530   +147%
    Ok Tedi             49,656    65,391    -24%   103,574   105,406     -2%
    Other                 (494)     (355)   +39%      (988)     (843)   +17%
    -------------------------------------------------------------------------
                       129,166   178,385    -28%   272,874   311,601    -12%
    -------------------------------------------------------------------------
    DEVELOPMENT AND
     EXPLORATION
    Corporate
     development
     and exploration    (2,483)   (1,836)   +35%    (5,101)   (2,678)   -90%
    -------------------------------------------------------------------------
    CORPORATE COSTS
    General and
     administration     (2,790)   (2,162)           (6,438)   (5,002)
    Investment and
     other income      (11,358)    1,685             3,396     9,112
    Interest expense      (471)     (424)             (918)     (862)
    Income and
     capital taxes     (44,457)  (48,783)          (89,327)  (84,433)
    Non-controlling
     interest               98      (545)             (107)     (340)
    -------------------------------------------------------------------------
                       (58,978)  (50,229)   +17%   (93,394)  (81,525)   +15%
    -------------------------------------------------------------------------
    Net income before
     other items       $67,705  $126,320    -46%  $174,379  $227,398    -23%
    Gain on sale
     of Wolfden              -    11,730                 -    11,730
    -------------------------------------------------------------------------
    Net income         $67,705  $138,050    -51%  $174,379  $239,128    -27%
    -------------------------------------------------------------------------
    Basic and diluted
     net income
     per share           $1.40     $2.86    -51%     $3.61     $4.95    -27%
    -------------------------------------------------------------------------
    Weighted
     average shares
     outstanding        48,282    48,278            48,282    48,278    -27%
    -------------------------------------------------------------------------
    (1) Gross sales less smelter processing charges and freight, cost of
        sales, depreciation and provisions for mine rehabilitation.


    Key changes this year

    -------------------------------------------------------------------------
                                        three months    six months
                                               ended         ended       see
    (millions)                               June 30       June 30      page
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS
    Sales
    Lower metal prices denominated
     in Canadian dollars                        $(46)         $(19)        7
    Lower sales volumes                            -           (22)        8
    Costs
    Lower smelter processing charges
     and freight                                   7            18         9
    Higher operating costs, including costs
     that vary with income and cash flows        (10)          (16)       10
    -------------------------------------------------------------------------
    Decrease in earnings from operations,
     compared to 2007                           $(49)         $(39)

    CORPORATE COSTS
    Change in taxes from change in income          2            (6)       11
    Change in tax rates                            2             1        11
    Foreign exchange losses                       (9)           (2)       11
    Gain on sale of Wolfden in 2007              (12)          (12)       11
    Higher (lower) interest income                (1)            2        11
    Other                                         (3)           (9)       11
    -------------------------------------------------------------------------
    Decrease in net income, compared to 2007    $(70)         $(65)
    -------------------------------------------------------------------------


    Understanding our performance

    Metal prices

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

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
                          2008      2007  Change      2008      2007  Change
    -------------------------------------------------------------------------
    US dollar
     metal prices
      Copper (per pound) $3.83     $3.71     +3%     $4.00     $3.27    +22%
      Zinc (per pound)   $0.94     $1.75    -46%     $1.00     $1.54    -35%
      Gold (per ounce)    $725      $575    +26%      $748      $569    +31%
    -------------------------------------------------------------------------
    Canadian dollar
     metal prices
      Copper (per pound) $3.87     $4.08     -5%     $4.04     $3.73     +8%
      Zinc (per pound)   $0.95     $1.92    -51%     $1.01     $1.76    -43%
      Gold (per ounce)    $732      $632    +16%      $755      $649    +16%
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
                          2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Exchange rates
      1 US$ to C$        $1.01     $1.10     -8%     $1.01     $1.14    -11%
      1 euro to C$       $1.58     $1.46     +8%     $1.54     $1.50     +3%
    -------------------------------------------------------------------------

    Sales are affected by the conversion of US dollar revenue to Canadian
dollars. Because of the weaker US dollar this year, gross sales and net income
were lower compared to 2007:
    -   gross sales decreased by $27 million for the quarter and $67 million
        year to date
    -   net income decreased by $36 million for the quarter and $62 million
        year to date. The net income changes included the impact of foreign
        exchange losses from the recognition of deferred foreign exchange
        losses when cash was repatriated from Cayeli and Ok Tedi. These
        losses are recorded in Investment and other income and were
        $21 million for the quarter and $26 million for the year to date.
    

    The change in the average value of the Canadian dollar relative to the
euro lowered net income slightly between periods because euro-based costs were
slightly higher when converted to Canadian dollars.
    There was a larger change in the value of the euro relative to the
Canadian dollar in 2008, between December 31, 2007 to March 31, 2008 and
June 30, 2008, when we revalued euro denominated cash and short-term
intergroup receivables and from the recognition of deferred foreign exchange
gains when cash was repatriated from Pyhasalmi. This resulted in foreign
exchange gains of $3 million and $10 million for the three and six months of
this year, respectively, which we recorded in Investment and other income.

    Treatment charges and freight down for copper and up for zinc

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

    
    -------------------------------------------------------------------------
                    three months ended June 30      six months ended June 30
                       2008       2007  change       2008       2007  change
    -------------------------------------------------------------------------
    Treatment charges
      Copper (per
       dry metric
       tonne of
       concentrate)  US $40     US $59    -32%     US $46     US $69    -33%
      Zinc (per
       dry metric
       tonne of
       concentrate) US $292    US $384    -24%    US $291    US $249    +17%
    -------------------------------------------------------------------------
    Price
     participation
      Copper (per
       pound)      US $0.05   US $0.11    -55%   US $0.05   US $0.08    -38%
      Zinc (per
       pound)(1)  US $(0.01) US $(0.12)   -92%  US $(0.02)  US $0.09   -122%
    -------------------------------------------------------------------------
    Freight charges
      Copper (per
       dry metric
       tonne of
       concentrate)  US $54     US $67    -19%     US $50     US $55     -9%
      Zinc (per
       dry metric
       tonne of
       concentrate)  US $41     US $39     +5%     US $41     US $33    +24%
    -------------------------------------------------------------------------
    (1) Zinc price participation is based on a zinc price of US $2,000 per
        tonne in 2008 and US $3,500 per tonne in 2007.


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

    Statutory tax rates down slightly

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

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

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

    EARNINGS FROM OPERATIONS

    Earnings from operations include the following:

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
    (thousands)           2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Gross sales       $281,463  $320,018    -12%  $557,744  $606,632     -8%
    Smelter processing
     charges           (53,209)  (55,413)    -4%   (97,366) (120,019)   -19%
    Cost of sales:
      Direct production
       costs           (82,076)  (66,936)   +23%  (159,610) (140,652)   +13%
      Inventory changes (1,744)   (6,290)   -72%     1,196    (9,898)  -112%
      Provisions
       for mine
       rehabilitation
       and other
       non-cash charges (6,073)   (4,955)   +23%   (10,725)   (7,008)   +53%
    Depreciation        (9,195)   (8,039)   +14%   (18,365)  (17,454)    +5%
    -------------------------------------------------------------------------
    Earnings from
     operations       $129,166  $178,385    -28%  $272,874  $311,601    -12%
    -------------------------------------------------------------------------


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

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
    (thousands)           2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Gross sales by
     operation
      Cayeli           $98,313  $112,208    -12%  $198,929  $229,942    -13%
      Pyhasalmi         61,249    75,807    -19%   116,157   141,147    -18%
      Troilus           35,171    25,849    +36%    69,422    56,091    +24%
      Ok Tedi(1)        86,730   106,154    -18%   173,236   179,452     -3%
    -------------------------------------------------------------------------
                      $281,463  $320,018    -12%  $557,744  $606,632     -8%
    -------------------------------------------------------------------------
    Gross sales
     by metal
      Copper          $161,530  $189,056    -15%  $329,698  $332,380     -1%
      Zinc              52,185    82,702    -37%   100,991   172,483    -41%
      Gold              45,046    36,816    +22%    88,333    77,873    +13%
      Other             22,702    11,444    +98%    38,722    23,896    +62%
    -------------------------------------------------------------------------
                      $281,463  $320,018    -12%  $557,744  $606,632     -8%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's sales.


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

    -------------------------------------------------------------------------
                                                  three months    six months
                                                         ended         ended
    (millions)                                         June 30       June 30
    -------------------------------------------------------------------------
    (Lower) higher copper prices, denominated in C$       $(11)          $27
    Lower zinc prices, denominated in C$                   (53)          (74)
    Higher gold prices, denominated in C$                    7            13
    Higher pyrite prices, denominated in C$                  7            11
    Changes in other metal prices                            4             4
    Higher (lower) sales volumes                             7           (30)
    -------------------------------------------------------------------------
    Decrease in gross sales, compared to 2007             $(39)         $(49)
    -------------------------------------------------------------------------
    

    We record sales using the metal price we receive for sales that settle
during the reporting period. For sales that have not been settled, we use an
estimate based on the month we expect the sale to settle and the forward price
of the metal at the end of the reporting period. We recognize the difference
between our estimate and the final price we receive by adjusting our gross
sales in the period we settle the sale (finalization adjustment).
    Finalization adjustments in the second quarter were minimal.
    At the end of this quarter, the following sales had not been settled:
    
    -   35 million pounds of copper provisionally priced at US $3.90 per
        pound
    -   23 million pounds of zinc provisionally priced at US $0.87 per pound.

    The finalization adjustment we record for these sales will depend on the
actual price when the sale settles, which can be from one to five months after
we initially record it.

    Sales volume higher for zinc

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
                          2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Sales volumes
      Copper (tonnes)   18,900    20,900    -10%    37,200    40,900     -9%
      Zinc (tonnes)     25,000    19,700    +27%    45,500    44,900     +1%
      Gold (ounces)     61,600    59,000     +4%   117,000   120,800     -3%
    -------------------------------------------------------------------------

    Our sales volumes are directly affected by the amount of production from
our mines, and our ability to ship to our customers.
    Higher production increased sales volumes this quarter compared to the
same period last year. While production was also higher for the first six
months of 2008, sales volumes were mostly lower than the same period in 2007
because of shipment timing.

    Production
    -------------------------------------------------------------------------
                                                                     revised
    Inmet's   three months ended June 30  six months ended June 30 objective
     share(1)      2008     2007  change     2008     2007  change      2008
    -------------------------------------------------------------------------
    Copper
     (tonnes)
      Ok Tedi     7,400    6,700    +10%   14,100   14,900     -5%    32,100
      Cayeli      7,600    8,100     -6%   15,800   15,600     +1%    33,600
      Pyhasalmi   3,100    3,600    -14%    6,600    6,900     -4%    13,000
      Las Cruces      -        -       -        -        -       -     7,400
      Troilus     1,200      700    +71%    2,100    1,400    +50%     7,000
    -------------------------------------------------------------------------
                 19,300   19,100     +1%   38,600   38,600       -    93,100
    -------------------------------------------------------------------------
    Zinc (tonnes)
      Cayeli     13,200    8,300    +59%   25,900   20,200    +28%    47,800
      Pyhasalmi   7,700    8,300     -7%   15,300   18,500    -17%    30,900
    -------------------------------------------------------------------------
                 20,900   16,600    +26%   41,200   38,700     +6%    78,700
    -------------------------------------------------------------------------
    Gold (ounces)
      Troilus    37,800   35,100     +8%   72,800   68,300     +7%   163,200
      Ok Tedi    22,100   19,700    +12%   43,400   42,500     +2%   105,200
    -------------------------------------------------------------------------
                 59,900   54,800     +9%  116,200  110,800     +5%   268,400
    -------------------------------------------------------------------------
    Pyrite
     (tonnes)
      Pyhasalmi 111,200   98,400    +13%  305,700  258,900    +18%   645,000
    -------------------------------------------------------------------------
    (1) Inmet's share represents 100 percent for Cayeli, Pyhasalmi and
        Troilus, 18 percent for Ok Tedi and 70 percent for Las Cruces.


    This quarter:
    -   copper production was consistent with the second quarter of 2007.
        This was the net result of higher grades at Ok Tedi and Troilus, and
        lower grades at Cayeli and Pyhasalmi.
    -   zinc production was higher mainly because of higher grades,
        recoveries and throughput at Cayeli.
    -   gold production was higher due to higher grades.

    2008 outlook for sales

    We expect sales of all metals for the year to be consistent with our 2008
production estimates in the chart above. We have estimated an October
production start up 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 consistent with last year

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
    (thousands)           2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Smelter processing
     charges and freight
     by operation
      Cayeli           $25,565   $24,302     +5%   $47,578   $55,470    -14%
      Pyhasalmi         14,561    15,100     -4%    25,381    33,714    -25%
      Troilus            2,421     2,020    +20%     4,608     4,713     -2%
      Ok Tedi(1)        10,662    13,991    -24%    19,799    26,122    -24%
    -------------------------------------------------------------------------
                       $53,209   $55,413     -4%   $97,366  $120,019    -19%
    -------------------------------------------------------------------------
    Smelter processing
     charges and
     freight by metal
      Copper           $21,516   $27,160    -21%   $42,409   $54,640    -22%
      Zinc              24,679    25,071     -2%    44,451    58,786    -24%
      Other              7,014     3,182   +120%    10,506     6,593    +59%
    -------------------------------------------------------------------------
                       $53,209   $55,413     -4%   $97,366  $120,019    -19%
    -------------------------------------------------------------------------
    Smelter processing
     charges by type
     and freight
      Copper treatment
       and refining
       charges          $5,099    $7,398    -31%   $11,074   $18,423    -40%
      Zinc treatment
       charges          14,348    14,562     -1%    26,140    21,646    +21%
      Copper price
       participation     2,281     5,222    -56%     4,244     9,082    -53%
      Zinc price
       participation      (366)   (5,082)   -93%    (2,261)    8,533   -126%
      Content losses    16,104    20,829    -23%    32,361    42,792    -24%
      Other              2,239     3,252    -31%     4,512     2,179   +107%
      Freight           13,504     9,232    +46%    21,296    17,364    +23%
    -------------------------------------------------------------------------
                       $53,209   $55,413     -4%   $97,366  $120,019    -19%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's smelter processing charges and
        freight.
    

    Copper treatment and refining charges were lower in 2008 compared to 2007
because of more favourable contract terms with smelters. Zinc treatment
charges were higher, but lower prices significantly reduced zinc price
participation charges. For the quarter, zinc treatment charges expensed were
similar with last year's second quarter because of adjustments made to first
quarter sales after contracts were finalized with the smelters in the second
quarter. Freight charges were higher because Pyhasalmi increased their
shipments of pyrite and freight rates increased as a result of rising demand
and fuel prices.

    2008 outlook for smelter processing charges and freight

    Contract terms for long-term copper sales at our operating mines, and
treatment charges are averaging about US $50 per dry metric tonne with little
to no price participation.
    Contract terms for long-term zinc treatment charges have been finalized
averaging about US $300 per dry metric tonne. Price participation of zinc
concentrate is averaging US $0.10 per dry metric tonne for zinc priced at
higher than US $2,000 per tonne ($1.36 per pound), and (US $0.10) per dry
metric tonne for zinc priced at less than US $2,000 per tonne.
    Copper cathode production at Las Cruces should begin in the fourth
quarter. Copper cathode will be sold directly to buyers, bypassing the
smelters and eliminating smelter and refining treatment charges. In the fourth
quarter, the mine also intends to sell crushed ore and pay smelter processing
charges. These charges are expected to be higher than what our other
operations pay because of the impurity levels in this ore.

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

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
    (thousands)           2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Direct production
     costs by operation
      Cayeli           $22,638   $20,865     +8%   $45,978   $41,766    +10%
      Pyhasalmi         15,351    11,833    +30%    29,955    25,450    +18%
      Troilus           22,345    18,569    +20%    42,292    37,906    +12%
      Ok Tedi(1)        21,742    15,669    +39%    41,385    35,530    +16%
    -------------------------------------------------------------------------
    Total direct
     production costs   82,076    66,936    +23%   159,610   140,652    +13%
    Inventory changes    1,744     6,290    -72%    (1,196)    9,898   -112%
    Reclamation,
     accretion and
     other non-cash
     expenses            6,073     4,955    +23%    10,725     7,008    +53%
    -------------------------------------------------------------------------
    Total cost
     of sales          $89,893   $78,181    +15%  $169,139  $157,558     +7%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's direct production costs.


    Key reasons for the increase in direct production costs

    -------------------------------------------------------------------------
                                                  three months    six months
                                                         ended         ended
    (millions)                                         June 30       June 30
    -------------------------------------------------------------------------
    Volume                                                 $(2)          $(3)
    Labour costs                                             6             8
    Consumables                                              7             9
    Energy                                                   1             4
    Costs that vary with income and cash flow               (2)            1
    Other                                                    5             -
    -------------------------------------------------------------------------
    Increase in direct production costs,
     compared to 2007                                      $15           $19
    -------------------------------------------------------------------------


    Depreciation was higher than last year

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
    (thousands)           2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Depreciation by
     operation
      Cayeli            $2,556    $1,871    +37%    $4,929    $4,568     +8%
      Pyhasalmi          2,232     2,433     -8%     4,382     4,794     -9%
      Troilus            1,718     2,007    -14%     4,136     4,716    -12%
      Ok Tedi            2,689     1,728    +56%     4,918     3,376    +46%
    -------------------------------------------------------------------------
                        $9,195    $8,039    +14%   $18,365   $17,454     +5%
    -------------------------------------------------------------------------
    

    At Cayeli, depreciation is higher because of the shaft extension that was
finished in the last quarter of 2007. Ok Tedi has higher depreciation because
it has been spending on new mine equipment and other sustaining capital over
the last few years.

    2008 outlook for depreciation

    We estimate depreciation will be about $40 million for 2008 assuming
production at Las Cruces commences in October.

    CORPORATE COSTS

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

    
    Investment and other income was lower because of foreign exchange losses

    -------------------------------------------------------------------------
                                            three months          six months
                                           ended June 30       ended June 30
    (thousands)                           2008      2007      2008      2007
    -------------------------------------------------------------------------
    Interest income                     $6,963    $7,378   $15,686   $14,394
    Dividend income and royalty          1,504     1,000     1,504     2,000
    Foreign exchange gain (loss)       (18,573)   (9,400)  (11,715)   (9,545)
    Sale of Wolfden                          -    11,730         -    11,730
    Other                               (1,252)    2,707    (2,079)    2,263
    -------------------------------------------------------------------------
                                      $(11,358)  $13,415    $3,396   $20,842
    -------------------------------------------------------------------------
    

    We recorded a net foreign exchange loss of $18.6 million this quarter.
This included a foreign exchange loss of $15 million when we received
dividends from Cayeli, Pyhasalmi and Ok Tedi, and a $4 million loss when we
revalued some of our foreign currency denominated accounts and cash balances.
For the year, we recognized $20 million in foreign exchange losses from
dividends received. In 2007, we sold our shares in Wolfden for cash proceeds
of $51 million and recorded a gain of $11.7 million.

    2008 outlook for investment and other income

    Investment and other income is affected by cash balances, interest rates
and exchange rates. For the rest of the year, we expect to repatriate funds
only from Ok Tedi. This operation distributes its earnings more frequently, so
the foreign exchange effect of repatriation is normally not significant.
    On June 30, 2008, the Las Cruces credit facility converted from a euro
denominated loan to a US $215 million dollar loan. Starting on July 1, we will
revalue the loan to euros (the functional currency of Las Cruces). Foreign
exchange gains or losses on revaluations will be reflected in Investment and
other income.

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

    -------------------------------------------------------------------------
                      three months ended June 30    six months ended June 30
    (thousands)           2008      2007  change      2008      2007  change
    -------------------------------------------------------------------------
    Cayeli              $8,655   $13,763    -37%   $27,779   $27,434     +1%
    Pyhasalmi            6,425    10,379    -38%    12,448    17,286    -28%
    Ok Tedi             23,803    23,291     +2%    43,150    37,908    +14%
    Las Cruces             (84)      691   -112%       166       486    -66%
    Corporate            5,658       659   +759%     5,784     1,319   +339%
    -------------------------------------------------------------------------
                       $44,457   $48,783     -9%   $89,327   $84,433     +6%
    -------------------------------------------------------------------------
    

    Our tax expense changes as our earnings change. Cayeli's effective tax
rate was 20 percent this quarter. This is lower than its statutory rate of 24
percent because taxable foreign exchange losses in its Turkish lira tax
accounts generated a lower tax expense of $2 million. For the year to date,
Cayeli's effective tax rate was 27 percent, the result of foreign exchanges
gains in its tax accounts. The effective tax rate at Ok Tedi is also higher
than its statutory 37 percent for the quarter and year to date because of
foreign exchange gains recorded in its tax accounts. The tax expense at
Corporate reflects a provision for Quebec mining duties. We expect 2008 to be
the first year we have to pay this tax because we have fully drawn down our
tax deductible assets in regard to this mining tax return.

    2008 outlook for income tax expense

    We are not expecting any further changes in statutory tax rates at our
operations in 2008. We estimate approximately $15 million for Quebec mining
duties will be expensed for the year, but this will depend on Troilus' 2008
net income.

    Results of our operations

    
    Cayeli

    -------------------------------------------------------------------------
                                                                      revised
              three months ended June 30  six months ended June 30  objective
                    2008     2007 change      2008     2007 change       2008
    -------------------------------------------------------------------------
    Tonnes of
     ore milled
    (000's)          279      249   +12%       557      508   +10%      1,100
    Tonnes of
     ore milled
     per day       3,100    2,700   +12%     3,100    2,800   +10%      3,000
    -------------------------------------------------------------------------
    Grades
     (percent)
          copper     3.5      3.9   -10%       3.6      3.7    -3%        3.8
          zinc       6.3      5.3   +19%       6.4      5.7   +12%        6.0
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
          copper      78       83    -6%        79       83    -5%         81
          zinc        75       63   +19%        73       70    +4%         72
    -------------------------------------------------------------------------
    Production
     (tonnes)
          copper   7,600    8,100    -6%    15,800   15,600    +1%     33,600
          zinc    13,200    8,300   +59%    25,900   20,200   +28%     47,800
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)     $81      $84    -4%       $83      $82    +1%        $80
    -------------------------------------------------------------------------
    

    On target to achieve production goal of 1.1 million tonnes

    Cayeli produced ore this quarter at an annualized rate of more than 1.1
million tonnes, which is consistent with our annual objective and higher than
last year. Higher zinc grades along with the higher throughput increased zinc
production compared to last year. Copper production was slightly lower in the
second quarter compared to last year because of lower copper grades mined.
    Operating costs are higher than in previous years. This is mainly because
of inflation in Turkey (which has increased labour costs), rising electricity
rates in Turkey, and increasing commodity prices worldwide.

    2008 outlook for production and costs

    Improvements to Cayeli's ore pass system were completed in the first half
of the year and we expect to continue to reliably mine and process 1.1 million
tonnes of ore this year. Development in 2008 is focusing on access and level
development of the lower mine ore blocks. Mine development rates are higher
than 2007 and development of the lower mine is proceeding as planned. We
expect to operate at an annual production rate of 1.2 million tonnes by 2009.
    Costs could change, depending on the value of the Turkish lira relative
to the US dollar. If the Turkish lira decreases in value, Turkish lira based
costs such as labour will go down, reducing our costs.
    Royalties also have a significant effect on costs and are variable
depending on earnings. Cost per tonne of ore milled includes $8 per tonne in
royalties in the second quarter, and $12 per tonne in royalties year to date.
Our objective is $12 per tonne, which is based on metal price assumptions for
the rest of the year.

    
    Financial review

    Lower earnings this quarter because shipments in 2007 were considerably
    higher than production

    -------------------------------------------------------------------------
                                            three months          six months
    (millions of Canadian dollars          ended June 30       ended June 30
     otherwise stated)                    2008      2007      2008      2007
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)                6,800     7,200    13,500    15,400
    Zinc sales (tonnes)                 17,300    10,600    31,200    26,300
                                      ---------------------------------------
    Gross copper sales                     $57       $66      $121      $124
    Gross zinc sales                        37        44        70       101
    Other metal sales                        4         2         8         5
                                      ---------------------------------------
    Gross sales                             98       112       199       230
    Smelter processing
     charges and freight                   (25)      (24)      (48)      (56)
    -------------------------------------------------------------------------
    Net sales                              $73       $88      $151      $174
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)       279       249       557       508
    Direct production costs
     ($ per tonne)                         $81       $84       $83       $82
    -------------------------------------------------------------------------
    Direct production costs                 23        21        46        42
    Change in inventory                      1        (1)        -         2
    Depreciation and
     other non-cash costs                    4         3         6         6
    -------------------------------------------------------------------------
    Operating costs                        $28       $23       $52       $50
    -------------------------------------------------------------------------
    Operating earnings                     $45       $65       $99      $124
    -------------------------------------------------------------------------
    Operating cash flow                    $31       $63       $50      $122
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months    six months
                                                         ended         ended
    (millions)                                         June 30       June 30
    -------------------------------------------------------------------------
    Change in metal prices,
     denominated in Canadian dollars                      $(38)         $(34)
    Higher (lower) sales volumes                            11            (2)
    Lower smelter processing charges                         9            14
    Higher operating costs                                  (2)           (3)
    -------------------------------------------------------------------------
    Decrease in operating earnings, compared to 2007      $(20)         $(25)
    (Higher) lower tax expense                               3            (4)
    Lower tax rate                                           2             2
    Changes in working capital                             (12)          (46)
    Other                                                   (5)            1
    -------------------------------------------------------------------------
    Decrease in operating cash flow, compared to 2007     $(32)         $(72)
    -------------------------------------------------------------------------

    The change in working capital this quarter is from higher tax payments,
reduced in part by the collection of accounts receivable. Year to date, higher
accounts receivable balances and higher taxes paid resulted in a $46 million
reduction in working capital.

    Capital spending ahead of schedule, but on track for the year

    -------------------------------------------------------------------------
              three months ended June 30  six months ended June 30  objective
                    2008     2007 change      2008     2007 change       2008
    -------------------------------------------------------------------------
    Capital
     spending     $6,300   $3,900   +62%   $12,000   $8,300   +45%    $23,000
    -------------------------------------------------------------------------

    Capital spending in the quarter and the year to June was mainly for 
replacing mine equipment.

    2008 outlook for capital spending

    Cayeli expects to spend $23 million in 2008 on repairing a ventilation
raise, buying mine equipment and replacing other equipment.

    PYHASALMI

    -------------------------------------------------------------------------
                                                                      revised
              three months ended June 30  six months ended June 30  objective
                    2008     2007 change      2008     2007 change       2008
    -------------------------------------------------------------------------
    Tonnes of
     ore milled
     (000's)         344      346    -1%       691      671    +3%      1,370
    Tonnes of
     ore milled
     per day       3,800    3,800    -1%     3,800    3,700    +3%      3,750
    -------------------------------------------------------------------------
    Grades
     (percent)
          copper     1.0      1.1    -9%       1.0      1.1    -9%        1.0
          zinc       2.5      2.6    -4%       2.4      3.0   -20%        2.5
          sulphur     40       41    -2%        41       40    +3%         41
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
          copper      95       96    -1%        96       96     -          94
          zinc        92       90    +2%        92       92     -          90
    -------------------------------------------------------------------------
    Production
     (tonnes)
          copper   3,100    3,600   -14%     6,600    6,900    -4%     13,000
          zinc     7,700    8,300    -7%    15,300   18,500   -17%     30,900
          pyrite 111,200   98,400   +13%   305,700  258,900   +18%    645,000
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)     $45      $34   +32%       $43      $38   +13%        $41
    -------------------------------------------------------------------------
    

    Consistent strong performance

    Mill throughput has been consistent between years. Copper and zinc
production is lower, however, because the areas being mined contain lower
grades.
    Strengthening of the pyrite market has resulted in significantly improved
prices and sales.

    2008 outlook for production and costs

    We expect throughput and copper production for the year to be consistent
with our earlier estimates.
    Pyhasalmi has commissioned new copper flotation cells and installed a
primary mill motor for the mill in May. The mill motor should allow speed to
be adjusted more easily, which should increase throughput capacity in the
grinding circuit and reduce energy costs.
    We have revised our costs upwards to reflect the strength of the euro
relative to the Canadian dollar.

    
    Financial review

    Lower sales volumes reduce operating earnings

    -------------------------------------------------------------------------
                                            three months          six months
    (millions of Canadian dollars          ended June 30       ended June 30
    otherwise stated)                     2008      2007      2008      2007
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)                3,300     3,400     6,800     6,800
    Zinc sales (tonnes)                  7,700     9,100    14,300    18,600
    Pyrite sales (tonnes)              142,700   124,400   266,800   258,300
                                      ---------------------------------------
    Gross copper sales                     $29       $30       $57       $54
    Gross zinc sales                        16        38        31        72
    Other metal sales                       16         8        28        15
                                      ---------------------------------------
    Gross sales                             61        76       116       141
    Smelter processing
     charges and freight                   (15)      (15)      (25)      (34)
    -------------------------------------------------------------------------
    Net sales                               46        61        91       107
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)       344       346       691       671
    Direct production costs
     ($ per tonne)                         $45       $34       $43       $38
    -------------------------------------------------------------------------
    Direct production costs                 15        12        30        25
    Change in inventory                      1         1        (1)        -
    Depreciation and
     other non-cash costs                    3         3         7         6
    -------------------------------------------------------------------------
    Operating costs                        $19       $16       $36       $31
    -------------------------------------------------------------------------
    Operating earnings                     $27       $45       $55       $76
    -------------------------------------------------------------------------
    Operating cash flow                    $19       $10       $50       $51
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months    six months
                                                         ended         ended
    (millions)                                         June 30       June 30
    -------------------------------------------------------------------------
    Lower metal prices, denominated in Canadian dollars    $(8)          $(9)
    Lower sales volumes                                     (8)          (14)
    Lower smelter processing charges and freight             3             7
    Higher freight on pyrite sales                          (3)           (3)
    Higher operating costs                                  (2)           (2)
    -------------------------------------------------------------------------
    Decrease in operating earnings, compared to 2007      $(18)         $(21)
    Lower tax expense because of lower earnings              4             4
    Changes in working capital                              23            16
                                                      -----------------------
    Increase (decrease) in operating
     cash flow, compared to 2007                            $9           $(1)
    -------------------------------------------------------------------------

    The change in working capital this quarter and year to date is mainly
because the accounts receivable was lower and fewer income taxes were paid.

    Capital spending in 2008 will mainly be used to improve mill efficiencies

    -------------------------------------------------------------------------
              three months ended June 30  six months ended June 30  objective
    (thousands)     2008     2007 change      2008     2007 change       2008
    -------------------------------------------------------------------------
    Capital
     spending     $1,600     $400  +300%    $3,400     $700  +386%    $12,000
    -------------------------------------------------------------------------

    Spending this quarter was mainly for the mill motor and other asset
replacements and upgrades.


    2008 outlook for capital spending

    We expect to spend $12 million in 2008, mainly for mine and mill
equipment.

    TROILUS

    -------------------------------------------------------------------------
                                                                      revised
              three months ended June 30  six months ended June 30  objective
                    2008     2007 change      2008     2007 change       2008
    -------------------------------------------------------------------------
    Tonnes of
     ore milled
     (000's)       1,454    1,487    -2%     2,851    3,122    -9%      6,100
    Tonnes of
     ore milled
     per day      16,000   16,300    -2%    15,700   17,200    -9%     16,700
    -------------------------------------------------------------------------
    Strip ratio      1.6      1.0   +60%       1.4      1.0   +40%        1.1
    -------------------------------------------------------------------------
    Grades
        gold
         (grams/
         tonne)     0.96     0.90    +7%      0.94     0.84   +12%       1.00
        copper
         (percent)  0.09     0.05   +80%      0.08     0.05   +60%       0.12
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
        gold          84       81    +4%        84       81    +4%         83
        copper        92       88    +5%        92       86    +7%         92
    -------------------------------------------------------------------------
    Production
        gold
         (ounces) 37,800   35,100    +8%    72,800   68,300    +7%    163,200
        copper
         (tonnes)  1,200      700   +71%     2,000    1,400   +43%      7,000
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)     $15      $12   +25%       $15      $12   +25%        $12
    -------------------------------------------------------------------------
    

    Higher gold production

    Throughput this quarter continued to be lower than expectations.
Modifications to maximize mill throughput were complete during the first
quarter, but because harder ore was mined from the upper areas of the 87 pit,
we have yet to benefit from the modifications.
    Gold production this quarter and year to date was higher than the same
periods last year, mainly because grades from the 87 pit were higher. Gold
recoveries also continue to be higher than expected.
    A higher cost per tonne compared to previous years is mainly because the
cost of fuel and steel grinding media are higher.

    2008 outlook for production and costs

    Troilus is mining through the hard, lower grade ore of the upper benches
of the 87 pit and expects to access the higher grade, softer ore of the main
87 pit in August of this year. Both grades and mill throughput will improve as
it progresses deeper and towards the north. The pit will remain on track for
completion in early 2009 and then will begin stockpile recovery. Despite lower
throughput than expected, Troilus should meet targeted gold and copper
production this year because of the higher expected grades.

    
    Financial review

    Higher gold prices helped earnings

    -------------------------------------------------------------------------
                                            three months          six months
    (millions of Canadian dollars          ended June 30       ended June 30
    otherwise stated)                     2008      2007      2008      2007
    -------------------------------------------------------------------------
    Sales analysis
    Gold sales (ounces)                 36,300    32,400    71,500    72,100
    Copper sales (tonnes)                1,200       700     2,100     1,400
                                      ---------------------------------------
    Gross gold sales                       $24       $18       $50       $44
    Gross copper sales                      10         7        18        11
    Other metal sales                        1         1         1         1
                                      ---------------------------------------
    Gross sales                             35        26        69        56
    Smelter processing
     charges and freight                    (2)       (2)       (4)       (5)
    -------------------------------------------------------------------------
    Net sales                              $33       $24       $65       $51
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)     1,454     1,487     2,851     3,122
    Direct production costs
     ($ per tonne)                         $15       $12       $15       $12
    -------------------------------------------------------------------------
    Direct production costs                $22       $19       $42       $38
    Change in inventory                      -        (1)        -         1
    Depreciation and other non-cash costs    3         2         7         6
    -------------------------------------------------------------------------
    Operating costs                        $25       $20       $49       $45
    -------------------------------------------------------------------------
    Operating earnings                      $8        $4       $16        $7
    -------------------------------------------------------------------------
    Operating cash flow                     $8        $4       $15        $5
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months    six months
                                                         ended         ended
    (millions)                                         June 30       June 30
    -------------------------------------------------------------------------
    Higher metal prices
     denominated in Canadian dollars                        $1            $8
    Higher sales volumes                                     5             5
    Higher operating costs                                  (2)           (4)
    -------------------------------------------------------------------------
    Increase in operating earnings, compared to 2007        $4            $9
    Changes in working capital                               -            (2)
    Other                                                    -             3
    -------------------------------------------------------------------------
    Increase in operating cash flow, compared to 2007       $4           $10
    -------------------------------------------------------------------------


    OK TEDI

    -------------------------------------------------------------------------
                                                                      revised
    (100      three months ended June 30  six months ended June 30  objective
     percent)       2008     2007 change      2008     2007 change       2008
    -------------------------------------------------------------------------
    Tonnes of
     ore milled
     (000's)       5,400    6,400   -16%    10,400   13,000   -20%     23,200
    Tonnes of
     ore milled
     per day      59,300   70,500   -16%    57,100   71,900   -20%     64,000
    -------------------------------------------------------------------------
    Strip ratio      1.5      1.1   +36%       1.7      1.2   +42%        1.3
    -------------------------------------------------------------------------
    Grades
       copper
        (percent)    0.9      0.7   +29%       0.9      0.7   +29%        0.9
       gold
        (grams/
        tonne)       1.0      0.7   +43%       1.0      0.8   +25%        1.1
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
       copper         87       87     -         86       86     -          84
       gold           74       72    +3%        74       72    +3%         72
    -------------------------------------------------------------------------
    Production
       copper
        (tonnes)  41,100   37,200   +10%    78,400   82,500    -5%    178,600
       gold
        (ounces) 122,700  109,300   +12%   241,200  236,500    +2%    584,700
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)     $22      $14   +57%       $22      $15   +47%        $22
    -------------------------------------------------------------------------
    

    Lower throughput at Ok Tedi

    Mill throughput this quarter and year to date was lower than the same
periods last year because of harder skarn ore, and because problems with the
in-pit crusher conveyor system reduced the supply of ore to the mill. A
detailed plan has been developed to improve the conveyor.
    Copper and gold grades exceeded grades in 2007, increasing copper
production this quarter and gold production this quarter and year to date.
    The cost per tonne of ore milled is higher in 2008 because mill
throughput is lower and labour and fuel costs have increased.

    2008 outlook for production and costs

    We have adjusted our objective for 2008 to compensate for the shortfall
in production in the first half of the year. We anticipate copper production
to be consistent to our original objective because we expect copper grades to
be higher. We expect gold production to be lower than originally anticipated
because of lower gold grades.
    The increased cost per tonne reflects the higher fuel and labour costs.

    
    Financial review

    Ok Tedi benefited from higher copper and gold prices

    -------------------------------------------------------------------------
                                            three months          six months
    (millions of Canadian dollars          ended June 30       ended June 30
     otherwise stated)                    2008      2007      2008      2007
    -------------------------------------------------------------------------
    Sales analysis at 18%
    Copper sales (tonnes)                7,600     9,600    15,000    17,300
    Gold sales (ounces)                 25,300    26,500    45,500    48,700
                                      ---------------------------------------
    Gross copper sales                     $65       $87      $134      $143
    Gross gold sales                        21        18        38        34
    Other metal sales                        1         1         1         2
                                      ---------------------------------------
    Gross sales                             87       106       173       179
    Smelter processing
     charges and freight                   (11)      (14)      (20)      (26)
    -------------------------------------------------------------------------
    Net sales                               76        92       153       153
    -------------------------------------------------------------------------
    Cost analysis at 18%
    Tonnes of ore milled (thousands)     5,400     6,400    10,400    13,000
    Direct production costs
     ($ per tonne)                         $22       $14       $22       $15
    -------------------------------------------------------------------------
    Direct production costs                $22       $16       $41       $36
    Change in inventory                     (1)        7         -         6
    Depreciation and other non-cash costs    5         4         8         6
    -------------------------------------------------------------------------
    Operating costs                        $26       $27       $49       $48
    -------------------------------------------------------------------------
    Operating earnings                     $50       $65      $104      $105
    -------------------------------------------------------------------------
    Operating cash flow                    $42       $62       $81       $70
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months    six months
                                                         ended         ended
    (millions)                                         June 30       June 30
    -------------------------------------------------------------------------
    (Lower) higher metal prices,
     denominated in Canadian dollars                       $(1)          $15
    Lower sales volumes                                     (9)           (8)
    Higher smelter processing charges                       (3)            -
    Higher operating costs                                  (2)           (8)
    -------------------------------------------------------------------------
    Decrease in operating earnings, compared to 2007      $(15)          $(1)
    Lower tax expense                                       (4)           (2)
    Changes in net working capital                          (8)            8
    Other                                                    7             6
    -------------------------------------------------------------------------
    Increase (decrease) in operating cash flow,
     compared to 2007                                     $(20)          $11
    -------------------------------------------------------------------------

    The mine waste management program is expected to be commissioned in
    August

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

    -------------------------------------------------------------------------
    (18       three months ended June 30  six months ended June 30  objective
     percent)       2008     2007 change      2008     2007 change       2008
    -------------------------------------------------------------------------
    Capital
     spending    $10,900   $6,400   +70%   $18,900  $13,000   +45%    $32,000
    -------------------------------------------------------------------------
    

    2008 outlook for capital spending

    Ok Tedi plans to spend $180 million in 2008 (Inmet's 18 percent share is
$32 million). Of the $180 million, about $90 million will be for the mine
waste management program, $27 million for the pit drainage tunnel, and the
rest for mine equipment and other sustaining capital. The estimate for the
mine waste management program has increased about $50 million to include the
effect of a weaker US dollar on the Australian dollar based costs of
construction.


    Status of our development projects

    Las Cruces

    Quarterly development update

    Dewatering and re-injection system (DRS)

    In May Las Cruces was notified of a suspension of the authorization for
its DRS by the Confederacisn Hidrografica del Guadalquivir (CHG). Las Cruces
continued to operate the DRS to ensure that water from the aquifer did not
impact the pit walls. Although Las Cruces stopped mining in the bottom of the
pit, Las Cruces began to strip material for the second push back of the pit.
    On June 13, in response to the concerns that led to the suspension of the
DRS authorization, Las Cruces submitted a "Global Plan" to CHG. The proposal
included two primary actions.
    The first proposed action item under the Global Plan involves
purification of water extracted from the aquifer through a highly efficient
reverse osmosis treatment process prior to reinjection into the aquifer. In
July, Las Cruces took delivery of three reverse osmosis treatment units and
partial water treatment began shortly thereafter. We have also begun the
design of a long-term water treatment facility.
    The second proposed action item under the Global Plan involves the
relocation of certain DRS extraction wells currently located above the
mineralized zone to locations outside of the mineralized zones and to add
additional wells to increase dewatering capacity. We have identified the
locations for the new DRS wells.
    We anticipate that once we can demonstrate to the relevant regulatory
authorities through use of the temporary water treatment units that water
reinjected into the aquifer meets drinking water quality standards the
suspension of our DRS authorization will be lifted. At that time, mining of
ore can recommence prior to the completion of construction of the
metallurgical plant in the fourth quarter of 2008.

    Ground movement

    At the beginning of July over 5 million cubic metres of material from the
North dump failed, affecting a newly constructed storage facility. The
facility will be used for dried residues from the process plant once the plant
has started up. Las Cruces immediately commenced rehabilitation of the
affected areas and is examining measures to ensure long term stability of the
dumps. Based on preliminary findings we do not expect that the failure and the
rehabilitation measures will impact our planned fourth quarter start-up.

    Plant construction

    Plant construction continued at full pace and by the end of the second
quarter Las Cruces had completed the following:
    
    -  88 percent of construction
    -  89 percent of total physical progress.
    

    Work is progressing on schedule. We are preparing for the commissioning
of the plant and anticipate production of the first copper cathode in the
fourth quarter.

    Direct ore shipping

    Direct ore shipping has been suspended until the DRS authorization
suspension has been resolved and mining activity can restart in the bottom of
the pit.

    2008 outlook for development and operations

    Las Cruces plant construction is on schedule and copper cathode
production could begin in the fourth quarter subject to the lifting of the
suspension of the DRS permit and completion on the remediation of the storage
facilities.
    By June 30, 2008 (euro)393 million had been spent on the project with a
further (euro)24 million committed. We expect to spend the balance of the
estimated project costs ((euro)495 million, which includes the project
estimate of (euro)463 million plus the additional owners costs and
construction costs we expected because of the delay in the plant construction)
by the fourth quarter of 2008. Capital expenditures for 2008 are estimated  to
be $344 million. This includes the cost to complete the project, $17 million
for sustaining capital and $10 million on further pushback of the mine in
preparation of phase two mining. The costs to remediate the dumps have not
been included in the capital expenditure forecast for the year. Las Cruces has
been in contact with its insurance adjustor. Once the technical issues have
been fully resolved, Las Cruces will identify and pursue appropriate remedies
to attempt to mitigate these incremental costs.

    PETAQUILLA

    Quarterly development update

    All-cash offer for Petaquilla Copper

    On July 28, 2008, we filed a formal offer for all the outstanding common
shares of Petaquilla Copper Ltd. (PTC). Under the offer, PTC shareholders will
receive $2 per share in cash.
    PTC holds 26 percent of Minera Petaquilla SA. Petaquilla is an important
source of long term growth for Inmet. By obtaining control over the project we
can protect our interests in the Petaquilla Concession and advance the
development of the copper project.

    Summary of work during the quarter

    Management
    -----------
    Under our agreement with Teck Cominco Limited, Inmet began acting as
operator of the project on behalf of Teck Cominco as of April 1. Inmet also
has funded $8 million for development costs in the quarter.

    Drilling
    --------
    Drilling to expand the resource, to confirm prospective locations for
plant and other facilities and to provide geotechnical information for
engineering work is continuing. It is not progressing as quickly as planned
because of the speed of the permitting process, drill availability and a lack
of roads to supplement helicopter support. Additional drills are being sourced
and the field facilities to support them are being prepared.

    Plant and equipment
    -------------------
    Because of the long lead times required to receive equipment, we have
placed an order for two SAG mills, four ball mills and the associated gearless
drives, subject to cancellation terms.

    Baseline work for the social and environmental impact assessment
    ----------------------------------------------------------------
    Work is progressing in this area and we expect to submit our impact
assessment to the Panamanian environmental authorities in the second quarter
of 2009.

    Petaquilla team
    ---------------
    We continue to build a strong and dedicated team to lead all development,
engineering, technical, environmental and permitting activities in Panama.

    2008 outlook for development

    Petaquilla budgeted approximately $75 million for the project in 2008 to
continue the current field program and the engineering study and order long
lead time capital equipment. The capital items must be ordered at this stage
of development to maintain the project schedule. This spending plan could be
affected by the outcome of the all-cash offer for PTC and if the arbitration
between PTC and Teck Cominco continues without resolution in the near term.

    
    Managing our liquidity
    -------------------------------------------------------------------------
                                            three months          six months
                                           ended June 30       ended June 30
    (millions)                            2008      2007      2008      2007
    -------------------------------------------------------------------------
    CASH FROM OPERATING ACTIVITIES
    Cayeli                                 $37       $63       $50      $122
    Pyhasalmi                               19        10        50        51
    Troilus                                  8         4        15         5
    Ok Tedi                                 42        62        81        70
    Corporate development and
     exploration not included
     in operations' cash flow               (2)       (2)       (4)       (3)
    General and administration              (3)       (2)       (6)       (5)
    Other                                   14         3        10         3
    -------------------------------------------------------------------------
                                           115       138       196       243
    -------------------------------------------------------------------------
    CASH FROM INVESTING AND FINANCING
    Capital spending                      (121)      (82)     (232)     (134)
    Long-term borrowings                    56        24       106        38
    Funding from
     non-controlling shareholder            20        21        35        26
    Funding for Petaquilla                  (4)        -        (5)        -
    Settlement of foreign
     exchange forward contract              52         -        52         -
    Financial assurance deposits            (6)       (7)      (14)      (17)
    Dividends paid on common shares         (5)       (5)       (5)       (5)
    Disposition of portfolio investments     -        51         2        51
    Foreign exchange on cash
     held in foreign currency               (9)      (32)       24       (34)
    Other                                   (5)       (3)       (1)       (5)
    -------------------------------------------------------------------------
                                           (22)      (33)      (38)      (80)
    -------------------------------------------------------------------------
    Increase in cash                        93       105       158       163
    Cash and short-term investments
    Beginning of period                    906       698       841       640
    -------------------------------------------------------------------------
    End of period                         $999      $803      $999      $803
    -------------------------------------------------------------------------

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


    OPERATING ACTIVITIES

    Key components of the change in operating cash flows
    -------------------------------------------------------------------------
                                                  three months    six months
                                                         ended         ended
    (millions)                                         June 30       June 30
    -------------------------------------------------------------------------
    Lower earnings from operations (see page 4)           $(49)         $(39)
    Non-cash changes in operating earnings:
    Higher tax expense                                       -            (5)
    Changes in working capital                              16           (16)
    Other                                                   10            13
    -------------------------------------------------------------------------
    Decrease in operating cash flow, compared to 2007     $(23)         $(47)
    -------------------------------------------------------------------------
    

    Operating cash flows are lower than they were in 2007 mainly because
earnings from operations are lower. Working capital in the second quarter of
2008 increased because outstanding dividends were paid, accounts receivable
was down and higher taxes were paid at Pyhasalmi. For the year to June,
working capital was affected by higher accounts receivable at Cayeli.

    2008 outlook for operating activities

    Based on our outlook for metal prices and production, we expect operating
cash flows in 2008 for our operating mines to be similar to 2007.

    
    INVESTING AND FINANCING

    Capital spending and investing
    -------------------------------------------------------------------------
                                  three months        six months     revised
                                 ended June 30     ended June 30   objective
    (millions)                  2008      2007    2008      2007        2008
    -------------------------------------------------------------------------
    Cayeli                        $6        $4     $12        $9         $23
    Pyhasalmi                      2         1       3         1          12
    Troilus                        -         -       -         -           1
    Ok Tedi                       11         7      19        13          32
    Las Cruces                    97        69     190       107         344
    Cerattepe                      5         1       8         3          20
    -------------------------------------------------------------------------
                                $121       $82    $232      $133        $432
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Funding for Petaquilla        $4         -      $5        $-         $75
    -------------------------------------------------------------------------
    

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

    As of April 29, development work stopped at Cerattepe after an appeal by
the Turkish Ministry of Energy and Natural Resources of an injunction granted
by the Rize Administrative Court prohibiting further work on the property was
rejected. The property will remain on care and maintenance until a final
decision is made by the Rize Court concerning two applications by a local
non-governmental organization to cancel the operating licences for the
property (see page 27 for further details on the legal proceedings). Spending
year to date was on ramp development and receipt of part of the aerial
tramway.

    Long term borrowings and settlement of hedge

    Las Cruces borrowed the remaining (euro)26 million this quarter under its
credit facility, bringing the total amount borrowed under Tranche A of its
credit facility to (euro)139 million. On June 30, this euro denominated debt
was converted to a US dollar facility and the foreign exchange forward
contract in relation to this conversion was settled. Las Cruces received
(euro)36 million in cash from settlement of this contract. At June 30, Las
Cruces holds a US $215 million debt at interest rates of US Libor plus
2 percent. The funds received from the settlement of the forward contract will
be amortized as a reduction to interest expense over the term of the loan.

    
    2008 outlook for investing and financing

    We expect capital spending to be $432 million in 2008:
    -  $317 million for the continuing development of the Las Cruces mine and
       $27 million for its sustaining capital and phase two mining
    -  $20 million for development at Cerattepe for capital already incurred
       and committed items
    -  $17 million for the mine waste management program and $5 million for
       drainage tunnel underground work at Ok Tedi.
    

    To fund the costs at Las Cruces for the rest of the year, we expect to
use current cash on hand of $105 million, along with government subsidies and
sponsor contributions. We are expecting (euro)45 million in subsidies, but we
must meet certain conditions before we receive the funds (mainly reaching
specific levels of employment and completing construction of the plant).
    We also expect to invest $36 million (our 48 percent share) for
engineering studies and the deposits required for long lead time equipment at
Petaquilla. We will fund this from our current cash balances.

    Financial condition

    CASH

    Our cash and equivalents balance of $999 million at June 30, 2008
included cash and money market instruments that mature in 90 days or less from
the date of acquisition, and short-term investments that mature in 91 days to
a year.

    
    Cash and short-term investments were generally held in:
    -  short-term debt instruments issued by Canadian Crown Corporations
    -  highest rated asset backed commercial paper programs sponsored by
       leading Canadian financial institutions backed by global style
       liquidity lines
    -  AAA rated 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 $55 million included:
    -  $13 million in trust for future reclamation at Ok Tedi
    -  $16 million of cash collateralized letters of credit for Inmet
    -  $24 million related to issuing letters of credit to suppliers at Las
       Cruces
    -  $2 million for future reclamation at Pyhasalmi.

    COMMON SHARES
    -------------------------------------------------------------------
    Common shares outstanding as of
     June 30, 2008 and July 29, 2008                       48,281,759
    -------------------------------------------------------------------
    Deferred share units outstanding as of
     June 30, 2008
     (redeemable on a one-for-one basis for common shares)     77,290
    -------------------------------------------------------------------


    FINANCIAL INSTRUMENTS

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

    -------------------------------------------------------------------------
    Type of     Expiry       Quantity           Price         C$ marked-to-
    contract                                                  market loss at
                                                              June 30, 2008
    -------------------------------------------------------------------------
    Copper
     forward
     sales
      Ok Tedi     2008   1.6 million lbs   US $2.78 per lb
                  2009   3.2 million lbs   US $2.41 per lb
                -------------------------------------------
                         4.8 million lbs   US $2.54 per lb    $6.2 million(1)
    Gold
     forward
     sales
      Troilus     2008     29,100 ounces    US $352 per oz.  $17.4 million(2)
                -------------------------------------------

      Ok Tedi     2010      3,600 ounces    US $748 per oz.
                  2011      3,600 ounces    US $775 per oz.
                  2012      3,600 ounces    US $803 per oz.
                  2013      1,800 ounces    US $825 per oz.
                -------------------------------------------
                           12,600 ounces    US $783 per oz.   $4.8 million(2)
    Interest
     rate
     swaps
      Las      2009 to
       Cruces     2014   US $179 million       5.2 percent    $8.1 million
                        (reducing in con-
                        junction with debt
                       repayment schedule)
    -------------------------------------------------------------------------
    (1) At a copper price of US $3.86 per pound.
    (2) At a gold price of US $933 per ounce.
    

    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 our 2007 annual review.

    Development at Las Cruces

    Las Cruces is a development project, and while we are confident that the
project will add value as planned, there are still significant risks to
completing the project as planned, particularly in the ability to meet
critical construction milestones and to demonstrate to the regulators the
effectiveness of the Global Plan with respect to the DRS.
    Not meeting construction milestones or requirements for operating permits
could delay the date Las Cruces starts production, and affect whether it
receives government subsidies.
    A local non-governmental group has initiated several legal proceedings
claiming that various government 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. Two other proceedings are still outstanding.

    Cerattepe legal proceedings

    After the Turkish Administrative Supreme Court reinstated the project
operating licences on procedural grounds in April 2007, the plaintiffs in
prior proceedings re-filed applications to have the licences cancelled with
the newly created Rize Administrative Court to stop work on the property and
to cancel a lease of the land where the ropeway terminus will be located.
    We joined the various application proceedings as an intervener and,
together with the Turkish Ministry of Energy and Natural Resources, filed
defences in the various proceedings.
    On March 26, 2008 we received notice from the Rize Administrative Court
of its decision to grant an injunction against the Cerattepe project. The main
defendant in the legal proceedings is the Turkish Ministry of Energy and
Natural Resources (ABMI is a co-defendant). The Ministry appealed the
injunction decision to the Trabzon District Administrative Court, and on April
29, 2008 that appeal was rejected.
    As a result, our subsidiary Artvin Bakir Maden Isletmeleri, A.S. (ABMI)
is prevented from carrying out further development work on the Cerattepe
property until the Rize Administrative Court makes its final decision on the
status of the operating licences which is expected later this year. This
decision can be appealed to the Turkish Administrative Supreme Court.
    We continue to believe the applications to cancel the operating licences
are without merit and together with the Ministry are vigourously defending
against them. Nonetheless, in light of the Trabzon Regional Administrative
Court's decision, our ability to move the Cerattepe project ahead remains
subject to legal uncertainty at this time.

    
    Sensitivity analysis

    The table below shows you the effect of key variables on our net income
for the last six months of 2008, based on our 2008 revised objectives.

    -------------------------------------------------------------------------
                                                                       Would
                                                                  change our
                                                    Would change    2008 net
                                                    our 2008 net  income per
                                      A change of:    income by:   share by:
    -------------------------------------------------------------------------
    Metal prices
    Copper (per pound)                    US $0.30   $25 million       $0.51
    Zinc (per pound)                      US $0.10    $3 million       $0.06
    Gold (per ounce)(1)                    US $100   $13 million       $0.27
    -------------------------------------------------------------------------
    Exchange rates
    Canadian dollar per US dollar           C$0.10   $30 million       $0.63
    Canadian dollar per euro                C$0.10    $4 million       $0.07
    -------------------------------------------------------------------------
    Treatment and refining charges
    Copper treatment charge per tonne and   US $10
     copper refining charge per pound     US $0.01    $2 million       $0.03
    Zinc treatment charge per tonne         US $10    $1 million       $0.01
    -------------------------------------------------------------------------
    Freight and energy costs
    Concentrate freight per tonne              10%    $2 million       $0.04
    Fuel price per litre                     $0.10    $2 million       $0.04
    Electricity per kilowatt hour            $0.01    $2 million       $0.04
    -------------------------------------------------------------------------
    (1) Calculations include hedging in place at December 31, 2007.
    

    Accounting changes

    We adopted a new section of the CICA Handbook:

    Section 3031 - Inventories

    Effective January 1, 2008, we adopted CICA Handbook section 3031 -
Inventory on a prospective basis. This Section requires inventory to be
measured at cost or net realizable value - whichever is lower.
    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.
    As a result, certain administrative and other costs that were previously
included in the cost of inventory are now expensed as incurred. Metal
inventory and materials and supplies are measured at weighted average cost or
net realizable value - whichever is lower.
    This change in policy had the following impact on our interim 2008
financial statements:
    
    -  decreased opening 2008 inventory by $5.2 million
    -  increased opening 2008 property, plant and equipment by $2.4 million
    -  decreased opening 2008 future income tax liability by $0.6 million
    -  decreased opening 2008 retained earnings by $2.2 million.
    

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

    As of January 1, 2011 Inmet will report under IFRS, which are the
accounting standards used in most of the European Union, Australia, South
Africa and many other countries around the world. Changing from Canadian GAAP
to IFRS could materially affect our reported financial position and results of
operations. We have analyzed the major accounting differences between current
Canadian GAAP and IFRS.
    Over the next year we will refine our transitional plan, consult with our
operating units and assess the impact on our internal controls over financial
reporting, disclosure controls and information systems. Our goal is to make
policy changes (including transition elections) that are compliant but also
provide the most meaningful and transparent information to our stakeholders.

    Recently issued accounting pronouncement:

    Section 3064 - Goodwill and intangible assets

    This section establishes standards for the recognition, measurement,
presentation and disclosure of goodwill subsequent to its initial recognition
and of intangible assets. This section replaces Section 3062, Goodwill and
Other Intangible Assets and Section 3450, Research and Development Costs.
Various changes have been made to other sections of the CICA Handbook for
consistency purposes. It provides guidance for the recognition of internally
developed intangible assets and ensuring consistent treatment of all
intangible assets, whether separately acquired or internally developed. 
Standards concerning goodwill are unchanged from the standards included in the
previous section. This section will become effective for us beginning on
January 1, 2009. We are currently assessing the impact this change in
accounting policy will have on our consolidated financial statements.

    Supplementary financial information

    Page 30 includes supplementary financial information on cash costs. These
measures do not fall into the category of generally accepted accounting
principles.
    We use unit cash cost information as a key performance indicator, both on
a segmented and consolidated basis. We have included cash costs as
supplementary information because we believe our key stakeholders use these
measures as a financial indicator of our profitability and cash flows before
the effects of capital investment and financing costs, such as interest.
    Since cash costs are not recognized measures under Canadian generally
accepted accounting principles they should not be considered in isolation of
earnings or cash flows. There is also no standard way to calculate cash costs,
so they are not a reliable way to compare us to other companies.

    About Inmet

    Inmet is a Canadian-based global mining company that produces copper,
zinc and gold. We have interests in four mining operations in locations around
the world: Cayeli, Pyhasalmi, Troilus and Ok Tedi. We also have interests in
three development properties, Las Cruces, Cerattepe and Petaquilla.

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

    
    Second quarter conference call

    Will be held on
    - Wednesday, July 30, 2008
    - 8:30 a.m. Eastern Time
    - webcast available at
      www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2326280
      or www.inmetmining.com.

    You can also dial in by calling
    - Local or international: +1.416.644.3419
    - Toll-free within North America: +1.800.732.6179

    Starting 10:30 a.m. (ET) Wednesday July 30, 2008, conference call replay
    will be available
    - Local or international: +1.416.640.1917 passcode 21276716 followed by
      the number sign.
    - Toll-free within North America: +1.877.289.8525 passcode 21276716
      followed by the number sign.


    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs
    2008
    For the six months                                             per ounce
     ended June 30                    per pound of copper            of gold
                              ------------------------------------ ----------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    (US dollars)

    Direct production costs    $1.15     $2.06     $1.25     $1.35      $576
    Royalties and
     variable compensation      0.19         -      0.11      0.12         -
    Smelter processing
     charges and freight        1.40      1.17      0.58      1.04        63
    Metal credits              (2.04)    (3.73)    (1.22)    (2.03)     (265)
                              ------------------------------------ ----------
    Cash cost                  $0.70    ($0.50)    $0.72     $0.48      $374
                              ------------------------------------ ----------
                              ------------------------------------ ----------

    2007 For the six months                                              per
     ended June 30                                                     ounce
                                      per pound of copper            of gold
                              ------------------------------------ ----------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    (US dollars)

    Direct production costs    $0.95     $1.52     $1.02     $1.08      $488
    Royalties and
     variable compensation      0.14         -      0.08      0.09         -
    Smelter processing
     charges and freight        1.07      1.66      0.58      0.98        58
    Metal credits              (1.89)    (4.87)    (0.86)    (2.03)     (153)
                              ------------------------------------ ----------
    Cash cost                  $0.27    ($1.69)    $0.82     $0.12      $393
                              ------------------------------------ ----------
                              ------------------------------------ ----------
    -------------------------------------------------------------------------


    Reconciliation of cash costs to statements of earnings

    2008 For the six months                                              per
     ended June 30                                                     ounce
                                      per pound of copper            of gold
                              ------------------------------------ ----------
    (millions of Canadian
     dollars, except where                                    TOTAL
     otherwise noted)         CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    GAAP reference           page 15   page 17   page 21             page 19

    Direct production costs      $46       $30       $42      $118       $42
    Smelter processing
     charges and freight          48        26        20        94         5
    By product sales             (77)      (59)      (39)     (175)      (19)
    Adjust smelter
     processing and
     freight, and sales
     to production basis           8        (4)        -         4         -
                              ------------------------------------ ----------
    Operating costs net
     of metal credits            $25       ($7)      $23       $41       $28
    US $ to C$ exchange rate   $1.01     $1.01     $1.01     $1.01     $1.01
    Inmet's share
     of production (000's)    34,400    14,600    31,100    80,100    72,800
                              ------------------------------------ ----------
    Cash cost                  $0.70    ($0.50)    $0.72     $0.48      $374
                              ------------------------------------ ----------
                              ------------------------------------ ----------


    2007 For the six months                                              per
     ended June 30                                                     ounce
                                      per pound of copper            of gold
                              ------------------------------------ ----------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise noted)         CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    GAAP reference           page 15   page 17   page 21             page 19

    Direct production costs      $42       $25       $36      $103       $38
    Smelter processing
     charges and freight          55        34        26       115         5
    By product sales            (105)      (88)      (37)     (230)      (13)
    Adjust smelter processing
     and freight, and sales
     to production basis         19         (2)        5        22         -
                             ------------------------------------- ----------
    Operating costs
     net of metal credits       $11       ($31)      $30       $10       $30
    US $ to C$ exchange rate  $1.14      $1.14     $1.14     $1.14     $1.14
    Inmet's share
     of production (000's)   34,300     15,100    32,800    82,200    68,300
                             ------------------------------------- ----------
    Cash cost                 $0.27     ($1.69)    $0.82     $0.12      $393
                             ------------------------------------- ----------




    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs
    2008 For the three months                                            per
     ended June 30                                                     ounce
                                      per pound of copper            of gold
                              ------------------------------------ ----------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    (US dollars)

    Direct production costs    $1.24     $2.23     $1.21     $1.40      $584
    Royalties and
     variable compensation      0.14         -      0.12      0.11         -
    Smelter processing
     charges and freight        1.39      1.19      0.60      1.03        67
    Metal credits              (2.02)    (3.51)    (1.09)    (1.89)     (291)
                              ------------------------------------ ----------
    Cash cost                  $0.75    ($0.09)    $0.84     $0.65      $360
                              ------------------------------------ ----------
                              ------------------------------------ ----------

    2007 For the three months                                            per
     ended June 30                                                     ounce
                                      per pound of copper            of gold
                              ------------------------------------ ----------
                                                             TOTAL
                              CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    (US dollars per pound)

    Direct production costs    $0.93     $1.43     $1.14     $1.11      $480
    Royalties and
     variable compensation      0.16         -      0.18      0.14         -
    Smelter processing
     charges and freight        1.23      1.34      0.58      1.02        57
    Metal credits              (1.99)    (4.64)    (0.90)    (2.12)     (199)
                              ------------------------------------ ----------
    Cash cost                  $0.33    ($1.87)    $1.00     $0.15      $338
                              ------------------------------------ ----------
                              ------------------------------------ ----------
    -------------------------------------------------------------------------


    Reconciliation of cash costs to statements of earnings

    2008 For the three months                                            per
     ended June 30                                                     ounce
                                      per pound of copper            of gold
                              ------------------------------------ ----------
    (millions of Canadian
    dollars, except where                                    TOTAL
    otherwise noted)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    GAAP reference           page 15   page 17   page 21             page 19

    Direct production costs      $23       $15       $22       $60       $22
    Smelter processing
     charges and freight          26        15        11        52         3
    By product sales             (41)      (32)      (21)      (94)      (11)
    Adjust smelter processing
     and freight, and sales
     to production basis           5         1         2         8         -
                              ------------------------------------ ----------
    Operating costs
     net of metal credits        $13       ($1)      $14       $26       $14
    US $ to C$ exchange rate   $1.01     $1.01     $1.01     $1.01     $1.01
    Inmet's share
     of production (000's)    16,400     6,800    16,300    39,500    37,800
                              ------------------------------------ ----------
    Cash cost                  $0.75    ($0.09)    $0.84     $0.59      $360
                              ------------------------------------ ----------
                              ------------------------------------ ----------

    2007 For the three months                                            per
    ended June 30                                                      ounce
                                      per pound of copper            of gold
                              ------------------------------------ ----------
    (millions of Canadian
    dollars, except where                                    TOTAL
    otherwise noted)          CAYELI  PYHASALMI  OK TEDI    COPPER   TROILUS
    ------------------------------------------------------ ------- ----------
    GAAP reference           page 15   page 17   page 21             page 19

    Direct production costs      $21       $12       $16       $49       $19
    Smelter processing
     charges and freight          24        15        14        53         2
    By product sales             (46)      (46)      (20)     (112)       (8)
    Adjust smelter processing
     and freight, and sales
     to production basis           8         2         6        16         -
                              ------------------------------------ ----------
    Operating costs
     net of metal credits         $7      ($17)      $16        $6       $13
    US $ to C$ exchange rate   $1.10     $1.10     $1.10     $1.10     $1.10
    Inmet's share
     of production (000's)    17,900     8,100    14,800    40,800    35,100
                              ------------------------------------ ----------
    Cash cost                  $0.33    ($1.87)    $1.00     $0.15      $338
                              ------------------------------------ ----------


    INMET MINING CORPORATION
    Quarterly review
    (unaudited)

    Latest Four Quarters
    -------------------------------------------------------------------------
                                          2008      2008      2007      2007
    (thousands of Canadian dollars,     Second     First    Fourth     Third
     except per share amounts)         quarter   quarter   quarter   quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS
    Gross sales                       $281,463  $276,281  $224,773  $272,293
    Smelter processing
     charges and freight               (53,209)  (44,157)  (43,902)  (42,557)
    Cost of sales                      (89,893)  (79,246)  (78,809)  (72,057)
    Depreciation                        (9,195)   (9,170)   (9,480)   (8,739)
                                      ---------------------------------------
                                       129,166   143,708    92,582   148,940
    Corporate development
     and exploration                    (2,483)   (2,618)   (3,510)   (2,895)
    General and administration          (2,790)   (3,648)  (12,622)   (2,674)
    Investment and
     other income (expense)            (11,358)   14,754     5,968     9,644
    Interest expense                      (471)     (447)     (407)     (424)
    Capital tax expense                   (124)     (126)      212      (273)
    Income tax expense                 (44,333)  (44,744)  (18,551)  (37,649)
    Non-controlling interest                98      (205)      (27)      167
                                      ---------------------------------------
    Net income                         $67,705  $106,674   $63,645  $114,836
                                      ---------------------------------------
    Net income per common share          $1.40     $2.21     $1.32     $2.38
                                      ---------------------------------------
    Diluted net income
     per common share                    $1.40     $2.21     $1.32     $2.37
                                      ---------------------------------------


    Previous Four Quarters
    -------------------------------------------------------------------------
                                          2007      2007      2006      2006
    (thousands of Canadian dollars,     Second     First    Fourth     Third
     except per share amounts)         quarter   quarter   quarter   quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS
    Gross sales                       $320,018  $286,614  $258,911  $301,100
    Smelter processing
     charges and freight               (55,413)  (64,606)  (65,005)  (60,270)
    Cost of sales                      (78,181)  (79,377)  (67,868)  (73,394)
    Depreciation                        (8,039)   (9,415)   (9,057)   (9,025)
                                      ---------------------------------------
                                       178,385   133,216   116,981   158,411
    Corporate development
     and exploration                    (1,836)     (842)   (4,136)   (2,708)
    General and administration          (2,162)   (2,840)   (6,128)   (2,618)
    Investment and other income         13,415     7,427    17,972     1,759
    Interest expense                      (424)     (438)     (425)     (412)
    Capital tax (expense) recovery        (274)     (274)        -        41
    Income tax expense                 (48,509)  (35,376)  (26,679)  (42,902)
    Non-controlling interest              (545)      205      (165)       11
                                      ---------------------------------------
    Net income                        $138,050  $101,078   $97,420  $111,582
                                      ---------------------------------------
    Net income per common share          $2.86     $2.09     $2.02     $2.31
                                      ---------------------------------------
    Diluted net income
     per common share                    $2.86     $2.09     $2.02     $2.31
                                      ---------------------------------------


    INMET MINING CORPORATION
    Consolidated balance sheets
                                                     June 30     December 31
    (thousands of Canadian dollars)                     2008            2007
    -------------------------------------------------------------------------
                                                  (unaudited)
    Assets

    Current assets:
      Cash and short-term investments (note 5)      $998,925        $840,823
      Restricted cash (note 6)                         1,265           1,569
      Accounts receivable                            167,371         131,197
      Inventories (note 2)                            59,412          52,725
      Future income tax asset                         12,272          14,515
                                                  ---------------------------
                                                   1,239,245       1,040,829

    Restricted cash (note 6)                          54,136          37,205

    Property, plant and equipment                  1,152,163         870,965

    Investments (note 7)                              49,032          32,266

    Future income tax asset                           10,035           7,884

    Derivatives (note 8)                                   -          33,565

    Other assets                                      13,138          25,751
                                                  ---------------------------
                                                  $2,517,749      $2,048,465
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities:

      Accounts payable and accrued liabilities      $191,310        $172,800
      Current portion of long-term debt               14,403          12,971
                                                  ---------------------------
                                                     205,713         185,771

    Long-term debt (note 9)                          405,798         234,317

    Reclamation liabilities (note 10)                 98,096          84,017

    Derivatives (note 8)                              36,458          43,960

    Other liabilities                                 24,554          19,249

    Future income tax liabilities                     25,880          37,084

    Non-controlling interest                          62,862          51,574
                                                  ---------------------------
                                                     859,361         655,972
                                                  ---------------------------

    Commitments (note 11)

    Shareholders' equity

    Share capital                                    337,464         337,464

    Contributed surplus                               61,630          60,722

    Stock based compensation                           1,229           1,085

    Retained earnings                              1,244,313       1,076,958

    Accumulated other comprehensive
     income (loss) (note 12)                          13,752         (83,736)
                                                  ---------------------------
                                                   1,658,388       1,392,493
                                                  ---------------------------
                                                  $2,517,749      $2,048,465
    -------------------------------------------------------------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented balance sheets

    2008 As at June 30

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

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

    Assets

    Cash and short-term
     investments                $649,702    $147,853     $62,054         $ -
    Other current assets          14,577      45,579      54,383      30,693
    Restricted cash               15,994           -       1,926           -
    Property, plant and
     equipment                       497     138,100      69,922      24,624
    Investments                   49,032           -           -           -
    Derivatives                        -           -           -           -
    Other assets                  10,234         343           -       6,289
                               ----------------------------------------------

                                $740,036    $331,875    $188,285     $61,606
                               ----------------------------------------------

    Liabilities

    Current liabilities           $9,309     $39,797     $16,076     $11,669
    Long-term debt                18,347           -           -           -
    Reclamation liabilities       24,769       7,864      14,978       7,872
    Derivatives                        -           -           -      17,381
    Other liabilities              4,992       5,149           -         581
    Future income tax
     liabilities                       -       3,716       7,771           -
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------

                                 $57,417     $56,526     $38,825     $37,503
                               ----------------------------------------------


    2008 As at June 30

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

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

    Assets

    Cash and short-term
     investments                 $34,805    $104,511    $998,925
    Other current assets          38,266      56,822     240,320
    Restricted cash               13,292      22,924      54,136
    Property, plant and
     equipment                    78,683     840,337   1,152,163
    Investments                        -           -      49,032
    Derivatives                        -           -           -
    Other assets                   3,878       2,429      23,173
                               ---------------------- -----------

                                $168,924  $1,027,023  $2,517,749
                               ---------------------- -----------

    Liabilities

    Current liabilities          $37,887     $90,975    $205,713
    Long-term debt                     -     387,451     405,798
    Reclamation liabilities       20,608      22,005      98,096
    Derivatives                   10,981       8,096      36,458
    Other liabilities              1,620      12,212      24,554
    Future income tax
     liabilities                   1,104      13,289      25,880
    Non-controlling interest           -      62,862      62,862
                               ---------------------- -----------

                                 $72,200    $596,890    $859,361
                               ---------------------- -----------


    2007 As at December 31

                                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

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



    INMET MINING CORPORATION
    Consolidated statements of earnings
    (unaudited)

                                  Three Months Ended       Six Months Ended
    (thousands of Canadian              June 30                 June 30
     dollars except per
     share amounts)                 2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Gross sales                 $281,463    $320,018    $557,744    $606,632

    Smelter processing
     charges and freight         (53,209)    (55,413)    (97,366)   (120,019)

    Cost of sales                (89,893)    (78,181)   (169,139)   (157,558)

    Depreciation                  (9,195)     (8,039)    (18,365)    (17,454)

    ------------------------------------------------- -----------------------
                                 129,166     178,385     272,874     311,601

    Corporate development
     and exploration              (2,483)     (1,836)     (5,101)     (2,678)

    General and administration    (2,790)     (2,162)     (6,438)     (5,002)

    Investment and other income
     (loss) (note 13)            (11,358)     13,415       3,396      20,842

    Interest expense                (471)       (424)       (918)       (862)

    Capital tax expense             (124)       (274)       (250)       (548)

    Income tax expense
     (note 14)                   (44,333)    (48,509)    (89,077)    (83,885)

    Non-controlling interest          98        (545)       (107)       (340)

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

    Net income                   $67,705    $138,050    $174,379    $239,128
    ------------------------------------------------- -----------------------

    Basic and diluted net
     income per common share
     (note 15)                     $1.40       $2.86       $3.61       $4.95
    ------------------------------------------------- -----------------------

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



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2008 For the six months ended June 30

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

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

    Gross sales                      $ -    $198,929    $116,157     $69,422
    Smelter processing
     charges and freight               -     (47,578)    (25,381)     (4,608)
    Cost of sales                   (988)    (47,505)    (31,168)    (44,533)
    Depreciation                       -      (4,929)     (4,382)     (4,136)
                               ----------------------------------------------
                                    (988)     98,917      55,226      16,145

    Corporate development
     and exploration              (3,812)        (96)     (1,181)        (12)
    General and administration    (6,438)          -           -           -
    Investment and other
     income (expense)                199       3,938           -       2,722
    Interest expense                (918)          -           -           -
    Capital tax expense             (250)          -           -           -
    Income tax expense            (5,534)    (27,779)    (12,448)          -
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------

    Net income (loss)           ($17,741)    $74,980     $41,597     $18,855
                               ----------------------------------------------


    2008 For the six months ended June 30

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

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

    Gross sales                 $173,236         $ -    $557,744
    Smelter processing
     charges and freight         (19,799)          -     (97,366)
    Cost of sales                (44,945)          -    (169,139)
    Depreciation                  (4,918)          -     (18,365)
                               ---------------------- -----------
                                 103,574           -     272,874

    Corporate development
     and exploration                   -           -      (5,101)
    General and administration         -           -      (6,438)
    Investment and other
     income (expense)             (3,786)        323       3,396
    Interest expense                   -           -        (918)
    Capital tax expense                -           -        (250)
    Income tax expense           (43,150)       (166)    (89,077)
    Non-controlling interest           -        (107)       (107)
                               ---------------------- -----------

    Net income (loss)            $56,638         $50    $174,379
                               ---------------------- -----------


    2007 For the six months ended June 30

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

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

    Gross sales                      $ -    $229,942    $141,147     $56,091
    Smelter processing
     charges and freight               -     (55,470)    (33,714)     (4,713)
    Cost of sales                   (843)    (45,728)    (26,307)    (40,132)
    Depreciation                       -      (4,568)     (4,794)     (4,716)
                               ----------------------------------------------
                                    (843)    124,176      76,332       6,530

    Corporate development
     and exploration              (1,268)       (860)     (1,019)        469
    General and administration    (5,002)          -           -           -
    Investment and other
     income (expense)             20,013      (1,581)          -         791
    Interest expense                (862)          -           -           -
    Capital tax expense             (548)          -           -           -
    Income tax expense              (771)    (27,434)    (17,286)          -
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------

    Net income                   $10,719     $94,301     $58,027      $7,790
                               ----------------------------------------------


    2007 For the six months ended June 30

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

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

    Gross sales                 $179,452         $ -    $606,632
    Smelter processing
     charges and freight         (26,122)          -    (120,019)
    Cost of sales                (44,548)          -    (157,558)
    Depreciation                  (3,376)          -     (17,454)
                                --------------------- -----------
                                 105,406           -     311,601

    Corporate development
     and exploration                   -           -      (2,678)
    General and administration         -           -      (5,002)
    Investment and other
     income (expense)                  -       1,619      20,842
    Interest expense                   -           -        (862)
    Capital tax expense                -           -        (548)
    Income tax expense           (37,908)       (486)    (83,885)
    Non-controlling interest           -        (340)       (340)
                               ---------------------- -----------

    Net income                   $67,498        $793    $239,128
                               ---------------------- -----------



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2008 For the three months ended June 30

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

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

    Gross sales                      $ -     $98,313     $61,249     $35,171
    Smelter processing
     charges and freight               -     (25,565)    (14,561)     (2,421)
    Cost of sales                   (494)    (24,930)    (17,224)    (23,522)
    Depreciation                       -      (2,556)     (2,232)     (1,718)
                               ----------------------------------------------
                                    (494)     45,262      27,232       7,510

    Corporate development
     and exploration              (1,835)        (26)       (615)         (7)
    General and administration    (2,790)          -           -           -
    Investment and other
     income (expense)            (10,362)       (923)          -       1,361
    Interest expense                (471)          -           -           -
    Capital tax expense             (124)          -           -           -
    Income tax (expense)
     recovery                     (5,534)     (8,655)     (6,425)          -
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------

    Net income (loss)           ($21,610)    $35,658     $20,192      $8,864
                               ----------------------------------------------


    2008 For the three months ended June 30

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

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

    Gross sales                  $86,730         $ -    $281,463
    Smelter processing
     charges and freight         (10,662)          -     (53,209)
    Cost of sales                (23,723)          -     (89,893)
    Depreciation                  (2,689)          -      (9,195)
                                --------------------- -----------
                                  49,656           -     129,166

    Corporate development
     and exploration                   -           -      (2,483)
    General and administration         -           -      (2,790)
    Investment and other
     income (expense)               (924)       (510)    (11,358)
    Interest expense                   -           -        (471)
    Capital tax expense                -           -        (124)
    Income tax (expense)
     recovery                    (23,803)         84     (44,333)
    Non-controlling interest           -          98          98
                               ---------------------- -----------

    Net income (loss)            $24,929       ($328)    $67,705
                               ---------------------- -----------


    2007 For the three months ended June 30

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

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

    Gross sales                      $ -    $112,208     $75,807     $25,849
    Smelter processing
     charges and freight               -     (24,302)    (15,100)     (2,020)
    Cost of sales                   (355)    (21,294)    (13,384)    (18,104)
    Depreciation                       -      (1,871)     (2,433)     (2,007)
                               ----------------------------------------------
                                    (355)     64,741      44,890       3,718

    Corporate development
     and exploration                (521)       (651)       (558)       (106)
    General and administration    (2,162)          -           -           -
    Investment and other
     income (expense)             11,878      (1,266)          -         499
    Interest expense                (424)          -           -           -
    Capital tax expense             (274)          -           -           -
    Income tax expense              (385)    (13,763)    (10,379)          -
    Non-controlling interest           -           -           -           -
                               ----------------------------------------------

    Net income                    $7,757     $49,061     $33,953      $4,111
                               ----------------------------------------------


    2007 For the three months ended June 30

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

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

    Gross sales                 $106,154         $ -    $320,018
    Smelter processing
     charges and freight         (13,991)          -     (55,413)
    Cost of sales                (25,044)          -     (78,181)
    Depreciation                  (1,728)          -      (8,039)
                                --------------------- -----------
                                  65,391           -     178,385

    Corporate development
     and exploration                   -           -      (1,836)
    General and administration         -           -      (2,162)
    Investment and other
     income (expense)                  -       2,304      13,415
    Interest expense                   -           -        (424)
    Capital tax expense                -           -        (274)
    Income tax expense           (23,291)       (691)    (48,509)
    Non-controlling interest           -        (545)       (545)
                                --------------------- -----------

    Net income                   $42,100      $1,068    $138,050
                                --------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of cash flows
    (unaudited)

                                  Three Months Ended       Six Months Ended
    (thousands of Canadian              June 30                 June 30
     dollars)                       2008        2007        2008        2007
    ------------------------------------------------- -----------------------

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

    Net income                   $67,705    $138,050    $174,379    $239,128
    Add (deduct) items not
     affecting cash:
      Gain on disposition of
       investments                     -     (11,730)       (256)    (11,730)
      Depreciation                 9,195       8,039      18,365      17,454
      Future income tax           (6,973)     (2,645)     (4,056)     (4,380)
      Accretion expense on
       reclamation liabilities     1,123         879       2,144       1,803
      Non-controlling interest       (98)        545         107         340
      Foreign exchange loss       22,476       3,253      18,890       3,437
      Other                        1,156      (2,424)      3,465      (1,711)
    Reclamation costs               (303)       (524)       (824)     (1,004)
    Net change in non-cash
     working capital (note 4)     20,516       4,288     (16,506)       (626)
                              ----------------------- -----------------------
                                 114,797     137,731     195,708     242,711
                              ----------------------- -----------------------

    Cash provided by (used in)
     investing activities

    Capital spending            (121,028)    (82,079)   (232,442)   (134,014)
    Investment in Petaquilla      (3,755)          -      (3,755)          -
    Loans to other Petaquilla
     shareholders                 (4,091)          -      (4,091)          -
    Disposition of investments         -      50,726       1,521      50,726
    Sale (purchase) of
     short-term investments     (125,439)     17,355     174,985     137,531
    Other                              -           -           -         (46)
                              ----------------------- -----------------------
                                (254,313)    (13,998)    (63,782)     54,197
                              ----------------------- -----------------------

    Cash provided by (used in)
     financing activities

    Long-term debt
     borrowings (note 9)          55,894      24,169     106,240      38,009
    Funding by non-controlling
     shareholder                  19,627      21,462      34,756      26,110
    Settlement of foreign
     currency forward contract    52,256           -      52,256           -
    Financial assurance deposits  (6,478)     (7,485)    (13,972)    (17,415)
    Dividends paid on common
     shares                       (4,828)     (4,827)     (4,828)     (4,827)
    Subsidies received                 -          62       3,233         199
    Other                            (46)     (1,435)        (92)     (2,770)
                              ----------------------- -----------------------
                                 116,425      31,946     177,593      39,306
                              ----------------------- -----------------------

    Foreign exchange change
     on cash held in foreign
     currency                     (9,467)    (31,540)     23,568     (34,049)
                              ----------------------- -----------------------

    Increase (decrease) in
     cash                        (32,558)    124,139     333,087     302,165
                              ----------------------- -----------------------

    Cash:
      Beginning of period        888,150     562,636     522,505     384,610
                              ----------------------- -----------------------
      End of period              855,592     686,775     855,592     686,775

    Short-term investments       143,333     116,229     143,333     116,229
                              ----------------------- -----------------------

    Cash and short-term
     investments                $998,925    $803,004    $998,925    $803,004
    ------------------------------------------------- -----------------------
    (see accompanying notes)

    (1) Supplementary cash flow
        information:
          Cash interest paid      $4,724      $1,100      $8,122      $2,381
          Cash taxes paid        $65,036     $52,368     $80,249     $64,739
    ------------------------------------------------- -----------------------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2008 For the six months ended June 30

                                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      ($1,973)    $78,116     $46,306     $22,893
      Net change in non-cash
       working capital             1,752     (28,164)      4,298      (8,321)
                               ----------------------------------------------
                                    (221)     49,952      50,604      14,572
                               ----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending               (50)    (20,255)     (3,358)       (279)
      Disposition of investments   1,521           -           -           -
      Sale of short-term
       investments               174,985           -           -           -
      Spending for Petaquilla     (7,846)          -           -           -
                               ----------------------------------------------
                                 168,610     (20,255)     (3,358)       (279)
                               ----------------------------------------------

                               ----------------------------------------------
    Cash provided by (used in)
     financing activities         45,739           -      (1,850)          -
                               ----------------------------------------------
    Foreign exchange change on
     cash held in foreign
     currency                          -       9,517       8,531           -
                               ----------------------------------------------
    Intergroup funding
     (distributions)             251,200    (225,032)   (103,365)    (14,293)
                               ----------------------------------------------
    Increase (decrease) in
     cash                        465,328    (185,818)    (49,438)          -
    Cash:
      Beginning of period         41,041     333,671     111,492           -
                               ----------------------------------------------
      End of period              506,369     147,853      62,054           -
    Short-term investments       143,333           -           -           -
                               ----------------------------------------------
    Cash and short-term
     investments                $649,702    $147,853     $62,054         $ -
                               ----------------------------------------------


    2008 For the six months ended June 30

                                 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      $66,872         $ -    $212,214
      Net change in non-cash
       working capital            13,929           -     (16,506)
                                --------------------- -----------
                                  80,801           -     195,708
                                --------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending           (18,851)   (189,649)   (232,442)
      Disposition of investments       -           -       1,521
      Sale of short-term
       investments                     -           -     174,985
      Spending for Petaquilla          -           -      (7,846)
                                --------------------- -----------
                                 (18,851)   (189,649)    (63,782)
                                --------------------- -----------

                                --------------------- -----------
    Cash provided by (used in)
     financing activities           (616)    134,320     177,593
                                --------------------- -----------
    Foreign exchange change on
     cash held in foreign
     currency                        978       4,542      23,568
                                --------------------- -----------
    Intergroup funding
     (distributions)             (40,979)    132,469           -
                                --------------------- -----------
    Increase (decrease) in
     cash                         21,333      81,682     333,087
    Cash:
      Beginning of period         13,473      22,828     522,505
                                --------------------- -----------
      End of period               34,806     104,510     855,592
    Short-term investments             -           -     143,333
                                --------------------- -----------
    Cash and short-term
     investments                 $34,806    $104,510    $998,925
                                --------------------- -----------


    2007 For the six months ended June 30

                                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       $1,392    $104,357     $62,953     $10,549
      Net change in non-cash
       working capital            (6,696)     17,974     (11,960)     (5,834)
                               ----------------------------------------------
                                  (5,304)    122,331      50,993       4,715
                               ----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending              (131)    (13,150)       (724)       (407)
      Disposition of investments  50,726           -           -           -
      Sale of short-term
       investments               127,701      17,027           -           -
      Other                            -           -           -         (46)
                               ----------------------------------------------
                                 178,296       3,877        (724)       (453)
                               ----------------------------------------------

                               ----------------------------------------------
    Cash provided by (used in)
     financing activities         (5,799)          -           -      (2,000)
                               ----------------------------------------------
    Foreign exchange change on
     cash held in foreign
     currency                          -     (21,515)     (4,930)          -
                               ----------------------------------------------
    Intergroup funding
     (distributions)              64,999       1,643     (99,572)     (2,262)
                               ----------------------------------------------
    Increase (decrease) in
     cash                        232,192     106,336     (54,233)          -
    Cash:
      Beginning of period         39,899     159,195     119,260           -
                               ----------------------------------------------
      End of period              272,091     265,531      65,027           -
    Short-term investments        99,677           -           -           -
                               ----------------------------------------------
    Cash and short-term
     investments                $371,768    $265,531     $65,027         $ -
                               ----------------------------------------------


    2007 For the six months ended June 30

                                 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      $64,086         $ -    $243,337
      Net change in non-cash
       working capital             5,890           -        (626)
                                --------------------- -----------
                                  69,976           -     242,711
                                --------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending           (12,811)   (106,791)   (134,014)
      Disposition of investments       -           -      50,726
      Sale of short-term
       investments                (7,197)          -     137,531
    Other                              -           -         (46)
                                --------------------- -----------
                                 (20,008)   (106,791)     54,197
                                --------------------- -----------

                                --------------------- -----------
    Cash provided by (used in)
     financing activities           (850)     47,955      39,306
                                --------------------- -----------
    Foreign exchange change on
     cash held in foreign
     currency                     (6,136)     (1,468)    (34,049)
                                --------------------- -----------
    Intergroup funding
     (distributions)             (26,174)     61,366           -
                                --------------------- -----------
    Increase (decrease) in
     cash                         16,808       1,062     302,165
    Cash:
      Beginning of period         33,972      32,284     384,610
                                --------------------- -----------
      End of period               50,780      33,346     686,775
    Short-term investments        16,552           -     116,229
                                --------------------- -----------
    Cash and short-term
     investments                 $67,332     $33,346    $803,004
                                --------------------- -----------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2008 For the three months ended June 30

                                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         $699     $33,041     $22,192     $10,218
      Net change in non-cash
       working capital            13,829      (2,250)     (2,826)     (2,124)
                               ----------------------------------------------
                                  14,528      30,791      19,366       8,094
                               ----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending               (18)    (11,372)     (1,599)        (32)
      Purchase of short-term
       investments              (125,439)          -           -           -
      Spending on Petaquilla      (7,846)          -           -           -
                               ----------------------------------------------
                                (133,303)    (11,372)     (1,599)        (32)
                               ----------------------------------------------

                               ----------------------------------------------
    Cash provided by (used in)
     financing activities         45,784           -      (1,850)          -
                               ----------------------------------------------
    Foreign exchange change on
     cash held in foreign
     currency                          -      (2,255)     (6,844)          -
                               ----------------------------------------------
    Intergroup funding
     (distributions)             225,967    (182,259)    (91,545)     (8,062)
                               ----------------------------------------------
    Increase (decrease) in
     cash                        152,976    (165,095)    (82,472)          -
    Cash:
      Beginning of period        346,198     312,948     151,721           -
                               ----------------------------------------------
      End of period              499,174     147,853      69,249           -
    Short-term investments       143,333           -           -           -
                               ----------------------------------------------

    Cash and short-term
     investments                $642,507    $147,853     $69,249         $ -
                               ----------------------------------------------


    2008 For the three months ended June 30

                                 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      $28,131         $ -     $94,281
      Net change in non-cash
       working capital            13,887           -      20,516
                                --------------------- -----------
                                  42,018           -     114,797
                                --------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending           (10,892)    (97,115)   (121,028)
      Purchase of short-term
       investments                     -           -    (125,439)
      Spending on Petaquilla           -           -      (7,846)
                                --------------------- -----------
                                 (10,892)    (97,115)   (254,313)
                                --------------------- -----------

                                --------------------- -----------
    Cash provided by (used in)
     financing activities             (1)     72,492     116,425
                                --------------------- -----------
    Foreign exchange change on
     cash held in foreign
     currency                       (165)       (203)     (9,467)
                                --------------------- -----------
    Intergroup funding
     (distributions)             (41,097)     96,996           -
                                --------------------- -----------
    Increase (decrease) in
     cash                        (10,137)     72,170     (32,558)
    Cash:
      Beginning of period         44,943      32,340     888,150
                                --------------------- -----------
      End of period               34,806     104,510     855,592
    Short-term investments             -           -     143,333
                                --------------------- -----------
    Cash and short-term
     investments                 $34,806    $104,510    $998,925
                                --------------------- -----------


    2007 For the three months ended June 30

                                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      ($2,577)    $53,115     $36,430      $5,924
      Net change in non-cash
       working capital               872       9,626     (25,933)     (1,694)
                               ----------------------------------------------
                                 ($1,705)     62,741      10,497       4,230
                               ----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending              (107)     (5,818)       (440)       (241)
      Disposition of investments  50,726           -           -           -
      Sale (purchase) of short-
       term investments           35,876        (549)          -           -
                               ----------------------------------------------
                                  86,495      (6,367)       (440)       (241)
                               ----------------------------------------------

                               ----------------------------------------------
    Cash provided by (used in)
     financing activities         (5,464)          -           -      (1,000)
                               ----------------------------------------------
    Foreign exchange change on
     cash held in foreign
     currency                          -     (19,024)     (5,519)          -
                               ----------------------------------------------
    Intergroup funding
     (distributions)              71,419       2,312     (94,874)     (2,989)
                               ----------------------------------------------
    Increase (decrease) in
     cash                        150,745      39,662     (90,336)          -
    Cash:
      Beginning of period        121,346     225,869     155,363           -
                               ----------------------------------------------
      End of period              272,091     265,531      65,027           -
    Short-term investments        99,677           -           -           -
                               ----------------------------------------------
    Cash and short-term
     investments                $371,768    $265,531     $65,027         $ -
                               ----------------------------------------------


    2007 For the three months ended June 30

                                 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      $40,551         $ -    $133,443
      Net change in non-cash
       working capital            21,417           -       4,288
                                --------------------- -----------
                                  61,968           -     137,731
                                --------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending            (6,348)    (69,125)    (82,079)
      Disposition of investments       -           -      50,726
      Sale (purchase) of short-
       term investments          (17,972)          -      17,355
                                --------------------- -----------
                                 (24,320)    (69,125)    (13,998)
                                --------------------- -----------

                                --------------------- -----------
    Cash provided by (used in)
     financing activities             27      38,383      31,946
                                --------------------- -----------
    Foreign exchange change on
     cash held in foreign
     currency                     (5,653)     (1,344)    (31,540)
                                --------------------- -----------
    Intergroup funding
     (distributions)             (26,174)     50,306           -
                                --------------------- -----------
    Increase (decrease) in
     cash                          5,848      18,220     124,139
    Cash:
      Beginning of period         44,932      15,126     562,636
                                --------------------- -----------
      End of period               50,780      33,346     686,775
    Short-term investments        16,552           -     116,229
                                --------------------- -----------
    Cash and short-term
     investments                 $67,332     $33,346    $803,004
                                --------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of retained earnings
    (unaudited)

                                  Three Months Ended       Six Months Ended
    (thousands of Canadian              June 30                 June 30
     dollars)                       2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Retained earnings,
     beginning of period,
     as previously reported   $1,181,436    $770,082  $1,076,958    $669,004

    Adjustment for inventory
     (note 2)                          -           -      (2,196)          -
                              ----------------------- -----------------------
    Retained earnings,
     restated                  1,181,436     770,082   1,074,762     669,004

    Net income                    67,705     138,050     174,379     239,128

    Dividends on common
     shares                       (4,828)     (4,827)     (4,828)     (4,827)
    ------------------------------------------------- -----------------------
    Retained earnings, end
     of period                $1,244,313    $903,305  $1,244,313    $903,305
    ------------------------------------------------- -----------------------
    (see accompanying notes)



    Consolidated statements of comprehensive income
    (unaudited)

                                  Three Months Ended       Six Months Ended
    (thousands of Canadian              June 30                 June 30
     dollars)                       2008        2007        2008        2007
    ------------------------------------------------- -----------------------

    Net income                   $67,705    $138,050    $174,379    $239,128
                              ----------------------- -----------------------

    Other comprehensive income
     (loss) for the period(1):

      Changes in fair value of
       gold forward sales
       contracts                   2,351       7,745      (7,283)     10,894

      Changes in fair value of
       interest rate swap
       contracts                   3,047          14         118        (120)

      Changes in fair value of
       foreign exchange forward
       contracts                    (558)       (530)      7,054         291

      Changes in fair value of
       investments                 4,360       2,408      (1,746)     19,308

      Currency translation
       adjustments               (10,883)    (54,960)     64,486     (58,203)

    Reclassification to net
     income of gains/losses
     realized:

      Gain on sale of investment       -     (11,730)       (256)    (11,730)

      Troilus gold hedge loss      6,721           -      13,718           -

      Ok Tedi gold hedge loss          -           -       1,013           -

      Foreign exchange loss on
       reduction of net investment
       in self-sustaining foreign
       operations (note 13)       14,870           -      20,384           -
                              ----------------------- -----------------------
                                  19,908     (57,053)     97,488     (39,560)
                              ----------------------- -----------------------

    Comprehensive income         $87,613     $80,997    $271,867    $199,568
    ------------------------------------------------- -----------------------
    (see accompanying notes)

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



    INMET MINING CORPORATION
    Notes to the consolidated financial statements

    1.  Significant accounting policies

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

    2.  Changes in accounting policies

        Effective January 1, 2008, we adopted CICA Handbook section 3031 -
        Inventories on a prospective basis. This Section requires inventory
        to be recorded at the lower of cost or net realizable value. 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.

        As a result, certain administrative and other costs that were
        previously included in the cost of inventory are now expensed as
        incurred. Metal inventory and materials and supplies are measured at
        the lower of weighted average cost and net realizable value.

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

        -  decreased opening 2008 inventory by $5.2 million
        -  increased opening 2008 property, plant and equipment by
           $2.4 million
        -  decreased opening 2008 future income tax liability by $0.6 million
        -  decreased opening 2008 retained earnings by $2.2 million.

    3.  Recently issued accounting pronouncement

        Section 3064 - Goodwill and intangible assets

        This section establishes standards for the recognition, measurement,
        presentation and disclosure of goodwill subsequent to its initial
        recognition and of intangible assets. This section replaces
        Section 3062, Goodwill and Other Intangible Assets and Section 3450,
        Research and Development Costs. Various changes have been made to
        other sections of the CICA Handbook for consistency purposes. It
        provides guidance for the recognition of internally developed
        intangible assets and ensuring consistent treatment of all intangible
        assets, whether separately acquired or internally developed.
        Standards concerning goodwill are unchanged from the standards
        included in the previous section. This section will become effective
        for us beginning on January 1, 2009. We are currently assessing the
        impact this change in accounting policy 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 six months ended June 30, 2008
        ---------------------------------------------------------------------

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

        Accounts receivable             $8,832  $(13,805)   $9,362   $(5,113)
        Inventories                          -    (3,180)     (714)   (2,320)
        Accounts payable and
         accrued liabilities           (10,271)    1,966       (80)     (467)
        Taxes                            3,138   (13,255)   (4,270)        -
        Other                               48       110         -      (421)
        ---------------------------------------------------------------------
                                        $1,747  $(28,164)   $4,298   $(8,321)
        ---------------------------------------------------------------------

        For the six months ended June 30, 2008
        -----------------------------------------------------------
                                                     Las
        (thousands)                    Ok Tedi    Cruces     Total
        -----------------------------------------------------------

        Accounts receivable             $1,476       $ -      $752
        Inventories                     (1,502)        -    (7,716)
        Accounts payable and
         accrued liabilities            (4,232)        -   (13,084)
        Taxes                           18,386         -     3,999
        Other                             (194)        -      (457)
        -----------------------------------------------------------
                                       $13,934       $ -  $(16,506)
        -----------------------------------------------------------


        For the six months ended June 30, 2007
        ---------------------------------------------------------------------

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

        Accounts receivable            $(1,713)  $18,960   $(5,602)  $(5,373)
        Inventories                          -       885      (259)      240
        Accounts payable and
         accrued liabilities            (1,896)  (10,205)    2,345      (701)
        Taxes                           (3,090)    8,357    (8,444)        -
        Other                                3       (23)        -         -
        ---------------------------------------------------------------------
                                       $(6,696)  $17,974  $(11,960)  $(5,834)
        ---------------------------------------------------------------------

        For the six months ended June 30, 2007
        -----------------------------------------------------------
                                                     Las
        (thousands)                    Ok Tedi    Cruces     Total
        -----------------------------------------------------------

        Accounts receivable           $(14,916)      $ -   $(8,644)
        Inventories                      1,611         -     2,477
        Accounts payable and
         accrued liabilities            (5,685)        -   (16,142)
        Taxes                           25,404         -    22,227
        Other                             (524)        -      (544)
        -----------------------------------------------------------
                                        $5,890       $ -     $(626)
        -----------------------------------------------------------


        For the three months ended June 30, 2008
        ---------------------------------------------------------------------

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

        Accounts receivable             $8,817   $19,569   $(2,937)  $(2,022)
        Inventories                          -      (433)      750       367
        Accounts payable and
         accrued liabilities             1,533     3,555     1,395       (48)
        Taxes                            3,422   (24,931)   (2,034)        -
        Other                               52       (10)        -      (421)
        ---------------------------------------------------------------------
                                       $13,824   $(2,250)  $(2,826)  $(2,124)
        ---------------------------------------------------------------------

        For the three months ended June 30, 2008
        -----------------------------------------------------------
                                                     Las
        (thousands)                    Ok Tedi    Cruces     Total
        -----------------------------------------------------------

        Accounts receivable            $10,537       $ -   $33,964
        Inventories                     (1,602)        -      (918)
        Accounts payable and
         accrued liabilities             1,305         -     7,740
        Taxes                            2,705         -   (20,838)
        Other                              947         -       568
        -----------------------------------------------------------
                                       $13,892       $ -   $20,516
        -----------------------------------------------------------


        For the three months ended June 30, 2007
        ---------------------------------------------------------------------

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

        Accounts receivable              $(807)   $4,365  $(18,453)   $1,236
        Inventories                          -    (1,682)      573    (1,949)
        Accounts payable and
         accrued liabilities             1,362     3,718     3,706      (981)
        Taxes                              316     3,254   (11,759)        -
        Other                                1       (29)        -         -
        ---------------------------------------------------------------------
                                          $872    $9,626  $(25,933)  $(1,694)
        ---------------------------------------------------------------------

        For the three months ended June 30, 2007
        -----------------------------------------------------------
                                                     Las
        (thousands)                    Ok Tedi    Cruces     Total
        -----------------------------------------------------------

        Accounts receivable             $5,786       $ -   $(7,873)
        Inventories                      2,285         -      (773)
        Accounts payable and
         accrued liabilities             6,064         -    13,869
        Taxes                            7,795         -      (394)
        Other                             (513)        -      (541)
        -----------------------------------------------------------
                                       $21,417       $ -    $4,288
        -----------------------------------------------------------

    5.  Cash and short-term investments

        At June 30, our cash and short-term investments are held in:

        ---------------------------------------------------------------------
                                                       June 30   December 31
        (thousands)                                       2008          2007
        ---------------------------------------------------------------------
        Cash:
        Liquidity funds                               $187,134      $424,390
        Term deposits                                   38,887        22,186
        Corporate                                      254,537             -
        Overnight deposits                              15,888        50,822
        Bankers' acceptances                           170,376             -
        Money market funds                              97,209        18,531
        Other                                           91,561         7,018
                                                   --------------------------
                                                       855,592       522,947
        Short-term investments:
        Federal and crown corporation investments       29,842       317,876
        Provincial short-term notes                     28,971             -
        Corporate                                       84,520             -
        ---------------------------------------------------------------------
                                                       143,333       317,876
        ---------------------------------------------------------------------
        Total cash and short-term investments         $998,925      $840,823
        ---------------------------------------------------------------------

    6.  Restricted cash

        The table below shows our restricted cash balances.

        ---------------------------------------------------------------------
                                                       June 30   December 31
        (thousands)                                       2008          2007
        ---------------------------------------------------------------------
        Collateralized cash for letter of credit
         facility - Corporate                          $15,994       $14,444
        In trust for Ok Tedi reclamation                13,292        11,836
        Collateralized cash for letters of
         credit - Las Cruces                            24,189        12,494
        Collateralized cash for Pyhasalmi reclamation    1,926             -
        ---------------------------------------------------------------------
                                                        55,401        38,774
        Less current portion:
          Collateralized cash for letters of
           credit - Las Cruces                          (1,265)       (1,569)
        ---------------------------------------------------------------------
                                                       $54,136       $37,205
        ---------------------------------------------------------------------

        Cash collateralized letters of credit for Las Cruces are for the
        following:
        -  (euro) 3.1 million to secure payments that will ultimately be for
           the use of an electrical substation
        -  (euro) 2.5 million to secure payments to local townships that it
           will owe once certain licences are granted
        -  (euro) 5 million for a labour bond previously issued under
           Tranche A of its credit facility. During the second quarter,
           Las Cruces closed this portion of the credit facility and has
           secured the labour bond with cash. The labour bond is fixed at
           (euro) 5 million for the life of the mine.
        -  (euro) 4.5 million for dewatering and other purposes.

    7.  Investments

        The table below shows our investments.

        ---------------------------------------------------------------------
                                                       June 30   December 31
        (thousands)                                       2008          2007
        ---------------------------------------------------------------------
        Available-for-sale equity securities:
          Premier Gold Mines Ltd.                      $24,381       $22,680
          Other                                          4,171         9,586
        ---------------------------------------------------------------------
                                                        28,552        32,266
        Equity accounted investment:
          Minera Petaquilla S.A.                        20,480             -
        ---------------------------------------------------------------------
                                                       $49,032       $32,266
        ---------------------------------------------------------------------

        Our investment in Minera Petaquilla S.A. of $16.7 million was
        included in Other assets at December 31, 2007. During the second
        quarter, Inmet invested $3.8 million in Minera Petaquilla S.A.

    8.  Derivatives

        The table below shows the fair value of our derivatives.

        ---------------------------------------------------------------------
                                                       June 30   December 31
                                                          2008          2007
        (thousands)                                (fair value)  (fair value)
        ---------------------------------------------------------------------
        Derivative asset:
          Las Cruces currency forward sale                 $ -       $33,565
        ---------------------------------------------------------------------
        Derivative liabilities:
          Troilus gold forward sales                   $17,381       $26,889
          Ok Tedi gold and copper forward sales         10,981         9,034
          Las Cruces interest rate swaps                 8,096         8,037
        ---------------------------------------------------------------------
                                                       $36,458       $43,960
        ---------------------------------------------------------------------

        On June 30, 2008, Las Cruces' currency forward sale settled and
        Las Cruces received (euro) 32.6 million. As this hedge was highly
        effective from inception to the date of settlement, we continue to
        apply hedge accounting for this contract. The gain on settlement
        continues to be deferred in Accumulated other comprehensive income
        (note 12) and will be recognized in income as a reduction of interest
        expense over the life of Las Cruces' credit facility - Tranche A.

    9.  Long-term debt

        ---------------------------------------------------------------------
                                                       June 30   December 31
        (thousands)                                       2008          2007
        ---------------------------------------------------------------------
        Credit facility - Tranche A                   $222,384      $125,776
                        - Tranche B                     67,378        34,656
        Promissory note                                 18,347        16,267
        Loans from non-controlling shareholder         112,092        70,589
        ---------------------------------------------------------------------
                                                       420,201       247,288
        Less current portion:
        Credit facility - Tranche B                    (14,403)      (12,971)
        ---------------------------------------------------------------------
                                                      $405,798      $234,317
        ---------------------------------------------------------------------

        Credit facility

        This quarter, Las Cruces borrowed an additional (euro) 26 million
        (2008 year to date - (euro) 52 million) under Tranche A, the
        US $240 million senior secured facility, and an additional
        (euro) 10 million (2008 year to date - (euro) 18 million) under
        Tranche B, the (euro) 69 million senior secured bridge financing
        facility. The credit facility loans approximate fair value because
        the loans accrue interest at prevailing market rates.

        On June 30, 2008, the Las Cruces credit facility - Tranche A was
        converted from a euro-denominated loan to a US $215 million loan.
        From July 1 forward, we will revalue the loan to euros (the
        functional currency of Las Cruces). Foreign exchange gains and losses
        on revaluations will be reflected in Investment and other income.

        Loans from non-controlling shareholder

        This quarter, Las Cruces received (euro) 36 million (2008 year to
        date - (euro) 70 million) of intercompany loan advances. These loans
        bear interest at EURIBOR plus 6.1 percent and are due to be repaid on
        February 25, 2020. The non-controlling portion of these loans,
        (euro) 70 million, is reflected in long-term debt at June 30, 2008.
        Loans from non-controlling shareholders approximate fair value
        because the loans accrue interest at prevailing market rates.

    10. Reclamation liabilities

        This quarter, we recognized additional liabilities of $4.3 million at
        Cayeli primarily as a result of cost escalation and $1.0 million at
        Las Cruces as a result of development activities that took place
        during the quarter.

    11. Commitments

        Our operations have the following capital commitments as at June 30,
        2008:

        -  Ok Tedi has committed approximately $28.9 million (our
           proportionate share is $5.2 million) to capital expenditures for
           the mine waste management project.

        -  Las Cruces has committed $38.5 million to engineering, procurement
           and construction management and additional construction work
           related to the development of the mine and process plant.

        -  Cayeli has committed $3.2 million for mine and mill equipment.

        -  Cerattepe has committed approximately $5.2 million for mine and
           mill equipment.

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

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

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

        (thousands)
        ---------------------------------------------------------------------
        Unrealized losses on gold forward sales contracts
         (net of tax of $2,169)                                     $(31,951)
        Deferred Troilus gold hedges                                   5,444
        Unrealized gains on foreign exchange forward contract(1)      17,067
        Unrealized losses on interest rate swap contracts(2)          (4,097)
        Unrealized gains on investments (net of tax of $2,951)        14,506
        Currency translation adjustment                              (84,705)
        ---------------------------------------------------------------------
        AOCI, December 31, 2007                                     $(83,736)
        Other comprehensive income for the six months ending
         June 30, 2008                                                97,488
        ---------------------------------------------------------------------
        AOCI, June 30, 2008                                          $13,752
        ---------------------------------------------------------------------

        AOCI June 30, 2008 comprises:
        Unrealized losses on gold forward sales contracts
         (net of tax of $1,885)                                     $(21,781)
        Deferred Troilus gold hedges                                   2,722
        Unrealized gains on foreign exchange forward contract(3)      24,121
        Unrealized losses on interest rate swap contract(4)           (3,979)
        Unrealized gains on investments (net of tax of $2,516)        12,504
        Currency translation adjustment                                  165
        ---------------------------------------------------------------------
        AOCI, June 30, 2008                                          $13,752
        ---------------------------------------------------------------------

        1. Net of tax of $10,448 and non-controlling interest of $7,315.
        2. Net of tax of $2,510 and non-controlling interest of $1,756.
        3. Net of tax of $14,767 and non-controlling interest of $10,337.
        4. Net of tax of $2,438 and non-controlling interest of $1,705.

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

        ---------------------------------------------------------------------
                                                       June 30   December 31
        (thousands)                                       2008          2007
        ---------------------------------------------------------------------
        Pyhasalmi (euro functional currency)            $6,607       $(1,466)
        Las Cruces (euro functional currency)           34,027        (1,919)
        Cayeli (US dollar functional currency)         (27,557)      (65,822)
        Ok Tedi (US dollar functional currency)        (12,912)      (15,498)
        ---------------------------------------------------------------------
                                                          $165      $(84,705)
        ---------------------------------------------------------------------

        The US dollar to Canadian dollar exchange rate was $1.02 at June 30,
        2008 and $0.99 at December 31, 2007. The euro to Canadian dollar
        exchange rate was $1.61 at June 30, 2008 and $1.45 at December 31,
        2007.

    13. Investment and other income

        Investment and other income are summarized as follows:

        ---------------------------------------------------------------------
                                      Three months ended    Six months ended
                                                 June 30             June 30
        (thousands)                       2008      2007      2008      2007
        ---------------------------------------------------------------------
        Interest income                 $6,963    $7,378   $15,686   $14,394
        Foreign exchange gain (loss)   (18,573)   (9,400)  (11,715)   (9,545)
        Dividend and royalty income      1,504     1,000     1,504     2,000
        Gain on sale of Wolfden              -    11,730         -    11,730
        Other                           (1,252)    2,707    (2,079)    2,263
        ---------------------------------------------------------------------
                                      $(11,358)  $13,415    $3,396   $20,842
        ---------------------------------------------------------------------

        Foreign exchange

        We recorded a net foreign exchange loss of $18.6 million this
        quarter. We recognized a deferred foreign exchange loss of
        $14.7 million when dividends were received from Cayeli, Pyhasalmi and
        Ok Tedi, and recognized a loss of $3.7 million because we revalued
        some of our foreign currency denominated accounts and cash balances.

        For the year, we recognized $20.4 million in foreign exchange losses
        from dividends received.

        Gain on sale of Wolfden

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

    14. Income tax expense (recovery)

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

    For the six months ended June 30, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes   $5,534   $28,472   $12,536   $46,591       $ -   $93,133
    Future
     income taxes        -      (693)      (88)   (3,441)      166    (4,056)
    -------------------------------------------------------------------------
                    $5,534   $27,779   $12,448   $43,150      $166   $89,077
    -------------------------------------------------------------------------

    For the six months ended June 30, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes     $771   $26,072   $17,246   $44,176       $ -   $88,265
    Future
     income taxes        -     1,362        40    (6,268)      486    (4,380)
    -------------------------------------------------------------------------
                      $771   $27,434   $17,286   $37,908      $486   $83,885
    -------------------------------------------------------------------------

    For the three months ended June 30, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes   $5,534    $9,922    $6,564   $29,286       $ -   $51,306
    Future
     income taxes        -    (1,267)     (139)   (5,483)      (84)   (6,973)
    -------------------------------------------------------------------------
                    $5,534    $8,655    $6,425   $23,803      $(84)  $44,333
    -------------------------------------------------------------------------

    For the three months ended June 30, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current
     income taxes     $385   $14,716   $10,381   $25,672       $ -   $51,154
    Future
     income taxes        -      (953)       (2)   (2,381)      691    (2,645)
    -------------------------------------------------------------------------
                      $385   $13,763   $10,379   $23,291      $691   $48,509
    -------------------------------------------------------------------------

    15. Net income per share

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

        ---------------------------------------------------------------------
                                      Three months ended    Six months ended
                                                 June 30             June 30
        (thousands)                       2008      2007      2008      2007
        ---------------------------------------------------------------------
        Net income available to
         common shareholders           $67,705  $138,050  $174,379  $239,128

        (thousands)
        ---------------------------------------------------------------------
        Weighted average common
         shares outstanding             48,282    48,278    48,282    48,278
        Plus incremental shares from
         assumed conversions deferred
         share units                        78        78        78        78
        ---------------------------------------------------------------------
        Diluted weighted average
         common shares outstanding      48,360    48,356    48,360    48,356
        ---------------------------------------------------------------------

        (Canadian dollars per share)
        ---------------------------------------------------------------------
        Basic net income per
         common share                    $1.40     $2.86     $3.61     $4.95
        Dilutive effect from assumed
         conversions of deferred
         share units per common share        -         -         -         -
        ---------------------------------------------------------------------
        Diluted net income per
         common share                    $1.40     $2.86     $3.61     $4.95
        ---------------------------------------------------------------------

    16. Subsequent event

        On July 6, 2008, Inmet announced its intention to make an all cash
        offer for all of the outstanding shares of Petaquilla Copper Ltd.
        ("PTC") at a price of $2.00 per share. On July 28, 2008, Inmet mailed
        its offer-to-purchase to PTC shareholders. The offer is subject to
        certain conditions, including receipt of all necessary regulatory
        clearance and acceptance of the offer by PTC shareholders owning not
        less than 50.1 percent of PTC common shares on a fully diluted basis.
        Following the completion of the offer, Inmet intends but is not
        required to take steps to acquire any PTC common shares that remain
        outstanding.
    





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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