Inmet announces third quarter 2008 earnings of $1.55 per share



    All amounts in Canadian dollars unless indicated otherwise

    TORONTO, Oct. 28 /CNW/ -

    
    Highlights

    -   Lower net income per share

        Net income per share this quarter was lower than in the third quarter
        of 2007 because zinc and copper prices were lower, costs were higher,
        and we recognized foreign exchange losses on the translation of Las
        Cruces' US dollar denominated credit facility.

    -   Higher production

        This quarter, copper and gold production was higher than the same
        quarter in 2007, zinc production was lower, and pyrite production was
        nearly four times higher.

    -   Production outlook

        We expect to produce 82,400 tonnes of copper, 74,000 tonnes of zinc
        and 248,200 ounces of gold for the year. This is an overall reduction
        from our original objectives because of the delay in the start of
        production at Las Cruces, change in mine plans at Cayeli and
        Pyhdsalmi, and lower throughput at Troilus and Ok Tedi. Pyrite
        projections are 616,000 tonnes because of the strong demand for this
        product in the third quarter.

    -   Lower operating cash flow per share

        Operating cash flow this quarter was $98 million or $2.03 per common
        share compared to $108 million or $2.24 per share in the third
        quarter of 2007.

    -   Las Cruces awaiting regulator consent to resume mining

        The temporary water treatment facilities are in place and working
        effectively at Las Cruces, but we have to wait for the suspension of
        the dewatering system permit to be lifted before we can resume mining
        activities. Construction is essentially completed and commissioning
        has commenced with turning of the mills. The commissioning will take
        several months before copper production commences, which we now
        expect will be in the first quarter of 2009.

    -   Controlling ownership in Petaquilla

        On September 19, we acquired 95 percent of the outstanding common
        shares of Petaquilla Copper Ltd. (PTC) for $2.20 per share. PTC has a
        26 percent stake in Minera Petaquilla SA, the Panamanian company that
        holds the project concession. We now control 74 percent of the
        project.

    -   Court rules against Cerattepe operating licenses

        On October 24, we learned that the Rize Administrative Court ruled to
        cancel the Cerattepe operating licences. We will review the reasons
        for the decision once we receive it and will discuss with the Turkish
        Ministry of Energy and Natural Resources an appeal to the Supreme
        Administrative Court of Turkey. We will continue to keep the project
        on care and maintenance and also suspend all work on the project and
        re-assess our development plans in light of the court decision.

    -   Dividend declaration

        The board of directors has declared an eligible dividend of $0.10 per
        common share payable on December 15, 2008 to shareholders of record
        as at November 30, 2008.


    Key financial data
    -------------------------------------------------------------------------
                                             three months ended September 30
                                                2008        2007      change
    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS
    (thousands, except per share amounts)

    Sales
    Gross sales                             $247,495    $272,293         -9%

    Net income
    Net income                               $75,057    $114,836        -35%
    Net income per share                       $1.55       $2.38        -35%

    Cash flow
    Cash flow provided by operating
     activities                              $97,805    $108,315        -10%
    Cash flow provided by operating
     activities per share(1)                   $2.03       $2.24        -10%

    Capital spending                         $94,371    $117,989        -20%
    -------------------------------------------------------------------------

    OPERATING HIGHLIGHTS
    Production(2)
      Copper (tonnes)                         20,800      19,000         +9%
      Zinc (tonnes)                           14,600      20,400        -28%
      Gold (ounces)                           63,200      55,400        +14%
    Cash costs
      Copper (US $ per pound)(3)               $0.60       $0.27       +122%
      Gold (US $ per ounce)(3)                  $432        $367        +18%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                              nine months ended September 30
                                                2008        2007      change
    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS
    (thousands, except per share amounts)

    Sales
    Gross sales                             $805,239    $878,925         -8%

    Net income
    Net income                              $249,436    $353,964        -30%
    Net income per share                       $5.17       $7.33        -30%

    Cash flow
    Cash flow provided by operating
     activities                             $293,513    $351,026        -16%
    Cash flow provided by operating
     activities per share(1)                   $6.08       $7.27        -16%

    Capital spending                        $326,813    $252,003        +30%
    -------------------------------------------------------------------------
    OPERATING HIGHLIGHTS
    Production(2)
      Copper (tonnes)                         59,400      57,600         +3%
      Zinc (tonnes)                           55,900      59,100         -5%
      Gold (ounces)                          179,400     166,200         +8%
    Cash costs
      Copper (US $ per pound)(3)               $0.51       $0.19       +168%
      Gold (US $ per ounce)(3)                  $395        $384         +3%
    -------------------------------------------------------------------------

                                                         as at         as at
                                                  September 30   December 31
    FINANCIAL CONDITION                                   2008          2007
                                             --------------------------------
    Current ratio                                     3.1 to 1      5.6 to 1
    Gross debt to total equity(4)                          23%           18%
    Net working capital balance (millions)                $575          $855
    Cash balance (millions)                               $636          $841
    Shareholders' equity (millions)                     $1,714        $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
        30, 31 and 32.
    (4) Gross debt includes long-term debt and current portion of long-term
        debt.

    Current market environment

    Since September 30, there has been a further general weakening in the
economic environment and a significant decline in base metal prices. We
believe we are in a strong financial position with a cash balance at September
30 of $636 million to sustain and grow our business. We will continue to
ensure efficiencies at our operations and to carefully manage capital budgets
during these uncertain times.


    Third 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........................................ 27
    Accounting changes................................... 29
    Supplementary financial information.................. 30
    Quarterly review..................................... 33
    Consolidated financial statements.................... 34
    

    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 September 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 share amounts)    three months ended September 30
                                                2008        2007      change
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS(1)
    Cayeli                                   $32,004     $63,578        -50%
    Pyhasalmi                                 29,660      34,101        -13%
    Troilus                                    6,488       2,953       +120%
    Ok Tedi                                   33,974      48,927        -31%
    Other                                       (476)       (619)       -23%
    -------------------------------------------------------------------------
                                             101,650     148,940        -32%
    -------------------------------------------------------------------------
    DEVELOPMENT AND EXPLORATION
    Corporate development and exploration     (3,548)     (2,475)       +43%
    -------------------------------------------------------------------------
    CORPORATE COSTS
    General and administration                (3,411)     (2,674)
    Investment and other income               (5,467)      9,224
    Interest expense                            (476)       (424)
    Income and capital taxes                 (17,504)    (37,922)
    Non-controlling interest                   3,813         167
    -------------------------------------------------------------------------
                                             (23,045)    (31,629)       -27%
    -------------------------------------------------------------------------
    Net income before other items            $75,057    $114,836        -35%
    Gain on sale of Wolfden                        -           -           -
    -------------------------------------------------------------------------
    Net income                               $75,057    $114,836        -35%
    -------------------------------------------------------------------------
    Basic net income per share                 $1.55       $2.38        -35%
    -------------------------------------------------------------------------
    Diluted net income per share               $1.55       $2.37        -35%
    -------------------------------------------------------------------------
    Weighted average shares outstanding       48,282      48,278           -
    -------------------------------------------------------------------------

    Our financial results
    -------------------------------------------------------------------------
    (thousands, except per share amounts)     nine months ended September 30
                                                2008        2007      change
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS(1)
    Cayeli                                  $130,921    $187,754        -30%
    Pyhasalmi                                 84,886     110,433        -23%
    Troilus                                   22,633       9,483       +139%
    Ok Tedi                                  137,548     154,333        -11%
    Other                                     (1,464)     (1,462)          -
    -------------------------------------------------------------------------
                                             374,524     460,541        -19%
    -------------------------------------------------------------------------
    DEVELOPMENT AND EXPLORATION
    Corporate development and exploration     (8,649)     (5,573)       +55%
    -------------------------------------------------------------------------
    CORPORATE COSTS
    General and administration                (9,849)     (7,676)
    Investment and other income               (2,071)     18,756
    Interest expense                          (1,394)     (1,286)
    Income and capital taxes                (106,831)   (122,355)
    Non-controlling interest                   3,706        (173)
    -------------------------------------------------------------------------
                                            (116,439)   (112,734)         +3%
    -------------------------------------------------------------------------
    Net income before other items           $249,436    $342,234         -27%
    Gain on sale of Wolfden                        -      11,730        -100%
    -------------------------------------------------------------------------
    Net income                              $249,436    $353,964         -30%
    -------------------------------------------------------------------------
    Basic net income per share                 $5.17       $7.33         -29%
    -------------------------------------------------------------------------
    Diluted net income per share               $5.16       $7.32         -30%
    -------------------------------------------------------------------------
    Weighted average shares outstanding       48,282      48,278           -
    -------------------------------------------------------------------------
    (1) Gross sales less smelter processing charges and freight, cost of
        sales, depreciation and provisions for mine rehabilitation.



    Key changes this year
    -------------------------------------------------------------------------
                                               three          nine
                                              months        months
                                               ended         ended       see
    (millions)                          September 30  September 30      page
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS
    Sales
    Lower metal prices denominated
     in Canadian dollars                        $(37)         $(56)        5
    Higher (lower) sales volumes                  15           (16)        8
    Costs
    Lower smelter processing charges               4            30         9
    Higher freight costs                          (8)          (12)        9
    Higher operating costs, including
     costs that vary with income and
     cash flows                                  (19)          (28)       10
    Other                                         (2)           (4)
    -------------------------------------------------------------------------
    Decrease in earnings from
     operations, compared to 2007                (47)          (86)

    CORPORATE COSTS
    Change in taxes from change in
     income                                       20            13        11
    Decrease in tax rates                          1             3        11
    Foreign exchange losses                      (12)          (14)       11
    Gain on sale of Wolfden in 2007                -           (12)       11
    Lower interest income                         (5)           (4)       11
    Other                                          3            (5)
    -------------------------------------------------------------------------
    Decrease in net income, compared
     to 2007                                    $(40)        $(105)
    -------------------------------------------------------------------------

    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 September 30   nine months ended September 30
                      2008      2007 Change            2008      2007 Change
    US dollar
     metal prices
    -------------------------------------------------------------------------
      Copper (per
       pound)     US $2.66  US $3.62   -27%        US $3.52  US $3.37    +4%
      Zinc (per
       pound)     US $0.73  US $1.37   -47%        US $0.93  US $1.50   -38%
      Gold (per
       ounce)      US $715   US $580   +23%         US $736   US $571   +29%
    -------------------------------------------------------------------------
    Canadian
     dollar metal
     prices
      Copper (per
       pound)      C$ 2.77   C$ 3.76   -26%         C$ 3.59   C$ 3.74    -4%
      Zinc (per
       pound)      C$ 0.76   C$ 1.42   -46%         C$ 0.95   C$ 1.67   -43%
      Gold (per
       ounce)       C$ 744    C$ 603   +23%          C$ 751    C$ 634   +18%
    -------------------------------------------------------------------------
    

    Commodity prices have declined substantially in the third quarter. Copper
prices were steady for the first half of the year and then in the third
quarter, it had the largest drop among base metals coming down from US $3.90
per pound on July 1 to US $2.91 per pound on September 30. September saw the
largest decline where the price dropped US $0.50 per pound. Zinc prices came
down about US $0.14 per pound in the quarter, but they had already been
declining gradually from January 1. Conversely gold was viewed as a safe haven
amid the financial crisis with the price increasing 20 percent during the
quarter. The price of sulphur, which is closely linked to pyrite prices, was
also strong during the quarter. Sulphur prices have tapered off dramatically
in October.

    Exchange rates

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

    
    -------------------------------------------------------------------------
            three months ended September 30   nine months ended September 30
                      2008      2007 Change            2008      2007 Change
    -------------------------------------------------------------------------
    Exchange
     rates
    1 US$ to C$      $1.04     $1.04      -           $1.02     $1.11    -8%
    1 euro to C$     $1.56     $1.44    +8%           $1.55     $1.48    +5%
    1 euro to US$    $1.51     $1.37   +10%           $1.52     $1.34   +13%
    -------------------------------------------------------------------------
    

    Sales are affected by the conversion of US dollar revenue to Canadian
dollars. Foreign exchange was not a factor when looking at variances in sales
between the third quarter of 2007 and 2008 because the US to Canadian exchange
rate was consistent between these periods. On average for the nine months, the
US dollar was weaker in 2008 than 2007, which reduced sales by $67 million.
    Net income was $80 million less for the year and $17 million less for the
quarter because of fluctuations in the value of the US dollar relative to the
Canadian dollar and euro.

    
    Changes to the US to Canadian dollar exchange rate and US dollar to euro
    exchange rate affect our net income in three ways:
    -   US dollar sales translated to Canadian dollar
    -   Cayeli and Ok Tedi record all costs in US dollars which we translate
        to Canadian dollars
    -   we recognize deferred foreign exchange gains or losses when we
        repatriate cash from Cayeli and Ok Tedi (we record this in Investment
        and other income). Foreign exchange losses for the year to date
        include a deferred foreign exchange loss of $26 million when we
        repatriated cash from Cayeli and Ok Tedi. No cash was repatriated
        this quarter.
    -   we revaluate foreign currency balances such as the US dollar debt in
        Las Cruces (recorded in Investment and other income). Pre-tax net
        income this quarter and year to September was down $17 million
        because we recognized a foreign exchange loss on the translation of
        the Las Cruces' US dollar credit facility.
    

    Net income was slightly lower between periods because costs we incurred
in euros were higher when we converted them to Canadian dollars.
    We recorded foreign exchange gains of $3 million year to date when we
revalued euro denominated cash and short-term intergroup receivables. This was
the result of a large change in the value of the euro relative to the Canadian
dollar during the nine month period. We also recognized deferred foreign
exchange gains of $6 million when we repatriated cash from Pyhasalmi. We
recorded both of these in Investment and other income. Foreign exchange gains
in the third quarter were minimal.

    Treatment charges down for copper and up for zinc

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

    
    -------------------------------------------------------------------------
            three months ended September 30   nine months ended September 30
                      2008      2007 Change            2008      2007 Change
    -------------------------------------------------------------------------
    Treatment charges
      Copper (per
       dry metric
       tonne of
       concentrate)    $41       $51   -20%             $44       $63   -30%
      Zinc (per dry
       metric tonne
       of
       concentrate)   $341      $315    +8%            $304      $268   +13%
    -------------------------------------------------------------------------
    Price
     participation
      Copper (per
       pound)        $0.06    $(0.02) +400%           $0.04     $0.12   -66%
      Zinc (per
       pound) (1)    $0.04    $(0.09) +144%          $(0.01)    $0.04  -125%
    -------------------------------------------------------------------------
    Freight charges
      Copper (per
       dry metric
       tonne of
       concentrate)    $58       $33   +76%             $53       $48   +10%
      Zinc (per dry
       metric tonne
       of
       concentrate)    $31       $25   +24%             $38       $31   +23%
    -------------------------------------------------------------------------
    (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. The quarterly price participation figures for zinc include
adjustments from the first half of the year because of the timing of when
annual zinc terms are finalized. Excluding the adjustments, price
participation for zinc would have been nil for the third quarter of 2008 and
the third quarter of 2007.

    
    Statutory tax rates down slightly

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

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

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

    EARNINGS FROM OPERATIONS

    Earnings from operations include the following:

    -------------------------------------------------------------------------
                                             three months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales                             $247,495    $272,293         -9%
    Smelter processing charges               (49,502)    (42,557)       +16%
    Cost of sales:
      Direct production costs                (84,628)    (67,520)       +26%
      Inventory changes                        2,179      (1,293)      +269%
      Provisions for mine rehabilitation
       and other non-cash charges             (2,499)     (3,244)       -23%
    Depreciation                             (11,395)     (8,739)       +30%
    -------------------------------------------------------------------------
    Earnings from operations                $101,650    $148,940        -32%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                              nine months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales                             $805,239    $878,925         -8%
    Smelter processing charges              (146,868)   (162,576)       -10%
    Cost of sales:
      Direct production costs               (244,238)   (213,934)       +14%
      Inventory changes                        3,375      (5,429)      -162%
      Provisions for mine rehabilitation
       and other non-cash charges            (13,224)    (10,252)       +29%
    Depreciation                             (29,760)    (26,193)       +14%
    -------------------------------------------------------------------------
    Earnings from operations                $374,524    $460,541        -19%
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                             three months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales by operation
      Cayeli                                 $78,780    $107,664        -27%
      Pyhasalmi                               67,694      60,427        +12%
      Troilus                                 35,438      24,970        +42%
      Ok Tedi (1)                             65,583      79,232        -17%
    -------------------------------------------------------------------------
                                            $247,495    $272,293         -9%
    -------------------------------------------------------------------------
    Gross sales by metal
      Copper                                $134,972    $174,338        -23%
      Zinc                                    29,115      54,983        -47%
      Gold                                    46,326      33,826        +37%
      Other                                   37,082       9,146       +305%
    -------------------------------------------------------------------------
                                            $247,495    $272,293         -9%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                              nine months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Gross sales by operation
      Cayeli                                $277,709    $337,606        -18%
      Pyhasalmi                              183,851     201,574         -9%
      Troilus                                104,860      81,061        +29%
      Ok Tedi(1)                             238,819     258,684         -8%
    -------------------------------------------------------------------------
                                            $805,239    $878,925         -8%
    -------------------------------------------------------------------------
    Gross sales by metal
      Copper                                $464,670    $506,718         -8%
      Zinc                                   130,106     227,467        -43%
      Gold                                   134,659     111,700        +21%
      Other                                   75,804      33,040       +129%
    -------------------------------------------------------------------------
                                            $805,239    $878,925         -8%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's sales.

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

    -------------------------------------------------------------------------
    (millions)                                    three months   nine months
                                                         ended         ended
                                                  September 30  September 30
    -------------------------------------------------------------------------
    Lower copper prices, denominated in C$                $(47)         $(20)
    Lower zinc prices, denominated in C$                   (23)          (96)
    Higher gold prices, denominated in C$                    9            22
    Higher pyrite prices, denominated in C$                 20            30
    Changes in other metal prices                            4             8
    Higher (lower) sales volumes                            12           (18)
    -------------------------------------------------------------------------
    Decrease in gross sales, compared to 2007             $(25)         $(74)
    -------------------------------------------------------------------------
    

    We record sales using the metal price we receive for sales that settle
during the reporting period. For sales that have not been settled, we use an
estimate based on the month we expect the sale to settle and the forward price
of the metal at the end of the reporting period. We recognize the difference
between our estimate and the final price we receive by adjusting our gross
sales in the period we settle the sale (finalization adjustment).
    We recorded $17 million in negative finalization adjustments in the third
quarter.

    
    At the end of this quarter, the following sales had not been settled:
    -   47 million pounds of copper provisionally priced at US $2.89 per
        pound
    -   32 million pounds of zinc provisionally priced at US $0.76 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.

    Overall, sales volumes were higher for the quarter

    -------------------------------------------------------------------------
                                     three months                nine months
                               ended September 30         ended September 30
                           2008     2007   change     2008     2007   change
    -------------------------------------------------------------------------
    Sales volumes
      Copper (tonnes)    22,000   21,000      +5%   59,200   61,900      -4%
      Zinc (tonnes)      17,000   17,900      -5%   62,500   62,800        -
      Gold (ounces)      61,100   55,500     +10%  178,100  176,400      +1%
      Pyrite (tonnes)   225,000  118,100     +91%  491,700  376,400     +31%
    -------------------------------------------------------------------------

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

    Production
    -------------------------------------------------------------------------
                        three months ended        nine months ended  revised
    Inmet's                   September 30             September 30 objective
     share(1)         2008     2007 change     2008     2007 change     2008
    -------------------------------------------------------------------------
    Copper (tonnes)
      Ok Tedi        7,300    6,900    +6%   21,400   21,700    -1%   29,800
      Cayeli         8,600    7,900    +9%   24,400   23,500    +4%   33,600
      Pyhasalmi      3,300    3,400    -3%    9,900   10,300    -4%   13,000
      Las Cruces         -        -      -        -        -      -        -
      Troilus        1,600      800  +100%    3,700    2,100   +76%    6,000
    -------------------------------------------------------------------------
                    20,800   19,000    +9%   59,400   57,600    +3%   82,400
    -------------------------------------------------------------------------
    Zinc (tonnes)
      Cayeli         8,900   12,300   -28%   34,900   32,500    +7%   46,100
      Pyhasalmi      5,700    8,100   -30%   21,000   26,600   -21%   27,900
    -------------------------------------------------------------------------
                    14,600   20,400   -28%   55,900   59,100    -5%   74,000
    -------------------------------------------------------------------------
    Gold (ounces)
      Troilus       38,000   36,400    +4%  110,800  104,700    +6%  152,000
      Ok Tedi       25,200   19,000   +33%   68,600   61,500   +12%   96,200
    -------------------------------------------------------------------------
                    63,200   55,400   +14%  179,400  166,200    +8%  248,200
    -------------------------------------------------------------------------
    Pyrite (tonnes)
      Pyhasalmi    177,800   45,100  +294%  483,500  304,000   +59%  616,000
    -------------------------------------------------------------------------
    (1) Inmet's share represents 100 percent for Cayeli, Pyhasalmi and
        Troilus, 18 percent for Ok Tedi and 70 percent for Las Cruces.

    This quarter compared to the third quarter of 2007:
    -   copper production was higher because of higher grades at Cayeli,
        Troilus and Ok Tedi.
    -   zinc production was lower mainly because of low zinc grade areas
        being mined at Cayeli and Pyhasalmi.
    -   gold production was higher due to higher grades.

    For the nine months zinc production was lower than the prior year because
of lower grades and gold production was higher because of 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.
    The total amount we 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.

    Higher freight costs in the quarter

    -------------------------------------------------------------------------
                                             three months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Smelter processing charges and freight
     by operation
      Cayeli                                 $17,543     $19,474        -10%
      Pyhasalmi                               21,958      12,983        +69%
      Troilus                                  2,541       1,478        +72%
      Ok Tedi(1)                               7,460       8,622        -13%
    -------------------------------------------------------------------------
                                             $49,502     $42,557        +16%
    -------------------------------------------------------------------------
    Smelter processing charges and freight
     by metal
      Copper                                 $19,728     $22,479        -12%
      Zinc                                    17,551      17,673         -1%
      Other                                   12,223       2,405       +408%
    -------------------------------------------------------------------------
                                             $49,502     $42,557        +16%
    -------------------------------------------------------------------------
    Smelter processing charges by type and
     freight
      Copper treatment and refining charges   $5,473      $6,462        -15%
      Zinc treatment charges                  10,662      10,969         -3%
      Copper price participation               1,551       2,763        -44%
      Zinc price participation                 1,445      (3,469)      +142%
      Content losses                          11,392      16,532        -31%
      Other                                      693       2,512        -72%
      Freight                                 18,286       6,788       +169%
    -------------------------------------------------------------------------
                                             $49,502     $42,557        +16%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                              nine months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Smelter processing charges and freight
     by operation
      Cayeli                                 $65,121     $74,944        -13%
      Pyhasalmi                               47,339      46,697         +1%
      Troilus                                  7,149       6,191        +15%
      Ok Tedi(1)                              27,259      34,744        -22%
    -------------------------------------------------------------------------
                                            $146,868    $162,576        -10%
    -------------------------------------------------------------------------
    Smelter processing charges and freight
     by metal
      Copper                                 $62,138     $77,156        -19%
      Zinc                                    62,002      76,459        -19%
      Other                                   22,728       8,961       +154%
    -------------------------------------------------------------------------
                                            $146,868    $162,576        -10%
    -------------------------------------------------------------------------
    Smelter processing charges by type and
     freight
      Copper treatment and refining charges  $16,101     $24,322        -34%
      Zinc treatment charges                  36,802      32,615        +13%
      Copper price participation               5,796      11,846        -51%
      Zinc price participation                  (816)      5,064       -116%
      Content losses                          43,752      59,324        -26%
      Other                                    5,651       5,253         +8%
      Freight                                 39,582      24,152        +64%
    -------------------------------------------------------------------------
                                            $146,868    $162,576        -10%
    -------------------------------------------------------------------------
    (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 third quarter because of lower volumes sold. 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.

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

    -------------------------------------------------------------------------
                                             three months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Direct production costs by operation
      Cayeli                                 $22,622     $21,299         +6%
      Pyhasalmi                               14,090      11,078        +27%
      Troilus                                 23,787      18,614        +28%
      Ok Tedi(1)                              24,129      16,529        +46%
    -------------------------------------------------------------------------
    Total direct production costs             84,628      67,520        +23%
    Inventory changes                         (2,179)      1,293       -269%
    Reclamation, accretion and other
     non-cash expenses                         2,499       3,244        -23%
    -------------------------------------------------------------------------
    Total cost of sales                      $84,948     $72,057        +18%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                              nine months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Direct production costs by operation
      Cayeli                                 $68,600     $63,065         +9%
      Pyhasalmi                               44,045      36,528        +21%
      Troilus                                 66,079      56,520        +17%
      Ok Tedi(1)                              65,514      57,821        +13%
    -------------------------------------------------------------------------
    Total direct production costs            244,238     213,934        +14%
    Inventory changes                         (3,375)      5,429       -162%
    Reclamation, accretion and other
     non-cash expenses                        13,224      10,252        +29%
    -------------------------------------------------------------------------
    Total cost of sales                     $254,087    $229,615        +11%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's direct production costs.

    Key reasons for the increase in direct production costs

    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Volume                                                 $(2)          $(5)
    Labour costs                                             4            10
    Consumables                                              7            15
    Energy                                                   5             8
    Costs that vary with income and cash flow                -             2
    Other                                                    3             -
    -------------------------------------------------------------------------
    Increase in direct production costs, compared to 2007  $17           $30
    -------------------------------------------------------------------------

    Depreciation was higher than last year

    -------------------------------------------------------------------------
                                     three months                nine months
                               ended September 30         ended September 30
    (thousands)            2008     2007   change     2008     2007   change
    -------------------------------------------------------------------------
    Depreciation by operation
      Cayeli             $3,369   $1,654    +104%   $8,298   $6,222     +33%
      Pyhasalmi           2,343    1,764     +33%    6,725    6,558      +3%
      Troilus             2,149    2,784     -23%    6,285    7,500     -16%
      Ok Tedi             3,534    2,537     +39%    8,452    5,913     +43%
    -------------------------------------------------------------------------
                        $11,395   $8,739     +30%  $29,760  $26,193     +14%
    -------------------------------------------------------------------------

    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.

    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 ended     nine months ended
                                          September 30          September 30
    (thousands)                        2008       2007       2008       2007
    -------------------------------------------------------------------------
    Interest income                  $6,308    $11,490    $21,994    $25,884
    Dividend income and royalty       1,650      1,821      3,154      3,821
    Foreign exchange gain (loss)    (16,553)    (4,695)   (28,268)   (14,240)
    Sale of Wolfden                       -          -          -     11,730
    Other                             3,128      1,028      1,049      3,291
    -------------------------------------------------------------------------
                                    $(5,467)    $9,644    $(2,071)   $30,486
    -------------------------------------------------------------------------
    

    We recorded a net foreign exchange loss of $17 million this quarter
mostly from the effects of revaluing the Las Cruces US $215 million credit
facility. For the year, we recognized $20 million in foreign exchange losses
from dividends received. The decrease in interest income is mainly due to
lower interest rates on cash and short-term investments we are holding. 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.

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

    -------------------------------------------------------------------------
                                             three months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Cayeli                                    $6,428     $13,055        -51%
    Pyhasalmi                                  6,418       7,425        -14%
    Ok Tedi                                    7,174      17,015        -58%
    Las Cruces                                (5,167)       (232)    +2,127%
    Corporate                                  2,526         659       +283%
    -------------------------------------------------------------------------
                                             $17,379     $37,922         -54%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                              nine months ended September 30
    (thousands)                                 2008        2007      change
    -------------------------------------------------------------------------
    Cayeli                                   $34,207     $40,489        -16%
    Pyhasalmi                                 18,866      24,711        -24%
    Ok Tedi                                   50,324      54,923         -8%
    Las Cruces                                (5,001)        254     -2,069%
    Corporate                                  8,060       1,978       +307%
    -------------------------------------------------------------------------
                                            $106,456    $122,355        -13%
    -------------------------------------------------------------------------
    

    Our tax expense changes as our earnings change. Cayeli's effective tax
rate was 21 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. For the year to date, Cayeli's
effective tax rate was 26 percent, the result of foreign exchanges gains in
its tax accounts. At Las Cruces, we have recorded a tax recovery in relation
to the foreign exchange losses recorded from the translation of its US dollar
denominated debt. 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 $11 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

    -------------------------------------------------------------------------
                                                          three months ended
                                                                September 30
                                                        2008     2007 change
    -------------------------------------------------------------------------
    Tonnes of ore milled (000's)                         259      262    -1%
    Tonnes of ore milled per day                       2,800    2,85     -2%
    -------------------------------------------------------------------------
    Grades (percent)               copper                4.0      3.7    +8%
                                     zinc                5.2      6.4   -19%
    -------------------------------------------------------------------------
    Mill recoveries (percent)      copper                 82       81    +1%
                                     zinc                 66       73   -10%
    -------------------------------------------------------------------------
    Production (tonnes)            copper              8,600    7,900    +9%
                                     zinc              8,900   12,300   -28%
    -------------------------------------------------------------------------
    Cost per tonne of ore milled
     (C$)                                                $87      $81    +7%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                 nine months ended   revised
                                                      September 30 objective
                                              2008     2007 change      2008
    -------------------------------------------------------------------------
    Tonnes of ore milled (000's)               817      770    +6%     1,100
    Tonnes of ore milled per day             3,000    2,800    +7%     3,000
    -------------------------------------------------------------------------
    Grades (percent)               copper      3.7      3.7      -       3.8
                                     zinc      6.0      6.0      -       6.0
    -------------------------------------------------------------------------
    Mill recoveries (percent)      copper       80       82    -2%        81
                                     zinc       71       71      -        71
    -------------------------------------------------------------------------
    Production (tonnes)            copper   24,400   23,500    +4%    33,600
                                     zinc   34,900   32,500    +7%    46,100
    -------------------------------------------------------------------------
    Cost per tonne of ore milled
     (C$)                                      $84      $82    +2%       $81
    -------------------------------------------------------------------------
    

    On target to achieve production goal of 1.1 million tonnes

    Ore milled this quarter was less than the annualized rate and less than
what Cayeli had been producing in the first half of the year, mainly because
mine production was down. In addition, we lowered throughput rates to improve
metal recovery while mining high grade clastic ore. Throughput rates are
expected to return to the previous quarter rate for the remainder of the year.
Year to date, Cayeli produced ore at its expected annualized rate of 1.1
million tonnes, which is consistent with our annual objective and higher than
last year.
    Lower zinc grades and recoveries in this quarter resulted in a 28 percent
drop in zinc production compared to the third quarter of last year. Copper
production this quarter was higher than last year because grades were higher.
Both copper and zinc production improved year to date compared to last year
because throughput was higher.
    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

    As we originally anticipated, we expect to process 1.1 million tonnes of
ore this year and produce 33,600 tonnes of copper. We revised our zinc
recovery estimate to 71 percent and now we expect to produce about 1,700
tonnes less zinc. 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.
    Costs could change, depending on the value of the Turkish lira relative
to the US dollar. If the Turkish lira decreases in value, costs denominated in
Turkish lira such as labour will go down, lowering our costs.
    Royalties also have a significant effect on costs and are variable
depending on earnings. Cost per tonne of ore milled includes $7 per tonne in
royalties in the third quarter and $10 per tonne in royalties year to date. We
have estimated $11 per tonne in our $81 per tonne of ore milled objective,
which can change based on metal price assumptions for the rest of the year.

    
    Financial review

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

    -------------------------------------------------------------------------
    (millions of Canadian           three months ended     nine months ended
     dollars unless                       September 30          September 30
     otherwise stated)                 2008       2007       2008       2007
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)             9,900      8,800     23,300     24,200
    Zinc sales (tonnes)              10,400     10,400     41,600     36,700
                                   ------------------------------------------
    Gross copper sales                  $59        $74       $180       $199
    Gross zinc sales                     17         32         87        132
    Other metal sales                     3          2         11          7
                                   ------------------------------------------
    Gross sales                          79        108        278        338
    Smelter processing charges and
     freight                            (18)       (19)       (65)       (75)
    -------------------------------------------------------------------------
    Net sales                           $61        $89       $213       $263
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)    259        262        817        770
    Direct production costs ($ per
     tonne)                             $87        $81        $84        $82
    -------------------------------------------------------------------------
    Direct production costs             $23        $21        $69        $63
    Change in inventory                   2          1          2          3
    Depreciation and other non-cash
     costs                                4          3         11          9
    -------------------------------------------------------------------------
    Operating costs                     $29        $25        $82        $75
    -------------------------------------------------------------------------
    Operating earnings                  $32        $64       $131       $188
    -------------------------------------------------------------------------
    Operating cash flow                 $40        $42        $90       $164
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Change in metal prices, denominated in
     Canadian dollars                                     $(38)         $(70)
    Higher (lower) sales volumes                             5             -
    Lower smelter processing charges                         4            17
    Higher operating costs and depreciation                 (3)           (4)
    -------------------------------------------------------------------------
    Decrease in operating earnings, compared to 2007       (32)          (57)
    Lower tax expense                                        3             1
    Lower tax rate                                           1             3
    Changes in working capital                              27           (19)
    Other                                                   (1)           (2)
    -------------------------------------------------------------------------
    Decrease in operating cash flow, compared to 2007      $(2)         $(74)
    -------------------------------------------------------------------------

    The change in working capital this quarter is from higher accounts
payable. Year to date, the increase in working capital is because more taxes
were paid.

    Capital spending behind schedule this quarter, but on track for the year

    -------------------------------------------------------------------------
                        three months ended        nine months ended
                              September 30             September 30 objective
                      2008     2007 change     2008     2007 change     2008
    -------------------------------------------------------------------------
    Capital
     spending       $4,600   $6,100   -25%  $16,700  $15,600    +7%  $23,000
    -------------------------------------------------------------------------

    Capital spending this quarter and year to date was mainly to repair a
ventilation raise, replace mine equipment and develop the lower mine.

    2008 outlook for capital spending

    Cayeli expects to spend $23 million in 2008 to repair a ventilation raise,
buy mine equipment and replace other equipment.

    PYHASALMI

    -------------------------------------------------------------------------
                                                          three months ended
                                                                September 30
                                                        2008     2007 change
    -------------------------------------------------------------------------
    Tonnes of ore milled (000's)                         359      348     +3%
    Tonnes of ore milled per day                       3,900    3,780     +3%
    -------------------------------------------------------------------------
    Grades (percent)               copper                1.0      1.0      -
                                     zinc                1.8      2.6    -31%
                                  sulphur               43.0     40.7     +6%
    -------------------------------------------------------------------------
    Mill recoveries (percent)      copper                 94       95     -1%
                                     zinc                 88       89     -1%
    -------------------------------------------------------------------------
    Production (tonnes)            copper              3,300    3,400     -3%
                                     zinc              5,700    8,100    -30%
                                   pyrite            177,800   45,100   +294%
    -------------------------------------------------------------------------
    Cost per tonne of ore milled
     (C$)                                                $39      $32    +22%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                 nine months ended   revised
                                                      September 30 objective
                                              2008     2007 change      2008
    -------------------------------------------------------------------------
    Tonnes of ore milled (000's)             1,050    1,019    +3%     1,370
    Tonnes of ore milled per day             3,850    3,730    +3%     3,750
    -------------------------------------------------------------------------
    Grades (percent)               copper      1.0      1.1    -9%       1.0
                                     zinc      2.2      2.9   -24%       2.2
                                  sulphur     41.4     40.3    +3%        41
    -------------------------------------------------------------------------
    Mill recoveries (percent)      copper       95       95      -        94
                                     zinc       91       91      -        90
    -------------------------------------------------------------------------
    Production (tonnes)            copper    9,900   10,300    -4%    13,000
                                     zinc   21,000   26,600   -21%    27,900
                                   pyrite  483,500  304,000   +59%   616,000
    -------------------------------------------------------------------------
    Cost per tonne of ore milled
     (C$)                                      $42      $36   +17%       $41
    -------------------------------------------------------------------------
    

    Record pyrite production and sales

    Mill throughput this quarter has improved because of the high pyrite
content ore being more easily processed and because of the mill improvements
made during the second quarter. Pyrite production was at a record high in
August to take advantage of increased demand and increased sales prices for
the product. Zinc production continues to be lower than last year because the
areas being mined contain lower grade zinc.
    Costs this year increased partly because of the exchange rate between the
euro and Canadian dollar and partly due to increased prices for steel and mill
processing reagents.

    2008 outlook for production and costs

    We have reduced our zinc production objective because areas with lower
grade zinc are being mined this year. We do expect to meet our original copper
production estimate for the year and we expect pyrite production to increase.
We do not expect to produce as much pyrite in the fourth quarter as we did in
the third quarter because we are expecting a lower demand for pyrite and
sulphur from China.

    
    Financial review

    Higher pyrite sales help offset lower copper and zinc sales

    -------------------------------------------------------------------------
    (millions of Canadian           three months ended     nine months ended
     dollars unless                       September 30          September 30
     otherwise stated)                 2008       2007       2008       2007
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)             3,200      3,900      9,900     10,700
    Zinc sales (tonnes)               6,600      7,500     20,900     26,100
    Pyrite sales (tonnes)           225,000    118,100    491,700    376,400
                                   ------------------------------------------
    Gross copper sales                  $24        $31        $80        $85
    Gross zinc sales                     12         24         43         95
    Other metal sales                    32          5         61         22
                                   ------------------------------------------
    Gross sales                          68         60        184        202
    Smelter processing charges and
     freight                            (22)       (13)       (47)       (47)
    -------------------------------------------------------------------------
    Net sales                           $46        $47       $137       $155
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled (thousands)    359        348      1,050      1,019
    Direct production costs ($ per
     tonne)                             $39        $32        $42        $36
    -------------------------------------------------------------------------
    Direct production costs             $14        $11        $44        $37
    Change in inventory                   -          -          -          -
    Depreciation and other non-cash
     costs                                2          2          8          8
    -------------------------------------------------------------------------
    Operating costs                     $16        $13        $52        $45
    -------------------------------------------------------------------------
    Operating earnings                  $30        $34        $85       $110
    -------------------------------------------------------------------------
    Operating cash flow                 $28        $53        $79       $104
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Change in metal prices, denominated in
     Canadian dollars                                      $12            $2
    Lower sales volumes                                     (3)          (16)
    Lower smelter processing charges and freight            (1)            6
    Higher freight costs for pyrite sales                   (8)          (11)
    Higher operating costs                                  (4)           (6)
    -------------------------------------------------------------------------
    Decrease in operating earnings, compared to
     2007                                                   (4)          (25)
    Lower tax expense because of lower earnings              1             6
    Changes in working capital                             (23)           (7)
    Other                                                    1             1
                                                 ----------------------------
    Decrease in operating cash flow, compared to
     2007                                                 $(25)         $(25)
    -------------------------------------------------------------------------

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

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

    -------------------------------------------------------------------------
                        three months ended        nine months ended
                              September 30             September 30 objective
    (thousands)       2008     2007 change     2008     2007 change     2008
    -------------------------------------------------------------------------
    Capital
     spending       $2,500   $1,300   +92%   $5,900   $2,100  +181%  $12,000
    -------------------------------------------------------------------------

    Spending this quarter was mainly for asset replacements.

    2008 outlook for capital spending

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

    TROILUS

    -------------------------------------------------------------------------
                                                          three months ended
                                                                September 30
                                                        2008     2007 change
    -------------------------------------------------------------------------
    Tonnes of ore milled (000's)                       1,444    1,475    -2%
    Tonnes of ore milled per day                      15,900   16,000    -2%
    -------------------------------------------------------------------------
    Strip ratio                                          1.6      1.1   +45%
    -------------------------------------------------------------------------
    Grades              gold (grams/tonne)              0.95     0.93    +2%
                          copper (percent)              0.12     0.06  +100%
    -------------------------------------------------------------------------
    Mill recoveries (percent)        gold                 85       83    +2%
                                   copper                 94       89    +6%
    -------------------------------------------------------------------------
    Production               gold (ounces)            38,000   36,400    +4%
                           copper (tonnes)             1,600      800  +100%
    -------------------------------------------------------------------------
    Cost per tonne of ore milled (C$)                    $16      $13   +23%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                                 nine months ended   revised
                                                      September 30 objective
                                              2008     2007 change      2008
    -------------------------------------------------------------------------
     Tonnes of ore milled (000's)            4,295    4,600     -7%    5,800
     Tonnes of ore milled per day           15,700   16,800     -7%   15,900
     ------------------------------------------------------------------------
     Strip ratio                               1.4      1.0    +40%      1.2
     ------------------------------------------------------------------------
     Grades             gold (grams/tonne)    0.95     0.87     +9%     0.97
                          copper (percent)    0.09     0.05    +80%     0.11
    -------------------------------------------------------------------------
     Mill recoveries (percent)       gold       84       82     +2%       84
                                   copper       94       87     +8%       93
    -------------------------------------------------------------------------
     Production              gold (ounces) 110,800  104,700     +6%  152,000
                           copper (tonnes)   3,700    2,100    +76%    6,000
    -------------------------------------------------------------------------
     Cost per tonne of ore milled (C$)         $15      $12    +25%      $14
    -------------------------------------------------------------------------

    Higher gold production

    Troilus mined the hard, lower grade ore of the upper benches of the 87 pit
through most of the third quarter, and by September began to mine the main 87
pit. Congestion in the pit bottom has resulted in ore sequencing challenges
and when not enough feed can be brought to the mill, ore from the low grade
stockpile is processed.
    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. Copper grades peaked in
the third quarter, doubling copper production compared to last year, and
increasing it by 76 percent year to date.
    Higher fuel and steel grinding media costs resulted in a higher cost per
tonne compared to previous years.

    2008 outlook for production and costs

    Both grades and mill throughput will improve as Troilus moves deeper and
towards the north of the 87 pit. Troilus may need to supplement mill feed with
lower grade stockpiled ore if production scheduling difficulties continue
because of congestion in the pit bottom. The production objectives have been
adjusted to reflect the results to September. We expect to remain on track to
complete the pit in early 2009 and then we will complete stockpile recovery in
2010.

    Financial review

    Higher gold prices and higher sales volumes improved earnings

    -------------------------------------------------------------------------
    (millions of Canadian           three months ended     nine months ended
     dollars unless                       September 30          September 30
     otherwise stated)                 2008       2007       2008       2007
    -------------------------------------------------------------------------
    Sales analysis
    Gold sales (ounces)              38,000     33,900    109,400    106,100
    Copper sales (tonnes)             1,500        700      3,500      2,100
                                   ------------------------------------------
    Gross gold sales                    $26        $19        $77        $63
    Gross copper sales                    8          5         26         17
    Other metal sales                     1          1          2          1
                                   ------------------------------------------
    Gross sales                          35         25        105         81
    Smelter processing charges
     and freight                         (2)        (1)        (7)        (6)
    -------------------------------------------------------------------------
    Net sales                           $33        $24        $98        $75
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled
     (thousands)                      1,444      1,475      4,295      4,600
    Direct production costs
     ($ per tonne)                      $16        $13        $15        $12
    -------------------------------------------------------------------------
    Direct production costs             $24        $19        $66        $57
    Change in inventory                   -         (1)        (1)         -
    Depreciation and other
     non-cash costs                       3          3         10          9
    -------------------------------------------------------------------------
    Operating costs                     $27        $21        $75        $66
    -------------------------------------------------------------------------
    Operating earnings                   $6         $3        $23         $9
    -------------------------------------------------------------------------
    Operating cash flow                  $7         $5        $21        $10
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Change in metal prices denominated in
     Canadian dollars                                       $3           $11
    Higher sales volumes                                     7            11
    Lower smelter processing charges                         -             2
    Higher operating costs                                  (7)          (10)
    -------------------------------------------------------------------------
    Increase in operating earnings, compared to
     2007                                                    3            14
    Changes in working capital                               5             3
    Settlement of gold forward sales, less
     amounts amortized to sales
                                                            (7)           (7)
    Other                                                    1             1
    -------------------------------------------------------------------------
    Increase in operating cash flow, compared
     to 2007                                                $2           $11
    -------------------------------------------------------------------------

    In August, we paid $12 million to settle the remainder of Troilus' gold
forward sales (4,850 ounces per month for a five month period). We will
recognize this settlement loss equally over the period from August to December
as a reduction to our gold sales.

    OK TEDI

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

                       three months ended         nine months ended  revised
                             September 30              September 30 objective
    (100 percent)   2008     2007  change     2008     2007  change     2008
    -------------------------------------------------------------------------
    Tonnes of
     ore milled
     (000's)       5,600    6,500    -14%   16,100   19,500    -17%   22,400
    Tonnes of
     ore milled
     per day      61,500   70,700    -14%   58,800   71,500    -17%   61,400
    -------------------------------------------------------------------------
    Strip ratio      1.6      1.1    +45%      1.6      1.2    +33%      1.5
    -------------------------------------------------------------------------
    Grades
      copper
       (percent)     0.8      0.7    +14%      0.9      0.7    +29%      0.9
      gold
       (grams/tonne) 1.0      0.8    +25%      1.0      0.8    +25%      1.0
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      copper          88       86     +2%       87       86     +1%       86
      gold            71       64    +11%       73       71     +3%       73
    -------------------------------------------------------------------------
    Production
      copper
       (tonnes)   40,700   38,200     +7%  119,100  120,800     -1%  165,600
      gold
       (ounces)  140,100  105,400    +33%  381,300  341,400    +12%  534,500
    -------------------------------------------------------------------------
    Cost per
     tonne of ore
     milled (C$)     $24      $14    +71%      $23      $17    +35%      $23
    -------------------------------------------------------------------------
    

    Lower throughput at Ok Tedi

    Ok Tedi made considerable progress this quarter in resolving problems
with the in-pit crushing system, including replacing the main conveyor belt.
Mill throughput this quarter and year to date was lower than the same periods
last year because of harder skarn ore, and because of the problems with the
in- pit crusher conveyor system. We saw improvements in September when Ok Tedi
met mill throughput plans.
    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 nine months of the year.

    
    Financial review

    Higher operating cash flow

    -------------------------------------------------------------------------
                                    three months ended     nine months ended
    (millions of Canadian dollars         September 30          September 30
     unless otherwise stated)          2008       2007       2008       2007
    -------------------------------------------------------------------------
    Sales analysis at 18%
    Copper sales (tonnes)             7,500      7,600     22,400     24,900
    Gold sales (ounces)              23,100     21,600     68,600     70,300
                                    -----------------------------------------
    Gross copper sales                  $44        $64       $178       $207
    Gross gold sales                     20         15         58         49
    Other metal sales                     1          1          3          3
                                    -----------------------------------------
    Gross sales                          65         79        239        259
    Smelter processing charges and
     freight                             (7)        (8)       (27)       (35)
    -------------------------------------------------------------------------
    Net sales                           $58        $71       $212       $224
    -------------------------------------------------------------------------
    Cost analysis at 18%
    Tonnes of ore milled (thousands)  1,000      1,170      2,900      3,500
    Direct production costs
     ($ per tonne)                      $24        $14        $23        $17
    -------------------------------------------------------------------------
    Direct production costs             $24        $17        $66        $58
    Change in inventory                  (4)         2         (4)         3
    Depreciation and other non-cash
     costs                                4          3         12          9
    -------------------------------------------------------------------------
    Operating costs                     $24        $22        $74        $70
    -------------------------------------------------------------------------
    Operating earnings                  $34        $49       $138       $154
    -------------------------------------------------------------------------
    Operating cash flow                 $25         $6       $106        $76
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Change in metal prices, denominated in
     Canadian dollars                                     $(14)           $2
    Higher (lower) sales volumes                             6           (11)
    Lower smelter processing charges                         1             4
    Higher operating costs                                  (7)           (9)
    Higher depreciation                                     (1)           (2)
    -------------------------------------------------------------------------
    Decrease in operating earnings, compared
     to 2007                                               (15)          (16)
    Lower tax expense                                       10             8
    Changes in net working capital                          27            35
    Other                                                   (3)            3
    -------------------------------------------------------------------------
    Increase in operating cash flow, compared
     to 2007                                               $19           $30
    -------------------------------------------------------------------------

    The mine waste management program was commissioned in September

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

    -------------------------------------------------------------------------
    (18 percent)       three months ended        nine months ended
                             September 30             September 30 objective
                    2008     2007  change    2008     2007  change      2008
    -------------------------------------------------------------------------
    Capital
     spending     $7,800   $8,500     -8% $26,700  $21,300    +25%   $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.

    Status of our development projects

    Las Cruces

    Quarterly development update

    Dewatering and re-injection system (DRS)

    In May the Confederacion Hidrografica del Guadalquivir (CHG) notified Las
Cruces that the authorization for its DRS had been suspended. In June, Las
Cruces responded to the concerns with a "Global Plan" that included two
primary action items:

    
    -   purification of water extracted from the aquifer through a highly
        efficient reverse osmosis treatment process prior to reinjection into
        the aquifer
    -   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.
    

    By the end of July, Las Cruces was successfully treating water with the
use of three portable water treatment facilities to ensure that all water
extracted from the aquifer met drinking water standards. In October, we
installed additional water treatment units to increase the treatment capacity
and have provisional treatment capacity in place for all water extracted from
the aquifer. CHG has not yet approved the start of re-injection as it is
reviewing a technical report from the Spanish Geological Survey. We are now
awaiting a decision from CHG to approve the reinjection of the treated water
into the aquifer and, the lifting of the suspension of the DRS permit. Until
the suspension is lifted, we cannot begin to mine the ore. In September, the
Public Prosecutor's office in Seville announced that, after acting on a
complaint by local anti-mining ecologists, a local Court would commence a
criminal investigation regarding the events of May 2008 that led to the
suspension of the water authorization. We understand that the judge presiding
over the investigation will have to provide her consent to the reinjection of 
treated water into the aquifer and the lifting of the suspension. We would
expect the judge to concur with the technical recommendations provided by the
Geological Survey, CHG and other third parties that have been asked to opine
on the measures proposed and implemented by Las Cruces.
    We believe that our proposed and implemented measures fully address the
concerns raised by CHG and provide sufficient grounds for the suspension to be
lifted. Although we cannot predict the outcome and timing of the final
decision, we remain confident that the suspension will be lifted in the coming
months.

    Repair of dumps

    At the beginning of July over 5 million cubic metres of material from the
North dump collapsed. We have fully repaired the dump walls and re-designed
both the north and south dump to make sure they will be able to support the
mine until the end of its life. The total cost to rehabilitate and improve was
about $3.5 million.

    Preparation for first copper

    Construction is essentially completed and commissioning has commenced
with the turning of mills. The Las Cruces plant operations team will also work
directly with Outotec to ensure a smooth and rapid commissioning period of the
leach reactors. Commissioning will take several months before first copper
cathode is produced in the first quarter of 2009.

    Direct ore shipping

    We have suspended direct ore shipping until the DRS authorization
suspension has been lifted and mining activity in the bottom of the pit can
recommence. In light of changing market conditions, including the price of
copper and smelting charges, we will be re-examining the economic benefit of
shipping and selling this material.

    2008 outlook for development spending

    By September 30, 2008, we had spent (euro) 445 million on the project and
committed another (euro) 38 million. We expect to spend the balance of the
estimated project costs ( (euro) 495 million) by the fourth quarter of 2008.
We estimate capital expenditures for 2008 to be $360 million. This includes
the cost to complete the project including $7 million on the remediation of
the dumps, $7 million for the temporary water treatment plants and $14 million
on further pushback of the mine to prepare for phase two mining.

    PETAQUILLA

    Quarterly development update

    All-cash offer for Petaquilla Copper

    On September 19, 2008, we acquired 95 percent of the outstanding common
shares of PTC at a price of $2.20 per share. Our intention is to acquire the
remaining 5 percent in November through a second step acquisition and then de-
list PTC from the Toronto Stock Exchange.
    PTC holds 26 percent of Minera Petaquilla SA, while Inmet holds 48
percent and Teck holds the remaining 26 percent. Petaquilla is an important
source of long term growth for Inmet. Gaining control over the project allows
us to protect our interests in the Petaquilla Concession and to advance the
development of the copper project.
    Under an agreement with Teck we have been acting as operator for the
project and have provided 100 percent project funding since April 1, 2008. By
October 28, we had funded US $28 million to Petaquilla, and expect to have
funded US $50 million by November.
    At that point, Teck must decide to either begin funding its own share or
to allow us to acquire its 26 percent interest in Petaquilla for US
$26 million.

    Drilling

    Drilling is continuing to expand the resource, to confirm prospective
locations for plant and other facilities and to provide geotechnical
information for engineering work.

    Social and environmental impact assessment

    Following the completion of the baseline studies, the work is now moving
to the impact assessment stage. We expect to submit our impact assessment to
the Panamanian environmental authorities by September 2009.

    Engineering

    Engineering work is advancing, and our goal is to complete the front end
engineering and design (FEED) by mid 2009.

    Petaquilla team

    We continue to build a strong and dedicated team to lead all development,
engineering, technical, environmental and permitting activities in Panama. We
have also begun to consider engineering firms with a view to rewarding the
contract once the FEED study is complete.

    2008 outlook for development

    We expect to fund approximately $65 million in 2008, to continue the
current field program and the engineering study, and on capital equipment with
long lead times. We have placed the order for the equipment to maintain the
project schedule.
    We believe it is appropriate to advance the Petaquilla copper project in
the current market, but we will remain prudent and disciplined in our approach
and find the right balance between advancing the project and preserving our
cash reserves.

    Managing our liquidity

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

    
    -------------------------------------------------------------------------
                                    three months ended     nine months ended
                                          September 30          September 30
    (millions)                         2008       2007       2008       2007
    -------------------------------------------------------------------------
    CASH FROM OPERATING ACTIVITIES
    Cayeli                              $40        $42        $90       $164
    Pyhasalmi                            28         53         79        104
    Troilus                               7          5         21         10
    Ok Tedi                              25          6        106         76
    Corporate development and
     exploration not included in
     operations' cash flow               (4)        (1)        (8)        (3)
    General and administration           (3)        (3)       (10)        (8)
    Other                                 5          6         16          8
    -------------------------------------------------------------------------
                                         98        108        294        351
    -------------------------------------------------------------------------
    CASH FROM INVESTING AND FINANCING
    Capital spending                    (94)      (118)      (327)      (252)
    Long-term - borrowing                 -         36        106         74
              - repayment               (14)        (9)       (14)        (9)
    Funding from non-controlling
     shareholder                          1         13         36         40
    Acquisition of Petaquilla Copper   (337)         -       (337)         -
    Funding for Petaquilla               (8)         -        (12)         -
    Settlement of foreign exchange
     forward contract                     -          -         52          -
    Financial assurance deposits         (1)         5        (15)       (13)
    Dividends paid on common shares       -          -         (5)        (5)
    Disposition of portfolio
     investments                          -          -          2         50
    Foreign exchange on cash held in
     foreign currency                     -        (23)        24        (57)
    Other                                (8)         -         (9)        (4)
    -------------------------------------------------------------------------
                                       (461)       (96)      (499)      (176)
    -------------------------------------------------------------------------
    Increase (decrease) in cash        (363)        12       (205)       175
    Cash and short-term investments
      Beginning of period               999        803        841        640
    -------------------------------------------------------------------------
      End of period                    $636       $815       $636       $815
    -------------------------------------------------------------------------



    OPERATING ACTIVITIES

    Key components of the change in operating cash flows
    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Lower earnings from operations (see page 4)           $(47)         $(86)
    Non-cash changes in operating earnings:
      Lower tax expense                                     15            10
      Changes in working capital                            33            17
      Settlement of gold forward contracts, less
       amounts amortized to sales                           (7)           (7)
      Other                                                 (5)            8
    -------------------------------------------------------------------------
    Decrease in operating cash flow, compared
     to 2007                                              $(11)         $(58)
    -------------------------------------------------------------------------
    

    Operating cash flows are lower than they were in 2007 mainly because of
lower operating earnings and higher taxes paid offset by reduced accounts
receivable from lower metal prices. During the third quarter, we settled
Troilus' remaining gold forward sales contracts for 24,250 ounces at a
settlement price of US $819 per ounce. This resulted in a cash payment of
$12.4 million.

    2008 outlook for operating activities

    In the current volatile markets it is even more difficult than usual to
develop reliable estimates for commodity prices and foreign exchange rates.
Our estimates of the sensitivity of our earnings and cash flow to key
operating parameters are shown on page 28.

    
    INVESTING AND FINANCING

    Capital spending and investing
    -------------------------------------------------------------------------
                            three months ended   nine months ended   revised
                                  September 30        September 30 objective
    (millions)                  2008      2007      2008      2007      2008
    -------------------------------------------------------------------------
    Cayeli                        $5        $6       $17       $16       $23
    Pyhasalmi                      3         1         6         2        12
    Troilus                        1         1         1         2         1
    Ok Tedi                        8         9        27        21        32
    Las Cruces                    72       100       262       207       387
    Cerattepe                      6         1        14         4        15
    Petaquilla(1)                  8         -        12         -        65
    -------------------------------------------------------------------------
                                $103      $118      $339      $252      $535
    -------------------------------------------------------------------------
    (1) Includes our 48 percent share of funding provided to Petaquilla prior
        to acquisition of PTC
    

    Please see Results of our operations and Status of our development
projects for a discussion of actual results and our 2008 objective.
    On October 24, we learned that the Rize Administrative Court ruled to
cancel the Cerattepe operating licences. We will review the reasons for the
decision once we receive it and will discuss with the Turkish Ministry of
Energy and Natural Resources an appeal to the Supreme Administrative Court of
Turkey. We will continue to keep the project on care and maintenance and also
suspend all work on the project and re-assess our development plans in light
of the court decision. See page 27 for further details on the legal
proceedings. Spending year to date was on ramp development and receipt of the
aerial tramway.

    Long term borrowings and settlement of hedge

    By June 30, 2008 Las Cruces had fully drawn down its credit facility and
on June 30, this euro denominated debt was converted to a US dollar facility
and the related foreign exchange forward contract was settled. Las Cruces
received (euro) 36 million in cash from the settlement of this contract. Since
June 30, Las Cruces has held a US $215 million debt at interest rates of US
Libor plus 2 percent. The funds received from the settlement of the forward
contract will be amortized as a reduction to interest expense over the term of
the loan.
    During the third quarter, Las Cruces repaid (euro) 9 million under
Tranche B of its credit facility which is equal to the amount of VAT refunds
received. It had (euro) 14 million of undrawn capacity remaining under Tranche
B at September 30, 2008.

    Acquisition of PTC

    On September 19, 2008, we acquired 95 percent of the outstanding common
shares of Petaquilla Copper Ltd. (PTC) for $337 million in cash, net of cash
acquired of $23 million. We intend to acquire the remaining 5 percent by the
end of the year at a price per common share of $2.20 and then de-list PTC from
the Toronto Stock Exchange. Turn to note 4 on page 44 in the consolidated
financial statements for more details about this transaction.

    
    2008 outlook for investing and financing

    We expect capital spending to be $515 million in 2008:
    -   $365 million for the continuing development of the Las Cruces mine
        and $19 million for its sustaining capital and phase two mining
    -   $19 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 sponsor contributions, government subsidies and the undrawn amount of
Tranche B of the credit facility. 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 $46 million (including our share of funding
provided to MPSA prior to the acquisition of PTC) for drilling programs,
engineering studies and the deposits required for equipment at Petaquilla that
has long lead times. We will fund this from our current cash balances.
    Our current cash balance puts us in a good position to finance the next
stages of Petaquilla's pre-development. We will review our spending for the
coming year and make our development decisions in a manner that finds the
right balance between advancing the project and preserving cash balances. We
will continue with our normal dividend distribution until this project is
fully financed.

    Financial condition

    CASH

    Our cash and equivalents balance at September 30, 2008 was $636 million.
This included cash and money market instruments that mature in 90 days or less
from the date of acquisition, and short-term investments that mature in 91
days to a year. Our policy is to invest excess cash in highly liquid
investments of the highest credit quality and to limit our exposure to
individual counterparties in order to minimize risks associated with these
investments. Decisions regarding the length of maturities are based on our
cash flow requirements, rates of returns and various other factors.

    
    At September 30, 2008, cash and short-term investments were mainly held
in:
    -   Canada and provincial T-Bills
    -   short-term debt instruments issued by Canadian Crown Corporations
    -   highest rated asset backed commercial paper programs sponsored by
        leading Canadian financial institutions backed by global style
        liquidity lines
    -   AAA rated money market funds managed by leading international fund
        managers investing in money market and short-term debt securities and
        fixed income securities issued by leading international financial
        institutions and their sponsored securitization vehicles
    -   cash, term and overnight deposits with leading Canadian and
        international financial institutions.

    Since the end of the third quarter, general worldwide economic conditions
have weakened dramatically. In response, we adjusted our investment positions
and are now mainly invested in treasury funds to minimize liquidity risk until
normal market conditions return. Turn to note 7 on page 46 in the consolidated
financial statements for more details on where our cash is invested.

    Our restricted cash balance of $59 million included:
    -   $14 million in trust for future reclamation at Ok Tedi
    -   $17 million of cash collateralized letters of credit for Inmet
    -   $23 million related to issuing letters of credit to suppliers at
        Las Cruces
    -   $2 million for future reclamation at Pyhasalmi
    -   $3 million supporting a guarantee by PTC of capital leases of one of
        its former related parties.

    COMMON SHARES

    -------------------------------------------------------------------------
    Common shares outstanding as of September 30, 2008
     and October 28, 2008                                         48,281,950
    -------------------------------------------------------------------------
    Deferred share units outstanding as of September 30, 2008
     (redeemable on a one-for-one basis for common shares)            78,596
    -------------------------------------------------------------------------

    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.

    -------------------------------------------------------------------------
                                                                C$ marked-to-
                                                                       market
    Type of                                                           loss at
    contract   Expiry          Quantity            Price   September 30, 2008
    -------------------------------------------------------------------------
    Copper
     forward
     sales
      Ok Tedi    2008   0.8 million lbs  US $2.78 per lb
                 2009   3.2 million lbs  US $2.41 per lb
                -----------------------------------------
                        4.0 million lbs  US $2.49 per lb      $1.8 million(1)
    Gold
     forward
     sales
      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.      $2.5 million(2)

    Interest
     rate
     swaps
      Las Cruces 2009
                   to
                 2014   US $179 million      5.2 percent        $9.1 million
                           (reducing in
                       conjunction with
                         debt repayment
                               schedule)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) At a copper price of US $2.88 per pound.
    (2) At a gold price of US $901 per ounce.
    

    Managing risk

    The following is an update to the discussion, only where required, of the
key risks associated with our business and how we 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.
    On October 24, 2008 we learned that the Rize Administrative Court ruled
to cancel the Cerattepe operating licences. We will review the reasons for the
decision once we receive it and will discuss with the Turkish Ministry of
Energy and Natural Resources an appeal to the Supreme Administrative Court of
Turkey. We will continue to keep the project on care and maintenance and also
suspend all work on the project and re-assess our development plans in light
of the court decision.
    We continue to believe that the applications to cancel the operating
licences are without merit. Nonetheless, in light of the Rize 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 three months of 2008, based on our 2008 revised objectives.

    
    -------------------------------------------------------------------------
                                                                Would change
                                                   Would change our 2008 net
                                                   our 2008 net   income per
                                      A change of:   income by:    share by:
    -------------------------------------------------------------------------
    Metal prices
    Copper (per pound)                    US $0.30  $10 million        $0.21
    Zinc (per pound)                      US $0.10   $2 million        $0.04
    Gold (per ounce)(1)                    US $100   $5 million        $0.10
    -------------------------------------------------------------------------
    Exchange rates
    Canadian dollar per US dollar           C$0.10  $ 9 million        $0.19

                                                      Less than
    Canadian dollar per euro                C$0.10   $1 million        $0.01
    -------------------------------------------------------------------------
    Treatment and refining charges
    Copper treatment charge per tonne       US $10
     and copper refining charge per
     pound                                US $0.01   $1 million        $0.02

                                                      Less than    Less than
    Zinc treatment charge per tonne         US $10   $1 million        $0.01
    -------------------------------------------------------------------------
    Freight and energy costs                          Less than    Less than
    Concentrate freight per tonne              10%   $1 million        $0.01
    Fuel price per litre                     $0.10   $1 million        $0.02
    Electricity per kilowatt hour            $0.01   $1 million        $0.02
    -------------------------------------------------------------------------
    (1) Calculations include hedging in place at September 30, 2008.
    

    Accounting changes

    We adopted a new section of the CICA Handbook:

    Section 3031 - Inventories

    Effective January 1, 2008, we adopted CICA Handbook section 3031 -
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 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.

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

    As of January 1, 2011 Inmet will report under IFRS, 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 and 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 recognizing, measuring, presenting
and disclosing goodwill (after its initial recognition) and intangible assets.
It replaces Section 3062, Goodwill and Other Intangible Assets and Section
3450, Research and Development Costs. Changes have been made to other sections
of the CICA Handbook for consistency.
    The section explains how to recognize internally developed intangible
assets, and how to ensure that all intangible assets (both separately acquired
and internally developed) are treated consistently. Standards related to
goodwill have not been changed. 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 31 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

    
    Third quarter conference call

    Will be held on
    -   Wednesday, October  29, 2008
    -   8:30 a.m. Eastern Time
    -   webcast available at
www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2426160 or
www.inmetmining.com.

    You can also dial in by calling
    -   Local or international: +1.416.644.3417
    -   Toll-free within North America: +1.800.732.9307

    Starting 10:30 a.m. (ET) Wednesday October 29, 2008, conference call
replay will be available
    -   Local or international: +1.416.640.1917 passcode 21284506 followed by
        the number sign.
    -   Toll-free within North America: +1.877.289.8525 passcode 21284506
        followed by the number sign.



    INMET MINING CORPORATION
    Supplementary financial information

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

    Direct production costs    $1.10     $1.98     $1.30     $1.33      $585
    Royalties and variable
     compensation               0.15         -      0.09      0.10         -
    Smelter processing
     charges and freight        1.23      1.23      0.54      0.96        64
    Metal credits              (1.68)    (3.68)    (1.27)    (1.88)     (254)
                            --------------------------------------- ---------
    Cash cost                  $0.80    ($0.47)    $0.66     $0.51      $395
                            --------------------------------------- ---------
                            --------------------------------------- ---------

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

    Direct production costs    $0.97     $1.47     $1.08     $1.11      $488
    Royalties and variable
     compensation               0.15         -      0.06      0.09         -
    Smelter processing
     charges and freight        1.22      1.59      0.58      1.04        53
    Metal credits              (2.09)    (4.48)    (0.86)    (2.05)     (157)
                            --------------------------------------- ---------
    Cash cost                  $0.25    ($1.42)    $0.86     $0.19      $384
                            --------------------------------------- ---------
                            --------------------------------------- ---------

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

    Reconciliation of cash costs to statements of earnings
    2008 For the nine months ended September 30
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise noted)         CAYELI PYHASALMI   OK TEDI    COPPER   TROILUS
    --------------------------------------------------------------- ---------
    GAAP reference           page 13   page 15   page 19             page 17

    Direct production costs      $69       $44       $66      $179       $66
    Smelter processing
     charges and freight          65        47        27       139         7
    By product sales             (98)     (103)      (61)     (262)      (28)
    Adjust smelter
     processing and freight,
     and sales to production
     basis                         8         1         -         9         -
                            --------------------------------------- ---------
    Operating costs net of
     metal credits               $44      ($11)      $32       $65       $45
    US $ to C$ exchange rate   $1.02     $1.02     $1.02     $1.02     $1.02
    Inmet's share of
     production (000's)       53,700    21,900    47,300   122,900   110,800
                            --------------------------------------- ---------
    Cash cost                  $0.80    ($0.47)    $0.66     $0.51      $395
                            --------------------------------------- ---------
                            --------------------------------------- ---------

    2007 For the nine months ended September 30
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise noted)         CAYELI PYHASALMI   OK TEDI    COPPER   TROILUS
    --------------------------------------------------------------- ---------
    GAAP reference           page 13   page 15   page 19             page 17

    Direct production costs      $63       $37       $58      $155       $57
    Smelter processing
     charges and freight          75        47        35       157         6
    By product sales            (139)     (117)      (52)     (308)      (18)
    Adjust smelter
     processing and freight,
     and sales to production
     basis                        15        (3)        4        16        (1)
                            --------------------------------------- ---------
    Operating costs net of
     metal credits               $14      ($36)      $45       $20       $44
    US $ to C$ exchange rate   $1.11     $1.11     $1.11     $1.11     $1.11
    Inmet's share of
     production (000's)       51,800    22,700    48,000   122,500   104,700
                            --------------------------------------- ---------
    Cash cost                  $0.25    ($1.42)    $0.86     $0.19      $384
                            --------------------------------------- ---------
                            --------------------------------------- ---------

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

    Direct production costs    $1.01     $1.84     $1.40     $1.30      $601
    Royalties and variable
     compensation               0.10         -      0.05      0.06         -
    Smelter processing
     charges and freight        0.86      1.31      0.48      0.79        64
    Metal credits              (0.98)    (3.57)    (1.29)    (1.55)     (233)
                            --------------------------------------- ---------
    Cash cost                  $0.99    ($0.42)    $0.64     $0.60      $432
                            --------------------------------------- ---------
                            --------------------------------------- ---------

    2007 For the three months ended September 30
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------

                              CAYELI PYHASALMI   OK TEDI     TOTAL   TROILUS
    --------------------------------------------------------------- ---------
    (US dollars per pound)

    Direct production costs    $1.01     $1.38     $1.23     $1.16      $489
    Royalties and variable
     compensation               0.16         -         -      0.07         -
    Smelter processing
     charges and freight        1.29      1.46      0.57      1.05        43
    Metal credits              (2.26)    (3.71)    (0.86)    (2.01)     (165)
                            --------------------------------------- ---------
    Cash cost                  $0.20    ($0.87)    $0.94     $0.27      $367
                            --------------------------------------- ---------
                            --------------------------------------- ---------

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

    Reconciliation of cash costs to statements of earnings
    2008 For the three months ended September 30
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise noted)         CAYELI PYHASALMI   OK TEDI    COPPER   TROILUS
    --------------------------------------------------------------- ---------
    GAAP reference           page 13   page 15   page 19             page 17

    Direct production costs      $26       $14       $21       $61       $24
    Smelter processing
     charges and freight          18        22         7        47         3
    By product sales             (20)      (44)      (21)      (85)       (9)
    Adjust smelter
     processing and freight,
     and sales to production
     basis                        (4)        5         3         4        (1)
                            --------------------------------------- ---------
    Operating costs net of
     metal credits               $20       ($3)      $10       $27       $17
    US $ to C$ exchange rate   $1.04     $1.04     $1.04     $1.04     $1.04
    Inmet's share of
     production (000's)       18,900     7,300    16,300    42,500    37,800
                            --------------------------------------- ---------
    Cash cost                  $0.99    ($0.42)    $0.64     $0.60      $432
                            --------------------------------------- ---------
                            --------------------------------------- ---------

    2007 For the three months ended September 30
                                                                   per ounce
                                      per pound of copper            of gold
                            --------------------------------------- ---------
    (millions of Canadian
     dollars, except where                                   TOTAL
     otherwise noted)         CAYELI PYHASALMI   OK TEDI    COPPER   TROILUS
    --------------------------------------------------------------- ---------
    GAAP reference           page 13   page 15   page 19             page 17

    Direct production costs      $23       $11       $18       $52       $19
    Smelter processing
     charges and freight          19        13         9        41         1
    By product sales             (33)      (29)      (16)      (78)       (6)
    Adjust smelter
     processing and freight,
     and sales to production
     basis                        (5)       (2)        4        (3)        -
                            --------------------------------------- ---------
    Operating costs net of
     metal credits                $4       ($7)      $15       $12       $14
    US $ to C$ exchange rate   $1.04     $1.04     $1.04     $1.04     $1.04
    Inmet's share of
     production (000's)       17,400     7,600    15,200    40,200    36,400
                            --------------------------------------- ---------
    Cash cost                  $0.20    ($0.87)    $0.94     $0.27      $367
                            --------------------------------------- ---------
                            --------------------------------------- ---------



    INMET MINING CORPORATION
    Quarterly review
    (unaudited)

    Latest Four Quarters
    -------------------------------------------------------------------------
                                       2008       2008       2008       2007
    (thousands of Canadian dollars,   Third     Second      First     Fourth
     except per share amounts)      quarter    quarter    quarter    quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS
    Gross sales                   $ 247,495  $ 281,463  $ 276,281  $ 224,773
    Smelter processing charges
     and freight                    (49,502)   (53,209)   (44,157)   (43,902)
    Cost of sales                   (84,948)   (89,893)   (79,246)   (78,809)
    Depreciation                    (11,395)    (9,195)    (9,170)    (9,480)
                                  -------------------------------------------
                                    101,650    129,166    143,708     92,582
    Corporate development and
     exploration                     (3,548)    (2,483)    (2,618)    (3,510)
    General and administration       (3,411)    (2,790)    (3,648)   (12,622)
    Investment and other income
     (expense)                       (5,467)   (11,358)    14,754      5,968
    Interest expense                   (476)      (471)      (447)      (407)
    Capital tax expense                (125)      (124)      (126)       212
    Income tax expense              (17,379)   (44,333)   (44,744)   (18,551)
    Non-controlling interest          3,813         98       (205)       (27)
                                  -------------------------------------------
    Net income                    $  75,057  $  67,705  $ 106,674  $  63,645
                                  -------------------------------------------
    Net income per common share   $    1.55  $    1.40  $    2.21  $    1.32
                                  -------------------------------------------
    Diluted net income per
     common share                 $    1.55  $    1.40  $    2.21  $    1.32
                                  -------------------------------------------



    Previous Four Quarters
    -------------------------------------------------------------------------
                                       2007       2007       2007       2006
    (thousands of Canadian dollars,   Third     Second      First     Fourth
     except per share amounts)      quarter    quarter    quarter    quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS
    Gross sales                   $ 272,293  $ 320,018  $ 286,614  $ 258,911
    Smelter processing charges
     and freight                    (42,557)   (55,413)   (64,606)   (65,005)
    Cost of sales                   (72,057)   (78,181)   (79,377)   (67,868)
    Depreciation                     (8,739)    (8,039)    (9,415)    (9,057)
                                  -------------------------------------------
                                    148,940    178,385    133,216    116,981
    Corporate development and
     exploration                     (2,475)    (2,086)    (1,012)    (4,136)
    General and administration       (2,674)    (2,162)    (2,840)    (6,128)
    Investment and other income       9,224     13,665      7,597     17,972
    Interest expense                   (424)      (424)      (438)      (425)
    Capital tax (expense)
     recovery                          (273)      (274)      (274)         -
    Income tax expense              (37,649)   (48,509)   (35,376)   (26,679)
    Non-controlling interest            167       (545)       205       (165)
                                  -------------------------------------------
    Net income                    $ 114,836  $ 138,050  $ 101,078  $  97,420
                                  -------------------------------------------
    Net income per common share   $    2.38  $    2.86  $    2.09  $    2.02
                                  -------------------------------------------
    Diluted net income per
     common share                 $    2.37  $    2.86  $    2.09  $    2.02
                                  -------------------------------------------



    INMET MINING CORPORATION
    Consolidated balance sheets

                                                  September 30   December 31
    (thousands of Canadian dollars)                       2008          2007
    -------------------------------------------------------------------------
                                                    (unaudited)
    Assets

    Current assets:
      Cash and short-term investments (note 7)        $636,283      $840,823
      Restricted cash (note 8)                           7,294         1,569
      Accounts receivable                              125,707       131,197
      Inventories (note 2)                              64,851        52,725
      Future income tax asset                           13,950        14,515
                                                    -------------------------
                                                       848,085     1,040,829

    Restricted cash (note 8)                            52,093        37,205
    Property, plant and equipment                    1,605,204       870,965
    Investments (note 9)                                32,945        32,266
    Future income tax asset                             11,274         7,884
    Derivatives (note 10)                                    -        33,565
    Other assets                                        20,019        25,751
                                                    -------------------------
                                                    $2,569,620    $2,048,465
    -------------------------------------------------------------------------

    Liabilities

    Current liabilities:
      Accounts payable and accrued liabilities        $186,247      $149,197
      Taxes payable                                     44,715        23,603
      Current portion of long-term debt                 42,130        12,971
                                                    -------------------------
                                                       273,092       185,771

    Long-term debt (note 11)                           353,421       234,317
    Reclamation liabilities (note 12)                   97,021        84,017
    Derivatives (note 10)                               13,355        43,960
    Other liabilities                                   24,365        19,249
    Future income tax liabilities                       24,656        37,084
    Non-controlling interest (note 16)                  70,172        51,574
                                                    -------------------------
                                                       856,082       655,972
                                                    -------------------------

    Commitments (note 13)

    Shareholders' equity

    Share capital                                      337,464       337,464
    Contributed surplus                                 62,087        60,722
    Stock based compensation                             1,301         1,085
    Retained earnings                                1,319,370     1,076,958
    Accumulated other comprehensive income (loss)
     (note 14)                                          (6,684)      (83,736)
                                                    -------------------------

                                                     1,713,538     1,392,493
                                                    -------------------------

                                                    $2,569,620    $2,048,465
    -------------------------------------------------------------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented balance sheets


    2008 As at September 30

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

    Assets
    Cash and short-term
     investments                $294,862    $187,574     $77,105    $      -
    Other current assets          13,551      45,545      50,011      23,921
    Restricted cash               20,093           -       1,798           -
    Property, plant and
     equipment                   408,510     152,024      65,392      23,546
    Investments                   32,945           -           -           -
    Derivatives                        -           -           -           -
    Other assets                  17,558         441           -       6,289
                               ----------------------------------------------
                                $787,519    $385,584    $194,306     $53,756
                               ----------------------------------------------

    Liabilities
    Current liabilities          $45,065     $53,931     $15,943      $9,924
    Long-term debt                17,266           -           -           -
    Reclamation liabilities       24,121       8,321      14,181       7,708
    Derivatives                        -           -           -           -
    Other liabilities              4,954       5,585           -         872
    Future income tax
     liabilities                       -       3,879       7,597           -
    Non-controlling interest      15,355           -           -           -
                               ----------------------------------------------
                                $106,761     $71,716     $37,721     $18,504
                               ----------------------------------------------


    2008 As at September 30

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

    Assets
    Cash and short-term
     investments                 $53,504     $23,238    $636,283
    Other current assets          33,304      45,470     211,802
    Restricted cash               14,422      15,780      52,093
    Property, plant and
     equipment                    86,783     868,949   1,605,204
    Investments                        -           -      32,945
    Derivatives                        -           -           -
    Other assets                   3,620       3,385      31,293
                               ---------------------- -----------
                                $191,633    $956,822  $2,569,620
                               ---------------------- -----------

    Liabilities
    Current liabilities          $28,906    $119,323    $273,092
    Long-term debt                     -     336,155     353,421
    Reclamation liabilities       21,682      21,008      97,021
    Derivatives                    4,274       9,081      13,355
    Other liabilities              1,768      11,186      24,365
    Future income tax
     liabilities                     780      12,400      24,656
    Non-controlling interest           -      54,817      70,172
                               ---------------------- -----------
                                 $57,410    $563,970    $856,082
                               ---------------------- -----------



    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)

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

    Gross sales                    $247,495   $272,293   $805,239   $878,925

    Smelter processing charges
     and freight                    (49,502)   (42,557)  (146,868)  (162,576)

    Cost of sales                   (84,948)   (72,057)  (254,087)  (229,615)

    Depreciation                    (11,395)    (8,739)   (29,760)   (26,193)

    --------------------------------------------------- ---------------------
                                    101,650    148,940    374,524    460,541
    Corporate development and
     exploration                     (3,548)    (2,475)    (8,649)    (5,573)

    General and administration       (3,411)    (2,674)    (9,849)    (7,676)

    Investment and other income
     (loss) (note 15)                (5,467)     9,224     (2,071)    30,486

    Interest expense                   (476)      (424)    (1,394)    (1,286)

    Capital tax expense                (125)      (273)      (375)      (821)

    Income tax expense (note 17)    (17,379)   (37,649)  (106,456)  (121,534)

    Non-controlling interest          3,813        167      3,706       (173)

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

    Net income                      $75,057   $114,836   $249,436   $353,964
    --------------------------------------------------- ---------------------

    Basic net income per common
     share (note 18)                  $1.55      $2.38      $5.17      $7.33
    --------------------------------------------------- ---------------------

    Diluted net income per common
     share (note 18)                  $1.55      $2.37      $5.16      $7.32
    --------------------------------------------------- ---------------------

    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 nine months ended September 30

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

    Gross sales                 $      -    $277,709    $183,851    $104,860
    Smelter processing
     charges and freight               -     (65,121)    (47,339)     (7,149)
    Cost of sales                 (1,464)    (73,369)    (44,901)    (68,793)
    Depreciation                       -      (8,298)     (6,725)     (6,285)
                              -----------------------------------------------
                                  (1,464)    130,921      84,886      22,633

    Corporate development
     and exploration              (6,507)       (278)     (1,801)        (63)
    General and administration    (9,849)          -           -           -
    Investment and other
     income (expense)              8,483       2,140        (228)      4,083
    Interest expense              (1,394)          -           -           -
    Capital tax expense             (375)          -           -           -
    Income tax (expense)
     recovery                     (8,060)    (34,207)    (18,866)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------

    Net income (loss)           ($19,166)    $98,576     $63,991     $26,653
                              -----------------------------------------------


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

    Gross sales                 $238,819    $      -    $805,239
    Smelter processing
     charges and freight         (27,259)          -    (146,868)
    Cost of sales                (65,560)          -    (254,087)
    Depreciation                  (8,452)          -     (29,760)
    ------------------------------------------------- -----------
                                 137,548           -     374,524
    Corporate development
     and exploration                   -           -      (8,649)
    General and administration         -           -      (9,849)
    Investment and other
     income (expense)                241     (16,790)     (2,071)
    Interest expense                   -           -      (1,394)
    Capital tax expense                -           -        (375)
    Income tax (expense)
     recovery                    (50,324)      5,001    (106,456)
    Non-controlling interest           -       3,706       3,706
    ------------------------------------------------- -----------
    Net income (loss)            $87,465     ($8,083)   $249,436
    ------------------------------------------------- -----------


    2007 For the nine months ended September 30

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

    Gross sales                 $      -    $337,606    $201,574     $81,061
    Smelter processing
     charges and freight               -     (74,944)    (46,697)     (6,191)
    Cost of sales                 (1,462)    (68,686)    (37,886)    (57,887)
    Depreciation                       -      (6,222)     (6,558)     (7,500)
                              -----------------------------------------------
                                  (1,462)    187,754     110,433       9,483

    Corporate development
     and exploration              (3,152)     (1,160)     (1,571)        310
    General and
     administration               (7,676)          -           -           -
    Investment and other
     income (expense)             28,360      (1,417)          -       4,188
    Interest expense              (1,286)          -           -           -
    Capital tax expense             (821)          -           -           -
    Income tax expense            (1,157)    (40,489)    (24,711)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------
    Net income                   $12,806    $144,688     $84,151     $13,981
                              -----------------------------------------------


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

    Gross sales                 $258,684    $      -    $878,925
    Smelter processing
     charges and freight         (34,744)          -    (162,576)
    Cost of sales                (63,694)          -    (229,615)
    Depreciation                  (5,913)          -     (26,193)
                              ----------------------- -----------
                                 154,333           -     460,541

    Corporate development
     and exploration                   -           -      (5,573)
    General and
     administration                    -           -      (7,676)
    Investment and other
     income (expense)             (1,492)        847      30,486
    Interest expense                   -           -      (1,286)
    Capital tax expense                -           -        (821)
    Income tax expense           (54,923)       (254)   (121,534)
    Non-controlling interest           -        (173)       (173)
                              ----------------------- -----------

    Net income                   $97,918        $420    $353,964
                              ----------------------- -----------


    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2008 For the three months ended September 30

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

    Gross sales                 $      -     $78,780     $67,694     $35,438
    Smelter processing charges
     and freight                       -     (17,543)    (21,958)     (2,541)
    Cost of sales                   (476)    (25,864)    (13,733)    (24,260)
    Depreciation                       -      (3,369)     (2,343)     (2,149)
                              -----------------------------------------------
                                    (476)     32,004      29,660       6,488

    Corporate development and
     exploration                  (2,695)       (182)       (620)        (51)
    General and administration    (3,411)          -           -           -
    Investment and other
     income (expense)              8,284      (1,798)       (228)      1,361
    Interest expense                (476)          -           -           -
    Capital tax expense             (125)          -           -           -
    Income tax (expense)
     recovery                     (2,526)     (6,428)     (6,418)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------
    Net income (loss)            ($1,425)    $23,596     $22,394      $7,798
                              -----------------------------------------------


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

    Gross sales                  $65,583    $      -    $247,495
    Smelter processing charges
     and freight                  (7,460)          -     (49,502)
    Cost of sales                (20,615)          -     (84,948)
    Depreciation                  (3,534)          -     (11,395)
                              ----------------------- -----------
                                  33,974           -     101,650

    Corporate development and
     exploration                       -           -      (3,548)
    General and administration         -           -      (3,411)
    Investment and other
     income (expense)              4,027     (17,113)     (5,467)
    Interest expense                   -           -        (476)
    Capital tax expense                -           -        (125)
    Income tax (expense)
     recovery                     (7,174)      5,167      (17,379)
    Non-controlling interest           -       3,813        3,813
                              ----------------------- -----------

    Net income (loss)            $30,827     ($8,133)     $75,057
                              ----------------------- -----------


    2007 For the three months ended September 30

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

    Gross sales                 $      -    $107,664     $60,427     $24,970
    Smelter processing
     charges and freight               -     (19,474)    (12,983)     (1,478)
    Cost of sales                   (619)    (22,958)    (11,579)    (17,755)
    Depreciation                       -      (1,654)     (1,764)     (2,784)
                              -----------------------------------------------
                                    (619)     63,578      34,101       2,953

    Corporate development
     and exploration              (1,464)       (300)       (552)       (159)
    General and
     administration               (2,674)          -           -           -
    Investment and other
     income (expense)              7,927         164           -       3,397
    Interest expense                (424)          -           -           -
    Capital tax expense             (273)          -           -           -
    Income tax (expense)
     recovery                       (386)    (13,055)     (7,425)          -
    Non-controlling interest           -           -           -           -
                              -----------------------------------------------

    Net income                    $2,087     $50,387     $26,124      $6,191
                              -----------------------------------------------


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

    Gross sales                  $79,232     $     -    $272,293
    Smelter processing
     charges and freight          (8,622)          -     (42,557)
    Cost of sales                (19,146)          -     (72,057)
    Depreciation                  (2,537)          -      (8,739)
                              ----------------------- -----------
                                  48,927           -     148,940

    Corporate development
     and exploration                   -           -      (2,475)
    General and
     administration                    -           -      (2,674)
    Investment and other
     income (expense)             (1,492)       (772)      9,224
    Interest expense                   -           -        (424)
    Capital tax expense                -           -        (273)
    Income tax (expense)
     recovery                    (17,015)        232     (37,649)
    Non-controlling interest           -         167         167
                              ----------------------- -----------

    Net income                   $30,420       ($373)   $114,836
                              ----------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of cash flows
    (unaudited)
                                    Three Months Ended     Nine Months Ended
    (thousands of Canadian                September 30          September 30
     dollars)                          2008       2007       2008       2007
    -------------------------------------------------------------------------

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

    Net income                      $75,057   $114,836   $249,436   $353,964
    Add (deduct) items not
     affecting cash:
      Gain on disposition of
       investments                        -          -       (256)   (11,730)
      Depreciation                   11,395      8,739     29,760     26,193
      Future income tax               2,126      2,873     (1,930)    (1,507)
      Accretion expense on
       reclamation liabilities        1,085        907      3,229      2,710
      Non-controlling interest       (3,813)      (167)    (3,706)       173
      Foreign exchange loss          11,257      2,397     30,147      5,834
      Other                           1,704        897      5,169       (814)
    Settlement of gold forward
     contracts (note 10)            (12,399)         -    (12,399)         -
    Reclamation costs                  (638)      (946)    (1,462)    (1,950)
    Net change in non-cash
     working capital (note 6)        12,031    (21,221)    (4,475)   (21,847)
                                 --------------------------------------------
                                     97,805    108,315    293,513    351,026
                                 --------------------------------------------

    Cash provided by (used in)
     investing activities

    Acquisition of Petaquilla
     Copper, net of cash
     acquired (note 4)             (336,911)         -   (336,911)         -
    Capital spending                (94,371)  (117,989)  (326,813)  (252,003)
    Loans to other Petaquilla
     shareholders                    (9,143)         -    (13,234)         -
    Investment in Petaquilla
     prior to consolidation          (8,412)         -    (12,167)         -
    Disposition of investments            -          -      1,521     50,170
    Sale (purchase) of short-term
     investments                     29,254   (173,117)   204,239    (35,586)
    Other                                 -       (553)         -        (43)
                                 --------------------------------------------
                                   (419,583)  (291,659)  (483,365)  (237,462)
                                 --------------------------------------------

    Cash provided by (used in)
     financing activities

    Long-term debt:
      Borrowings (note 11)                -     35,929    106,240     73,938
      Repayment (note 11)           (13,871)    (8,604)   (13,871)    (8,604)
    Funding by non-controlling
     shareholder                      1,432     13,418     36,188     39,528
    Settlement of foreign
     currency forward
     contract (note 10)                   -          -     52,256          -
    Financial assurance deposits     (1,344)     4,764    (15,316)   (12,651)
    Dividends paid on common
     shares                               -          -     (4,828)    (4,827)
    Subsidies received                    -          -      3,233          -
    Other                               (46)    (1,514)      (138)    (4,085)
                                 --------------------------------------------
                                    (13,829)    43,993    163,764     83,299
                                 --------------------------------------------

    Cash assumed on consolidation
     of Petaquilla                    2,201          -      2,201          -
                                 --------------------------------------------

    Foreign exchange change on
     cash held in foreign currency       18    (22,541)    23,586    (56,590)
                                 --------------------------------------------

    Increase (decrease) in cash    (333,388)  (161,892)      (301)   140,273

    Cash:
      Beginning of period           855,592    686,775    522,505    384,610
                                 --------------------------------------------
      End of period                 522,204    524,883    522,204    524,883

    Short-term investments          114,079    289,701    114,079    289,701
                                 --------------------------------------------
    Cash and short-term
     investments                   $636,283   $814,584   $636,283   $814,584
    -------------------------------------------------------------------------
    (see accompanying notes)

      (1)Supplementary cash
       flow information:

      Cash interest paid             $1,657     $3,187     $9,779     $5,568
      Cash taxes paid               $44,163    $50,830   $124,412   $115,569
                                 --------------------------------------------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2008 For the nine months ended September 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    ($559)   $103,176     $72,532     $25,282
      Net change in non-cash
       working capital            (1,421)    (13,531)      6,061      (4,123)
                              -----------------------------------------------
                                  (1,980)     89,645      78,593      21,159
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Acquisition of Petaquilla
       Copper, net of cash
       acquired                 (336,911)          -           -           -
      Capital spending              (368)    (30,945)     (5,848)     (1,357)
      Disposition of
       investments                 1,521           -           -           -
      Sale of short-term
       investments               204,239           -           -           -
      Loans to Petaquilla
       shareholders              (13,234)          -           -           -
      Investment in Petaquilla
       prior to consolidation    (12,167)          -           -           -
                              -----------------------------------------------
                                (156,920)    (30,945)     (5,848)     (1,357)
                              -----------------------------------------------

    Cash provided by (used in)
     financing activities         (6,696)          -      (1,858)          -
                              -----------------------------------------------

    Cash assumed on
     consolidation of MPSA         2,201           -           -           -
                              -----------------------------------------------

      Foreign exchange change
       on cash held in foreign
       currency                        -      16,745       3,586           -
                              -----------------------------------------------

    Intergroup funding
     (distributions)             303,137    (221,542)   (108,860)    (19,802)
                              -----------------------------------------------

    Increase (decrease) in
     cash                        139,742    (146,097)    (34,387)          -
    Cash:
      Beginning of period         41,041     333,671     111,492           -
                              -----------------------------------------------
      End of period              180,783     187,574      77,105           -
    Short-term investments       114,079           -           -           -
                              -----------------------------------------------
    Cash and short-term
     investments                $294,862    $187,574     $77,105    $      -
                              -----------------------------------------------


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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working capital  $97,557    $      -    $297,988
      Net change in non-cash
       working capital             8,539           -      (4,475)
                              ----------------------- -----------
                                 106,096           -     293,513
                              ----------------------- -----------
    Cash provided by (used in)
     investing activities
      Acquisition of Petaquilla
       Copper, net of cash
       acquired                        -           -    (336,911)
      Capital spending           (26,653)   (261,642)   (326,813)
      Disposition of
       investments                     -           -       1,521
      Sale of short-term
       investments                     -           -     204,239
      Loans to Petaquilla
       shareholders                    -           -     (13,234)
      Investment in Petaquilla
       prior to consolidation          -           -     (12,167)
                              ----------------------- -----------
                                 (26,653)   (261,642)   (483,365)
                              ----------------------- -----------

    Cash provided by (used in)
     financing activities         (1,258)    173,576     163,764
                              ----------------------- -----------

    Cash assumed on
     consolidation of MPSA             -           -       2,201
                              ----------------------- -----------

      Foreign exchange change
       on cash held in foreign
       currency                    2,476         779      23,586
                              ----------------------- -----------

    Intergroup funding
     (distributions)             (40,630)     87,697           -
                              ----------------------- -----------

    Increase (decrease) in
     cash                         40,031         410        (301)
    Cash:
      Beginning of period         13,473      22,828     522,505
                              ----------------------- -----------
      End of period               53,504      23,238     522,204
    Short-term investments             -           -     114,079
                              ----------------------- -----------
    Cash and short-term
     investments                 $53,504     $23,238    $636,283
                              ----------------------- -----------


        2007 For the nine months ended September 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                    $5,584    $158,070     $91,006     $16,324
      Net change in non-cash
       working capital            (7,444)      5,863      12,673      (6,801)
                              -----------------------------------------------
                                  (1,860)    163,933     103,679       9,523
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending              (145)    (20,259)     (2,071)     (1,457)
      Disposition of
       investments                50,170           -           -           -
      Sale (purchase) of
       short-term investments    (62,323)     16,575           -           -
      Other                            -           -           -         (43)
                              -----------------------------------------------
                                 (12,298)     (3,684)     (2,071)     (1,500)
                              -----------------------------------------------
    Cash provided by (used in)
     financing activities         (6,472)          -           -      (3,000)
                              -----------------------------------------------

    Foreign exchange change
     on cash held in foreign
     currency                         -      (39,914)     (7,268)          -
                              ------------------------ ----------------------
    Intergroup funding
     (distributions)              63,056       6,203    (104,649)     (5,023)
                              -----------------------------------------------

    Increase (decrease)
     in cash                      42,426     126,538     (10,309)          -
    Cash:
      Beginning of period         39,899     159,195     119,260           -
                              -----------------------------------------------
      End of period               82,325     285,733     108,951           -
    Short-term investments       289,701           -           -           -
                              -----------------------------------------------

    Cash and short-term
     investments                $372,026    $285,733    $108,951    $      -
                              -----------------------------------------------


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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                  $101,889    $      -    $372,873
      Net change in non-cash
       working capital           (26,138)   $      -     (21,847)
                              ----------------------- -----------
                                  75,751           -     351,026
                              ----------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending           (21,414)   (206,657)   (252,003)
      Disposition of
       investments                     -           -      50,170
      Sale (purchase) of
       short-term investments     10,162           -     (35,586)
      Other                            -           -         (43)
                              ----------------------- -----------
                                 (11,252)   (206,657)   (237,462)
                              ----------------------- -----------
    Cash provided by (used in)
     financing activities         (1,659)     94,430      83,299
                              ----------------------- -----------

    Foreign exchange change
     on cash held in foreign
     currency                     (8,348)     (1,060)    (56,590)
                              ----------------------- -----------

    Intergroup funding
     (distributions)             (52,281)     92,694           -
                              ----------------------- -----------

    Increase (decrease)
     in cash                       2,211     (20,593)    140,273
    Cash:
      Beginning of period         33,972      32,284     384,610
                              ----------------------- -----------
      End of period               36,183      11,691     524,883
    Short-term investments             -           -     289,701
                              ----------------------- -----------
    Cash and short-term
     investments                 $36,183     $11,691    $814,584
                              ----------------------- -----------


    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2008 For the three months ended September 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   $1,414     $25,060     $26,226      $2,389
      Net change in non-cash
       working capital            (3,173)     14,633       1,763       4,198
                              -----------------------------------------------
                                  (1,759)     39,693      27,989       6,587
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Acquisition of Petaquilla
       Copper, net of cash
       acquired                 (336,911)          -           -           -
      Capital spending              (318)    (10,690)     (2,490)     (1,078)
      Purchase of short-term
       investments                29,254           -           -           -
      Loans to Petaquilla
       shareholders               (9,143)          -           -           -
      Investment in Petaquilla
       prior to consolidation     (8,412)          -           -           -
                              -----------------------------------------------
                                (325,530)    (10,690)     (2,490)     (1,078)
                              -----------------------------------------------

    Cash provided by (used in)
     financing activities           (179)          -          (8)          -
                              -----------------------------------------------

    Cash assumed on
     consolidation of Petaquilla   2,201           -           -           -
                              -----------------------------------------------

      Foreign exchange change
       on cash held in foreign
       currency                        -       7,228      (4,945)          -
                              -----------------------------------------------

    Intergroup funding
     (distributions)                (319)      3,490      (5,495)     (5,509)
                              -----------------------------------------------

    Increase (decrease)
     in cash                    (325,586)     39,721      15,051           -
    Cash:
      Beginning of period        506,369     147,853      62,054           -
                              -----------------------------------------------
      End of period              180,783     187,574      77,105           -
    Short-term investments       114,079           -           -           -
                              -----------------------------------------------

    Cash and short-term
     investments                $294,862    $187,574     $77,105    $      -
                              -----------------------------------------------


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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working capital  $30,685    $      -     $85,774
      Net change in non-cash
       working capital            (5,390)          -      12,031
                              ----------------------- -----------
                                  25,295           -      97,805
                              ----------------------- -----------
    Cash provided by (used in)
     investing activities
      Acquisition of Petaquilla
       Copper, net of cash
       acquired                        -           -    (336,911)
      Capital spending            (7,802)    (71,993)    (94,371)
      Purchase of short-term
       investments                     -           -      29,254
      Loans to Petaquilla
       shareholders                    -           -      (9,143)
      Investment in Petaquilla
       prior to consolidation          -           -      (8,412)
                              ----------------------- -----------
                                  (7,802)    (71,993)   (419,583)
                              ----------------------- -----------

    Cash provided by (used in)
     financing activities           (642)    (13,000)    (13,829)
                              ----------------------- -----------

    Cash assumed on
     consolidation of Petaquilla       -           -       2,201
                              ----------------------- -----------

      Foreign exchange change
       on cash held in foreign
       currency                    1,498      (3,763)         18
                              ----------------------- -----------

    Intergroup funding
     (distributions)                 350       7,483           -
                              ----------------------- -----------

    Increase (decrease)
     in cash                      18,699     (81,273)   (333,388)
    Cash:
      Beginning of period         34,805     104,511     855,592
                              ----------------------- -----------
      End of period               53,504      23,238     522,204
    Short-term investments             -           -     114,079
                              ----------------------- -----------

    Cash and short-term
     investments                 $53,504     $23,238    $636,283
                              ----------------------- -----------


    2007 For the three months ended September 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                    $4,192     $53,713     $28,053      $5,775
      Net change in non-cash
       working capital              (748)    (12,111)     24,633        (967)
                              -----------------------------------------------
                                   3,444      41,602      52,686       4,808
                              -----------------------------------------------
    Cash provided by (used in)
     investing activities
      Capital spending               (14)     (7,109)     (1,347)     (1,050)
      Sale (purchase) of
       short-term investments   (190,024)       (452)          -           -
      Other                         (553)          -           -           -
                              -----------------------------------------------
                                (190,591)     (7,561)     (1,347)     (1,050)
                              -----------------------------------------------
    Cash provided by (used in)
     financing activities           (673)          -           -      (1,000)
                              -----------------------------------------------

                              -----------------------------------------------
      Foreign exchange change
       on cash held in foreign
       currency                        -     (18,399)     (2,338)          -
                              -----------------------------------------------

    Intergroup funding
     (distributions)              (1,946)      4,560      (5,077)     (2,758)
                              -----------------------------------------------

    Increase (decrease)
     in cash                    (189,766)     20,202      43,924           -
    Cash:
     Beginning of period         272,091     265,531      65,027           -
                              -----------------------------------------------
     End of period                82,325     285,733     108,951           -
    Short-term investments       289,701           -           -           -
                              -----------------------------------------------

    Cash and short-term
     investments                $372,026    $285,733    $108,951    $      -
                              -----------------------------------------------


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

    Cash provided by (used in)
     operating activities
      Before net change in
       non-cash working
       capital                   $37,803    $      -    $129,536
      Net change in non-cash
       working capital           (32,028)          -     (21,221)
                              ----------------------- -----------
                                   5,775           -     108,315
                              ----------------------- -----------
    Cash provided by (used in)
     investing activities
      Capital spending            (8,603)    (99,866)   (117,989)
      Sale (purchase) of
       short-term investments     17,359           -    (173,117)
      Other                            -           -        (553)
                              ----------------------- -----------
                                   8,756     (99,866)   (291,659)
                              ----------------------- -----------
    Cash provided by (used in)
     financing activities           (809)     46,475      43,993
                              ----------------------- -----------

                              ----------------------- -----------
      Foreign exchange change
       on cash held in foreign
       currency                   (2,212)        408     (22,541)
                              ----------------------- -----------

    Intergroup funding
     (distributions)             (26,107)     31,328           -
                              ----------------------- -----------

    Increase (decrease)
     in cash                     (14,597)    (21,655)   (161,892)
    Cash:
     Beginning of period          50,780      33,346     686,775
                              ----------------------- -----------
     End of period                36,183      11,691     524,883
    Short-term investments             -           -     289,701
                              ----------------------- -----------

    Cash and short-term
     investments                 $36,183     $11,691    $814,584
                              ----------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of retained earnings
    (unaudited)

                                    Three Months Ended     Nine Months Ended
    (thousands of Canadian                September 30          September 30
     dollars)                          2008       2007       2008       2007
    --------------------------------------------------- ---------------------

    Retained earnings, beginning
     of period, as previously
     reported                    $1,244,313   $903,305 $1,076,958   $669,004
    Adjustment for inventory
     (note 2)                             -          -     (2,196)         -
                                 ---------------------- ---------------------
    Retained earnings,
     restated                     1,244,313    903,305  1,074,762    669,004

    Net income                       75,057    114,836    249,436    353,964

    Dividends on common shares            -          -     (4,828)    (4,827)
    --------------------------------------------------- ---------------------
    Retained earnings, end
     of period                   $1,319,370 $1,018,141 $1,319,370 $1,018,141
    --------------------------------------------------- ---------------------
    (see accompanying notes)



    Consolidated statements of comprehensive income
    (unaudited)

                                    Three Months Ended     Nine Months Ended
    (thousands of Canadian                September 30          September 30
     dollars)                          2008       2007       2008       2007
    --------------------------------------------------- ---------------------

    Net income                      $75,057   $114,836   $249,436   $353,964
                                 ---------------------- ---------------------

    Other comprehensive income
     (loss) for the period(1):
      Changes in fair value of
       gold forward sales
       contracts                      3,593     (3,411)    (3,690)    (2,559)
      Changes in fair value of
       interest rate swap contracts    (445)    (1,417)      (327)    (1,537)
      Changes in fair value of
       foreign exchange forward
       contracts                          -      5,780      7,054      6,071
      Changes in fair value of
       investments                   (2,930)     1,074     (4,676)    20,382
      Currency translation
       adjustments                  (24,030)   (39,269)    40,456    (99,203)

    Reclassification to net
     income of gains/losses
     realized:
      Gain on sale of investment          -          -       (256)   (11,730)
      Troilus gold hedge loss         7,932      4,963     24,372     15,005
      Amortization of deferred
       Troilus gold hedges           (1,361)    (4,188)    (4,083)    (4,188)
      Amortization of Las Cruces
       foreign exchange forward
       contract                      (3,195)         -     (3,195)         -
      Ok Tedi gold hedge loss             -          -      1,013          -
      Foreign exchange loss on
       reduction of net investment
       in self-sustaining foreign
       operations (note 14)               -      1,580     20,384      3,311
                                 ---------------------- ---------------------
                                    (20,436)   (34,888)    77,052    (74,448)
                                 ---------------------- ---------------------

    Comprehensive income            $54,621    $79,948   $326,488   $279,516
    -------------------------------------------------------------------------
    (see accompanying notes)
    (1) net of applicable income taxes and non-controlling interest.


    INMET MINING CORPORATION
    Notes to the consolidated financial statements

    1.  Significant accounting policies

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

        On September 19, 2008, we acquired, through a wholly-owned
        subsidiary, 95 percent of the outstanding common shares Petaquilla
        Copper Ltd ("PTC"), a Canadian junior mining company listed on the
        Toronto Stock Exchange. PTC's principal asset is a 26 percent
        interest in the Petaquilla copper project for which we already
        owned 48 percent.

        For our interest, we paid $359 million in cash or $2.20 per PTC
        common share.

        We fully consolidated PTC's balance sheet effective September 19,
        2008 with the five percent of PTC that we do not own represented as
        non-controlling interest.

        We have not yet finalized the allocation of purchase consideration
        for this acquisition. The table below shows the preliminary fair
        value of the assets we acquired and liabilities we assumed at the
        date of acquisition, based on the consideration paid.

        ---------------------------------------------------------------------
        (thousands of Canadian dollars)
        ---------------------------------------------------------------------
        Consideration:
        Cash paid                                                   $359,000
        Transaction costs(1)                                          23,348
        ---------------------------------------------------------------------
        Cost of acquisition                                         $382,348
        ---------------------------------------------------------------------

        ---------------------------------------------------------------------
        Assets acquired:
        Cash                                                         $22,981
        Other current assets                                          $1,160
        Property, plant and equipment and other assets               383,417
        ---------------------------------------------------------------------
                                                                     407,558
        Liabilities assumed:
        Current liabilities                                          (14,611)
        Other liabilities                                             (6,619)
        Non-controlling interest                                      (3,980)
        ---------------------------------------------------------------------
        Net assets acquired                                         $382,348
        ---------------------------------------------------------------------
        (1) Includes Panamanian withholding taxes of $18 million as a
            result of transfer of ownership of the shares

    5.  Consolidation of Petaquilla

        As a result of our acquisition of PTC (note 4), we hold a 74 percent
        interest in Petaquilla and have determined that we control this
        entity. We fully consolidated Petaquilla's balance sheet effective
        September 19, 2008. Prior to September 19, 2008, we equity accounted
        for our investment in Petaquilla. 26 percent of the fair value of
        Petaquilla has been recognized in the purchase accounting for PTC.
        The remaining amount has been recognized at historical book values.

    6.  Statement of cash flows

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

        For the nine months ended September 30, 2008
        ---------------------------------------------------------------------

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

        Accounts receivable         $10,753    $(1,188)   $11,987       $533
        Inventories                       -       (992)       (91)    (1,194)
        Accounts payable and
         accrued liabilities        (10,530)     1,335        891     (3,462)
        Taxes                        (1,752)   (12,718)    (6,726)         -
        Other                           108         32          -          -
        ---------------------------------------------------------------------
                                    $(1,421)  $(13,531)    $6,061    $(4,123)
        ---------------------------------------------------------------------

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

        Accounts receivable         $18,254        $ -    $40,339
        Inventories                  (8,587)         -    (10,864)
        Accounts payable and
         accrued liabilities         (1,408)         -    (13,174)
        Taxes                           375          -    (20,821)
        Other                           (95)         -         45
        ----------------------------------------------------------
                                     $8,539        $ -    $(4,475)
        ----------------------------------------------------------

        For the nine months ended September 30, 2007
        ---------------------------------------------------------------------

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

        Accounts receivable         $(2,753)      $255    $17,819    $(5,072)
        Inventories                       -      1,247       (704)    (1,805)
        Accounts payable and
         accrued liabilities         (1,125)    (6,324)      (186)        76
        Taxes                        (3,548)    10,703     (4,256)         -
        Other                           (18)       (18)         -          -
        ---------------------------------------------------------------------
                                    $(7,444)    $5,863    $12,673    $(6,801)
        ---------------------------------------------------------------------

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

        Accounts receivable        $(22,800)         -   $(12,551)
        Inventories                     483          -       (779)
        Accounts payable and
         accrued liabilities         (2,789)         -    (10,288)
        Taxes                           421          -      3,320
        Other                        (1,453)         -     (1,549)
        ----------------------------------------------------------
                                   $(26,138)         -   $(21,847)
        ----------------------------------------------------------

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

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

        Accounts receivable          $1,921    $12,617     $2,625     $5,646
        Inventories                       -      2,188        623      1,126
        Accounts payable and
         accrued liabilities           (259)      (631)       971     (2,995)
        Taxes                        (4,890)       537     (2,456)         -
        Other                            60        (78)         -        421
        ---------------------------------------------------------------------
                                    $(3,168)   $14,633     $1,763     $4,198
        ---------------------------------------------------------------------

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

        Accounts receivable         $16,778        $ -    $39,587
        Inventories                  (7,085)         -     (3,148)
        Accounts payable and
         accrued liabilities          2,824          -        (90)
        Taxes                       (18,011)         -    (24,820)
        Other                            99          -        502
        ----------------------------------------------------------
                                    $(5,395)       $ -    $12,031
        ----------------------------------------------------------

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

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

        Accounts receivable         $(1,040)  $(18,705)   $23,421       $301
        Inventories                       -        362       (445)    (2,045)
        Accounts payable and
         accrued liabilities            771      3,881     (2,531)       777
        Taxes                          (458)     2,346      4,188          -
        Other                           (21)         5          -          -
        ---------------------------------------------------------------------
                                      $(748)  $(12,111)   $24,633      $(967)
        ---------------------------------------------------------------------

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

        Accounts receivable         $(7,884)       $ -    $(3,907)
        Inventories                  (1,128)         -     (3,256)
        Accounts payable and
         accrued liabilities          2,896          -      5,854
        Taxes                       (24,983)         -    (18,907)
        Other                          (929)         -     (1,005)
        ----------------------------------------------------------
                                   $(32,028)       $ -   $(21,221)
        ----------------------------------------------------------

    7.  Cash and short-term investments

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

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2008         2007
        ---------------------------------------------------------------------
        Cash:
        Liquidity funds                                $224,190     $424,390
        Term deposits                                   134,424       22,186
        Corporate                                        16,000            -
        Overnight deposits                               17,778       50,822
        Bankers' acceptances                             10,475            -
        Money market funds                               75,538       18,531
        Other                                            43,799        7,018
                                                   ------------- ------------
                                                        522,204      522,947
        Short-term investments:
        Federal and crown corporation investments        22,031      317,876
        Provincial short-term notes                      15,624            -
        Corporate                                        31,454            -
        Bankers' acceptances                             44,970            -
        ---------------------------------------------------------------------
                                                        114,079      317,876
        ---------------------------------------------------------------------
        Total cash and short-term investments          $636,283     $840,823
        ---------------------------------------------------------------------

    8.  Restricted cash

        The table below shows our restricted cash balances.

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2008         2007
        ---------------------------------------------------------------------
        Collateralized cash for letter of credit
         facility - Corporate                           $17,580      $14,444
        In trust for Ok Tedi reclamation                 14,422       11,836
        Collateralized cash for letters of
         credit - Las Cruces                             23,074       12,494
        Collateralized cash for Pyhasalmi
         reclamation                                      1,798            -
        Collateralized cash for guarantee - PTC           2,513            -
        ---------------------------------------------------------------------
                                                         59,387       38,774
        Less current portion:
          Collateralized cash for letters of
           credit - Las Cruces                           (7,294)      (1,569)
        ---------------------------------------------------------------------
                                                        $52,093      $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)4.8 million for dewatering and other purposes.

        We acquired $2.5 million of restricted cash as part of PTC which
        supports a guarantee of capital leases of one of its former related
        parties.

        9. Investments

        The table below shows our investments.
    -------------------------------------------------------------------------
                                                  September 30   December 31
    (thousands)                                           2008          2007
    -------------------------------------------------------------------------
    Available-for-sale equity securities:
      Premier Gold Mines Ltd.                          $20,696       $22,680
      Asset-backed commercial paper - PTC                7,913             -
      Other                                              4,336         9,586
    -------------------------------------------------------------------------
                                                       $32,945       $32,266
    -------------------------------------------------------------------------

        As part of our acquisition of PTC (note 4), we acquired an investment
        in asset-backed commercial paper (ABCP) issued by a number of trusts
        with an original cost of $12.8 million. This investment matured in
        early 2008 but as a result of liquidity issues in the ABCP market,
        did not settle on maturity. This investment is included in the
        ongoing Canadian ABCP restructuring that is expected to be finalized
        in the fourth quarter of 2008. We have recognized this asset at an
        estimated fair value of $7.9 million and have designated this
        financial instrument as available-for-sale.

        10. Derivatives

        The table below shows the fair value of our derivatives.
    -------------------------------------------------------------------------
                                                   September 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                       $      -      $26,889
      Ok Tedi gold and copper forward sales               4,274        9,034
      Las Cruces interest rate swaps                      9,081        8,037
    -------------------------------------------------------------------------
                                                        $13,355      $43,960
    -------------------------------------------------------------------------

        During the second quarter, Las Cruces' currency forward sale settled
        and Las Cruces received (euro)32.6 million. As this hedge was highly
        effective from inception to the date of settlement, we continue to
        apply hedge accounting for this contract. The gain on settlement
        continues to be deferred in Accumulated other comprehensive income
        (note 14) and will be recognized in income as a reduction of interest
        expense over the life of Las Cruces' credit facility - Tranche A.

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

        11. Long-term debt

    -------------------------------------------------------------------------
                                                   September 30  December 31
    (thousands)                                            2008         2007
    -------------------------------------------------------------------------
    Credit facility - Tranche A                        $222,900     $125,776
                    - Tranche B                          49,434       34,656
    Promissory note                                      17,266       16,267
    Loans from non-controlling shareholder              105,951       70,589
    -------------------------------------------------------------------------
                                                        395,551      247,288
    Less current portion:
    Credit facility - Tranche B                         (42,130)     (12,971)
    -------------------------------------------------------------------------
                                                       $353,421     $234,317
    -------------------------------------------------------------------------

        Credit facility

        In the first half of 2008, Las Cruces borrowed an additional (euro)52
        million under Tranche A, the US $215 million senior secured facility.
        On June 30, 2008, Tranche A was fully drawn and was converted from a
        euro-denominated loan to a US $215 million loan. Beginning July 1, we
        revalued the loan to euros (the functional currency of Las Cruces).
        Foreign exchange gains and losses on revaluations are reflected in
        Investment and other income (note 15).

        This quarter, there were no additional borrowings (2008 year to date
        - (euro)18 million) under Tranche B, the (euro)69 million senior
        secured bridge financing facility. During this quarter, Las Cruces
        repaid (euro)9 million under Tranche B equal to value-added tax
        refunds received.

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

        Loans from non-controlling shareholder

        This quarter, Las Cruces received (euro)3 million (2008 year to date
        - (euro)73 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)
        71 million, is reflected in long-term debt at September 30, 2008.
        Loans from non-controlling shareholders approximate fair value
        because the loans accrue interest at prevailing market rates.

        12. Reclamation liabilities

        During the current year to date, we have recognized additional
        liabilities of $4.6 million at Las Cruces as a result of development
        activities that have taken place.

        During the second quarter, we recognized additional liabilities of
        $4.3 million at Cayeli primarily as a result of cost escalation.

        13. Commitments

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

        -  Ok Tedi has committed approximately $50.9 million (our
           proportionate share is $9.2 million) to capital expenditures for
           the mine waste management project and pit drainage project.
        -  Las Cruces has committed $57.3 million to engineering, procurement
           and construction management and additional construction work
           related to the development of the mine and process plant.
        -  Cayeli has committed $2.9 million for mine and mill equipment.
        -  Cerattepe has committed approximately $4.4 million for mine and
           mill equipment.

        14. 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 nine months ending
     September 30, 2008                                               77,052
    -------------------------------------------------------------------------
    AOCI, September 30, 2008                                         $(6,684)
    -------------------------------------------------------------------------

    AOCI September 30, 2008 comprises:
    Unrealized losses on gold forward sales contracts (net of
     tax of $1,207)                                                 $(10,256)
    Deferred Troilus gold hedges                                       1,361
    Unrealized gains on foreign exchange forward contract(3)          20,926
    Unrealized losses on interest rate swap contract(4)               (4,424)
    Unrealized gains on investments (net of tax of $1,926)             9,574
    Currency translation adjustment                                  (23,865)
    -------------------------------------------------------------------------
    AOCI, September 30, 2008                                         $(6,684)
    -------------------------------------------------------------------------

        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 $14,786 and non-controlling interest of $10,350.
        4. Net of tax of $2,710 and non-controlling interest of $1,895.

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

    -------------------------------------------------------------------------
                                                   September 30  December 31
    (thousands)                                            2008         2007
    -------------------------------------------------------------------------
    Pyhasalmi (euro functional currency)                $(6,295)     $(1,466)
    Las Cruces (euro functional currency)                 8,533       (1,919)
    Cayeli (US dollar functional currency)              (16,079)     (65,822)
    Ok Tedi (US dollar functional currency)              (7,925)     (15,498)
    Petaquilla (US dollar functional currency)           (2,099)           -
    -------------------------------------------------------------------------
                                                       $(23,865)    $(84,705)
    -------------------------------------------------------------------------

        The US dollar to Canadian dollar exchange rate was $1.06 at September
        30, 2008 and $0.99 at December 31, 2007. The euro to Canadian dollar
        exchange rate was $1.50 at September 30, 2008 and $1.45 at December
        31, 2007.

        15. Investment and other income

        Investment and other income are summarized as follows:

    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30              September 30
    (thousands)                  2008         2007         2008         2007
    -------------------------------------------------------------------------
    Interest income            $6,308      $11,490      $21,994      $25,884
    Foreign exchange gain
     (loss)                   (16,553)      (4,695)     (28,268)     (14,240)
    Dividend and royalty
     income                     1,650        1,821        3,154        3,821
    Gain on sale of Wolfden         -            -            -       11,730
    Other                       3,128        1,028        1,049        3,291
    -------------------------------------------------------------------------
                              $(5,467)      $9,644      $(2,071)     $30,486
    -------------------------------------------------------------------------

        Foreign exchange

        A net foreign exchange loss of $16.6 million was recognized this
        quarter due to revaluation of Las Cruces' US dollar-denominated debt
        (note 11).

        For the year, we also 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.

        16. Non-controlling interest

        The table below provides a breakdown of our non-controlling interest:

                 -----------------------------------------------
                                      September 30  December 31
                 (thousands)                  2008         2007
                 -----------------------------------------------
                 Las Cruces (30%)          $54,817      $51,574
                 PTC (5%)                    3,980            -
                 Petaquilla (26%)           11,375            -
                 -----------------------------------------------
                                           $70,172      $51,574
                 -----------------------------------------------

        17. Income tax expense (recovery)

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

        For the nine months ended September 30, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current income
     taxes          $8,060   $36,565   $18,597   $49,447   $(4,283) $108,386
    Future income
     taxes               -    (2,358)      269       877      (718)   (1,930)
    -------------------------------------------------------------------------
                    $8,060   $34,207   $18,866   $50,324   $(5,001) $106,456
    -------------------------------------------------------------------------

    For the nine months ended September 30, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current income
     taxes          $1,157   $40,131   $24,548   $57,205        $-  $123,041
    Future income
     taxes               -       358       163    (2,282)      254    (1,507)
    -------------------------------------------------------------------------
                    $1,157   $40,489   $24,711   $54,923      $254  $121,534
    -------------------------------------------------------------------------

    For the three months ended September 30, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current income
     taxes          $2,526    $8,093    $6,061    $2,856   $(4,283)  $15,253
    Future income
     taxes               -    (1,665)      357     4,318      (884)    2,126
    -------------------------------------------------------------------------
                    $2,526    $6,428    $6,418    $7,174   $(5,167)  $17,379
    -------------------------------------------------------------------------

    For the three months ended September 30, 2007
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Cayeli Pyhasalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------
    Current income
     taxes            $386   $14,059    $7,302   $13,029        $-   $34,776
    Future income
     taxes               -    (1,004)      123     3,986      (232)    2,873
    -------------------------------------------------------------------------
                      $386   $13,055    $7,425   $17,015     $(232)  $37,649
    -------------------------------------------------------------------------


        18. Net income per share

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

    -------------------------------------------------------------------------
                                Three months ended         Nine months ended
                                      September 30              September 30
    (thousands)                  2008         2007         2008         2007
    -------------------------------------------------------------------------
    Net income available to
     common shareholders      $75,057     $114,836     $249,436     $353,964
    -------------------------------------------------------------------------

    (thousands)
    -------------------------------------------------------------------------
    Weighted average common
     shares outstanding        48,282       48,278       48,282       48,278
    Plus incremental shares
     from assumed conversions
     deferred share units          78           74           78           74
    -------------------------------------------------------------------------
    Diluted weighted average
     common shares outstanding 48,360       48,352       48,360       48,352
    -------------------------------------------------------------------------

    (Canadian dollars per share)
    -------------------------------------------------------------------------
    Basic net income per
     common share               $1.55        $2.38        $5.17        $7.33
    Dilutive effect from assumed
     conversions of deferred
     share units per common
     share                          -        (0.01)       (0.01)       (0.01)
    -------------------------------------------------------------------------
    Diluted net income per
     common share               $1.55        $2.37        $5.16        $7.32
    -------------------------------------------------------------------------

    19. Subsequent event

    On October 24, 2008 we learned that the Rize Administrative Court ruled
    to cancel the Cerattepe operating licences. We will review the reasons
    for the decision once we receive it and will discuss with the Turkish
    Ministry of Energy and Natural Resources an appeal to the Supreme
    Administrative Court of Turkey. We will continue to keep the project on
    care and maintenance and also suspend all work on the project and re-
    assess our development plans in light of the court decision.
    





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

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INMET MINING CORPORATION

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