Inmet announces third quarter earnings of $1.10 per share compared with $1.55
per share in the third quarter of 2008

All amounts in Canadian dollars unless indicated otherwise

TORONTO, Oct. 27 /CNW/ -

Third quarter highlights

    
    -   Comparable sales as lower sales volumes offset higher metal prices

        Higher copper, zinc and gold prices increased sales by $35 million
        this quarter compared to the same quarter in 2008. This was offset
        somewhat by lower sales volumes, which reduced sales by $34 million,
        of which $16 million was due to reduced pyrite sales volumes.

    -   Lower operating costs

        Cost of sales in the third quarter of 2009 were $12 million lower
        than they were last year mainly because Troilus is now only
        processing stockpiles and costs are lower at Çayeli.

    -   Higher zinc production

        Copper production this quarter was slightly lower than last year
        because grades were lower. Zinc production was higher because grades
        were higher. Gold production was lower because Troilus drew all of
        its feed from its low grade stockpile.

    -   Las Cruces copper production was lower than planned

        2,200 tonnes of copper cathode was produced during the third quarter.
        This was significantly below our expectations, and was the result of
        typical start-up issues encountered during the commissioning stage.
        We do not expect any of these issues to affect the long-term
        performance of the plant.

    -   Lower copper cash costs

        Copper cash costs this quarter were US $0.46 per pound compared to
        US $0.60 per pound in the third quarter of 2008. Lower unit direct
        production costs and higher metal credits helped lower cash costs,
        but this was partly offset by higher unit treatment charges. Cash
        costs are a non-GAAP measure (see pages 30 to 33).

    -   Updated 2009 production outlook

        We have revised our annual production objectives to reflect actual
        production so far this year at Çayeli, Ok Tedi and Las Cruces. We now
        expect to produce 87,000 tonnes of copper, 76,000 tonnes of zinc,
        224,000 ounces of gold and 388,000 tonnes of pyrite in 2009.

    -   Las Cruces repaid its credit facility

        On July 31, 2009, Las Cruces repaid the remaining $232 million
        outstanding under its credit facility and cash collateralized
        $32 million in letters of credit that had been secured under the
        credit facility. This eliminated the Las Cruces project credit
        facility and has significantly reduced long-term debt in our
        consolidated financial statements. We recognized $21 million in net
        gains from the settlement and the realization of hedge contracts
        associated with the credit facility. We also realized a foreign
        exchange loss of $14 million on US dollar cash we were holding in
        Canada to repay the facility.

    -   Joint Development Agreement between Suez Energy Central America and
        Cobre Panama

        A joint development agreement was signed with Suez in July to develop
        a coal fired power plant that will supply power to the project. The
        agreement details how we will work together over the next few months
        as the plant design is finalized. It also includes term sheets for a
        prospective power purchase agreement.
    

Key financial data

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
                            2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    FINANCIAL HIGHLIGHTS
    (thousands, except
     per share amounts)

    Sales
    Gross sales         $241,121  $247,495    -3%  $693,315  $805,239   -14%

    Net income
    Net income           $61,551   $75,057   -18%  $179,406  $249,436   -28%
    Net income per
     share                 $1.10     $1.55   -29%     $3.51     $5.17   -32%

    Cash flow
    Cash flow provided
     by operating
     activities          $89,277   $97,805    -9%  $196,970  $293,513   -33%
    Cash flow provided
     by operating
     activities per
     share(1)              $1.59     $2.03   -22%     $3.86     $6.08   -37%

    Capital spending(2)  $23,789   $94,371   -75%  $204,911  $326,813   -37%
    -------------------------------------------------------------------------

    OPERATING HIGHLIGHTS

    Production(3)
      Copper (tonnes)     19,900    20,800    -4%    59,200    59,400      -
      Zinc (tonnes)       21,700    14,600   +49%    54,500    55,900    -3%
      Gold (ounces)       48,200    63,200   -24%   177,600   179,400    -1%
      Pyrite (tonnes)          -   177,800  -100%   323,000   483,500   -33%

    Cash costs(4)
      Copper
       (US $ per pound)    $0.46     $0.60   -23%     $0.54     $0.51    +6%
      Gold
       (US $ per ounce)     $240      $432   -44%      $171      $395   -57%
    -------------------------------------------------------------------------


                                                 ----------------------------
                                                         as at         as at
                                                  September 30   December 31
    FINANCIAL CONDITION                                   2009          2008
                                                 ----------------------------
    Current ratio                                     4.8 to 1      2.4 to 1
    Gross debt to total equity(5)                           1%           19%
    Net working capital balance (millions)                $577          $475
    Cash balance (millions)                               $497          $573
    Shareholders' equity (millions)                     $2,196        $1,868
    -------------------------------------------------------------------------
    (1) Calculated as cash flow provided by operating activities divided by
        average shares outstanding for the respective period.
    (2) For the nine months of 2009 includes $108 million in spending at Las
        Cruces and $70 million at Cobre Panama.
    (3) Inmet's share.
    (4) Cash cost per pound of copper and cash cost per ounce of gold are
        non-GAAP measures - see Supplementary financial information on pages
        30 to 33.
    (5) Gross debt includes long-term debt and current portion of long-term
        debt less the non-recourse note owing from Las Cruces to its non-
        controlling shareholder.

    Third quarter press release

    Where to find it

    Our financial results................................................  4
    Key changes in 2009..................................................  4
    Understanding our performance........................................  5
      Earnings from operations...........................................  7
      Corporate costs.................................................... 11
    Results of our operations............................................ 13
      Çayeli............................................................. 14
      Pyhäsalmi.......................................................... 16
      Las Cruces......................................................... 18
      Troilus............................................................ 20
      Ok Tedi............................................................ 22
    Status of our development project.................................... 24
      Cobre Panama....................................................... 24
    Managing our liquidity............................................... 25
    Financial condition.................................................. 28
    Accounting changes................................................... 30
    Supplementary financial information.................................. 30
    Quarterly review..................................................... 34
    Consolidated financial statements.................................... 35
    

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, 2009.

Forward looking information

Securities regulators encourage companies to disclose forward-looking information to help investors understand a company's future prospects. This press release contains statements about our future financial condition, results of operations and business.

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

Our financial results

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
    (thousands, except                September 30               September 30
     per share amounts)     2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    EARNINGS FROM
     OPERATIONS(1)

    Çayeli               $28,789   $32,004   -10%   $65,875  $130,921   -50%
    Pyhäsalmi             20,800    29,660   -30%    39,126    84,886   -54%
    Troilus               14,096     6,488  +117%    84,612    22,633  +274%
    Ok Tedi               48,974    33,974   +44%   102,089   137,548   -26%
    Other                   (409)     (476)  -14%    (1,401)   (1,464)   -4%
    -------------------------------------------------------------------------
                         112,250   101,650   +10%   290,301   374,524   -22%
    -------------------------------------------------------------------------
    DEVELOPMENT AND
     EXPLORATION
    Corporate development
     and exploration      (1,963)   (3,548)  -45%    (7,922)   (8,649)   -8%
    -------------------------------------------------------------------------
    CORPORATE COSTS
    General and
     administration       (5,147)   (3,411)  +51%   (14,056)   (9,849)  +43%
    Investment and other
     income                3,588    (5,467) +166%     8,851    (2,071) +527%
    Asset impairment           -         -      -    (6,419)        -  +100%
    Interest expense        (496)     (476)   +4%    (1,481)   (1,394)   +6%
    Income and capital
     taxes               (39,988)  (17,504) +128%   (83,180) (106,831)  -22%
    Non-controlling
     interest             (6,693)    3,813  -276%    (6,688)    3,706  -280%
    -------------------------------------------------------------------------
                         (48,736)  (23,045) +111%  (102,973) (116,439)  -12%
    -------------------------------------------------------------------------

    Net income           $61,551   $75,057   -18%  $179,406  $249,436   -28%
    -------------------------------------------------------------------------
    Basic net income
     per share             $1.10     $1.55   -29%     $3.51     $5.17   -32%
    -------------------------------------------------------------------------
    Diluted net income
     per share             $1.09     $1.55   -30%     $3.50     $5.16   -32%
    -------------------------------------------------------------------------
    Weighted average
     shares outstanding   56,107    48,282   +16%    51,062    48,282    +6%
    -------------------------------------------------------------------------
    (1) Gross sales less smelter processing charges and freight, cost of
        sales, depreciation and provisions for mine reclamation.
    

Key changes in 2009

    
    -------------------------------------------------------------------------
                                               three          nine
                                        months ended  months ended       see
    (millions)                          September 30  September 30      page
    -------------------------------------------------------------------------
    EARNINGS FROM OPERATIONS
    Sales
    Higher (lower) copper and zinc prices
     denominated in Canadian dollars             $21         $(115)        7
    Higher gold prices and other prices           15            66         7
    Lower sales volumes                          (21)          (32)        8
    Lower pyrite sales, net of costs
     to sell                                     (20)          (29)        8

    Costs
    Lower smelter processing charges and
     freight                                       3            15         9
    Lower operating costs, including costs
     that vary with income and cash flows         15            24        10
    Higher depreciation                           (3)          (14)       10
    Other                                          1             1
    -------------------------------------------------------------------------
    Higher (lower) earnings from
     operations, compared to 2008                $11          $(84)

    CORPORATE COSTS
    Change in income tax expense from
     change in earnings                          (22)           24        12
    Lower interest income on cash balances        (5)          (18)       11
    Foreign exchange loss on US dollar cash      (14)          (14)       11
    Other foreign exchange changes                13            33        11
    Settlement and realization of hedge
     contracts                                    21            21        11
    Change in non-controlling interest           (11)          (10)
    Other                                         (7)          (22)
    -------------------------------------------------------------------------
    Lower net income, compared to 2008          $(14)         $(70)
    -------------------------------------------------------------------------
    

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          nine months ended
                                      September 30               September 30
                            2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    US dollar metal prices
      Copper (per pound)   $2.83     $2.66    +6%     $2.39     $3.52   -32%
      Zinc (per pound)     $0.83     $0.73   +14%     $0.68     $0.93   -27%
      Gold (per ounce)      $957      $715   +34%      $945      $736   +28%
    -------------------------------------------------------------------------
    Canadian dollar metal
     prices
      Copper (per pound)   $3.11     $2.77   +12%     $2.80     $3.59   -22%
      Zinc (per pound)     $0.91     $0.76   +20%     $0.80     $0.95   -16%
      Gold (per ounce)    $1,050      $744   +41%    $1,105      $751   +47%
    -------------------------------------------------------------------------
    

There has been an overall improvement in base metal prices in 2009 so far, and a steady increase in the price of gold.

Copper

The price of copper has increased progressively this year, doubling since the beginning of 2009, and rising 25 percent this quarter, closing at US $2.78 per pound.

The increase, which we believe is the combined result of economic optimism, investment fund interest, record Chinese consumption and imports, and a weaker US dollar, came about in spite of an increase in LME warehouse inventories. LME copper inventories rose 30 percent this quarter, to 346,000 tonnes.

Zinc

Zinc prices increased by 23 percent this quarter, to US $0.87 per pound.

This increase, which we believe comes from expectations that output from zinc smelters in China will be going down, is in spite of a reduction in world demand for zinc and an increase in LME warehouse inventories. LME zinc inventories went up by 24 percent this quarter, to 437,000 tonnes.

Gold

Gold prices continued to increase this quarter, closing September at US $996 per ounce. This is a 7 percent increase from the June close and a 22 percent increase from the start of the year. In mid-September the price reached US $1,018 per ounce - its highest level ever - mainly because of the depreciating US dollar and renewed investor demand.

Pyrite

The economic downturn began to have a significant effect on demand for sulphur and sulphuric acid near the end of 2008. Despite a slight increase in price this quarter, the sulphur markets are still feeling the effects of the downturn. We expect sulphur prices to continue to be lower over the short to medium term, which will have a direct impact on pyrite prices.

Exchange rates

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

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
                            2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Exchange rates
      1 US$ to C$          $1.10     $1.04    +6%     $1.17     $1.02   +15%
      1 euro to C$         $1.57     $1.56    +1%     $1.59     $1.55    +3%
      1 euro to US$        $1.43     $1.51    -5%     $1.37     $1.52   -10%
    -------------------------------------------------------------------------
    

Our sales are affected by the conversion of US dollar revenue to Canadian dollars. The Canadian dollar dropped 6 percent this quarter relative to the US dollar, and 1 percent relative to the euro as compared to the same quarter last year. The result was a $2 million increase in net income, as described in the table below. In addition, because we were holding US dollar cash in Canada in a period where the Canadian dollar strengthened, we also realized a foreign exchange loss of $14 million in the quarter.

    
    -------------------------------------------------------------------------
                                                          three months ended
    (millions)                                                  September 30
    -------------------------------------------------------------------------
    US dollar sales and costs translated into Canadian dollars
     (reflected in Canadian dollar sales price)                           $4
    Foreign exchange loss realized on US dollar cash held in Canada      (14)
    Other                                                                 (2)
    -------------------------------------------------------------------------
                                                                        $(12)
    -------------------------------------------------------------------------
    

Treatment charges up for copper and down for zinc

Treatment charges are one component of smelter processing charges. We also pay smelters for content losses and price participation.

The table below shows the average charges we realized this quarter and year to date.

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
                            2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Treatment charges
      Copper (per dry
       metric tonne of
       concentrate)          $72       $41   +76%       $77       $44   +75%
      Zinc (per dry
       metric tonne of
       concentrate)         $205      $341   -40%      $221      $304   -27%
    -------------------------------------------------------------------------
    Price participation
      Copper (per pound)   $0.03     $0.06   -50%     $0.03     $0.04   -25%
      Zinc (per pound)     $0.07     $0.04   +75%     $0.03    $(0.01) +400%
    -------------------------------------------------------------------------
    Freight charges
      Copper (per dry
       metric tonne of
       concentrate)          $48       $58   -17%       $40       $53   -25%
      Zinc (per dry
       metric tonne of
       concentrate)          $20       $31   -35%       $27       $38   -29%
    -------------------------------------------------------------------------
    

Statutory tax rates remain consistent

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

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

Earnings from operations

Earnings from operations include the following:

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
    (thousands)             2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Gross sales         $241,121  $247,495    -3%  $693,315  $805,239   -14%
    Smelter processing
     charges and
     freight             (41,607)  (49,502)  -16%  (122,736) (146,868)  -16%
    Cost of sales:
      Direct production
       costs             (69,698)  (84,628)  -18%  (218,547) (244,238)  -11%
      Inventory changes      179     2,179   -92%    (1,493)    3,375  -144%
      Provisions for mine
       rehabilitation and
       other non-cash
       charges            (3,187)   (2,499)  +28%   (16,397)  (13,224)  +24%
    Depreciation         (14,558)  (11,395)  +28%   (43,841)  (29,760)  +47%
    -------------------------------------------------------------------------
    Earnings from
     operations         $112,250  $101,650   +10%  $290,301  $374,524   -22%
    -------------------------------------------------------------------------
    

Gross sales were down this year

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
    (thousands)             2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Gross sales by
     operation
      Çayeli             $67,612   $78,780   -14%  $191,344  $277,709   -31%
      Pyhäsalmi           48,262    67,694   -29%   125,244   183,851   -32%
      Troilus             34,279    35,438    -3%   158,676   104,860   +51%
      Ok Tedi(1)          90,968    65,583   +39%   218,051   238,819    -9%
    -------------------------------------------------------------------------
                        $241,121  $247,495    -3%  $693,315  $805,239   -14%
    -------------------------------------------------------------------------
    Gross sales by
     metal
      Copper            $138,345  $134,972    +2%  $348,344  $464,670   -25%
      Zinc                35,237    29,115   +21%    95,289   130,106   -27%
      Gold                54,099    46,326   +17%   202,824   134,659   +51%
      Other               13,440    37,082   -64%    46,858    75,804   -38%
    -------------------------------------------------------------------------
                       $241,121   $247,495    -3%  $693,315  $805,239   -14%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's sales.


    Change in sales mainly the combined result of higher metals prices and
    lower sales volumes

    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Higher (lower) copper prices, denominated in
     Canadian dollars                                      $16          $(96)
    Higher (lower) zinc prices, denominated in Canadian
     dollars                                                 5           (19)
    Higher gold prices, denominated in Canadian dollars     14            65
    Changes in other metal prices                           (7)           (9)
    Lower sales volumes                                    (34)          (53)
    -------------------------------------------------------------------------
    Lower gross sales, compared to 2008                    $(6)        $(112)
    -------------------------------------------------------------------------
    

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 calculated using 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).

In the third quarter, we recorded $9 million in positive finalization adjustments from second quarter sales.

    
    At the end of this quarter, the following sales had not been settled:
    -   28 million pounds of copper provisionally priced at US $2.79 per
        pound
    -   16 million pounds of zinc provisionally priced at US $0.89 per pound.
    

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

    
    -------------------------------------------------------------------------
    (millions of pounds)                                copper          zinc
    -------------------------------------------------------------------------
    October 2009                                            13            10
    November 2009                                            7             6
    December 2009                                            3             -
    January 2010                                             5             -
    -------------------------------------------------------------------------
    Unsettled sales at September 30, 2009                   28            16
    -------------------------------------------------------------------------
    

Lower sales volumes

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

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
                            2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Sales volumes
      Copper (tonnes)     20,800    22,000    -5%    57,700    59,200    -3%
      Zinc (tonnes)       17,600    17,000    +4%    54,900    62,500   -12%
      Gold (ounces)       51,100    61,100   -16%   183,100   178,100    +3%
      Pyrite (tonnes)     98,600   225,000   -56%   295,600   491,700   -40%
    -------------------------------------------------------------------------

    Production
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
    Inmet's                   September 30             September 30 objective
     share(1)         2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Copper (tonnes)
      Ok Tedi        7,300    7,300      -   20,800   21,400    -3%   28,600
      Çayeli         6,400    8,600   -26%   21,000   24,400   -14%   31,100
      Pyhäsalmi      3,700    3,300   +12%   11,000    9,900   +11%   14,000
      Las Cruces     1,500        -  +100%    1,500        -  +100%    7,700
      Troilus        1,000    1,600   -38%    4,900    3,700   +32%    6,000
    -------------------------------------------------------------------------
                    19,900   20,800    -4%   59,200   59,400      -   87,400
    -------------------------------------------------------------------------
    Zinc (tonnes)
      Çayeli        13,600    8,900   +53%   37,100   34,900    +6%   50,200
      Pyhäsalmi      8,100    5,700   +42%   17,400   21,000   -17%   25,800
    -------------------------------------------------------------------------
                    21,700   14,600   +49%   54,500   55,900    -3%   76,000
    -------------------------------------------------------------------------
    Gold (ounces)
      Troilus       26,200   38,000   -31%  111,000  110,800      -  130,000
      Ok Tedi       22,000   25,200   -13%   66,600   68,600    -3%   93,600
    -------------------------------------------------------------------------
                    48,200   63,200   -24%  177,600  179,400    -1%  223,600
    -------------------------------------------------------------------------
    Pyrite (tonnes)
      Pyhäsalmi          -  177,800  -100%  323,000  483,500   -33%  388,000
    -------------------------------------------------------------------------
    (1) Inmet's share represents 100 percent for Çayeli, Pyhäsalmi and
        Troilus, 18 percent for Ok Tedi and 70 percent for Las Cruces.
    

Copper production this quarter was lower than the same quarter in 2008, because metal grades at Çayeli and Troilus were lower. This was partly offset by new production at Las Cruces and higher grades at Pyhäsalmi.

Zinc production was up mainly because zinc grades and recoveries at Çayeli and Pyhäsalmi were higher.

Gold production was down because grades were lower at Troilus (as production was drawn from its low grade stockpiles) and Ok Tedi.

We suspended pyrite production in the quarter because of low demand.

2009 outlook for sales

Our outlook for sales normally ties directly to our production outlook. We have revised our annual production objectives because production so far this year at Çayeli, Ok Tedi and Las Cruces has been lower than we expected. Turn to Results of our operations starting on page 13 for an explanation for each operation. We have reduced our production objectives overall from our second quarter estimates, by 13,100 tonnes of copper, 1,900 tonnes of zinc, 6,400 ounces of gold and 23,000 tonnes of pyrite.

Our Canadian dollar sales revenues are affected by the US dollar denominated metal price we receive, and the exchange rate between the US dollar and Canadian dollar. Since the uncertainty of the markets makes it difficult to forecast metal prices, we continue to focus on maximizing the efficiency of our operations to remain competitive in any economic environment.

Lower smelter processing charges than last year

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
    (thousands)             2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Smelter processing
     charges and freight
     by operation
      Çayeli             $17,580   $17,543      -   $55,094   $65,121   -15%
      Pyhäsalmi           12,485    21,958   -43%    33,802    47,339   -29%
      Troilus              2,272     2,541   -11%    10,990     7,149   +54%
      Ok Tedi(1)           9,270     7,460   +24%    22,850    27,259   -16%
    -------------------------------------------------------------------------
                         $41,607   $49,502   -16%  $122,736  $146,868   -16%
    -------------------------------------------------------------------------
    Smelter processing
     charges and freight
     by metal
      Copper             $21,483   $19,728    +9%   $59,826   $62,138    -4%
      Zinc                11,962    17,551   -32%    38,930    62,002   -37%
      Other                8,162    12,223   -33%    23,980    22,728    +6%
    -------------------------------------------------------------------------
                         $41,607   $49,502   -16%  $122,736  $146,868   -16%
    -------------------------------------------------------------------------
    Smelter processing
     charges by type
     and freight
      Copper treatment
       and refining
       charges            $8,657    $5,473   +58%   $27,290   $16,101   +69%
      Zinc treatment
       charges             7,016    10,662   -34%    24,065    36,802   -35%
      Copper price
       participation       1,393     1,551   -10%     4,138     5,796   -29%
      Zinc price
       participation       2,669     1,445   +85%     3,505      (816) -530%
      Content losses      12,217    11,392    +7%    33,741    43,752   -23%
      Other                2,427       693  +250%     6,334     5,651   +12%
      Freight              7,228    18,286   -60%    23,663    39,582   -40%
    -------------------------------------------------------------------------
                         $41,607   $49,502   -16%  $122,736  $146,868   -16%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's smelter processing charges and
        freight.
    

Copper treatment and refining charges are higher this year than they were in 2008 because contract terms with smelters are less favourable. Zinc treatment charges are lower because contract terms are more favourable, and also for the nine months of 2009 because sales volumes were down.

2009 outlook for smelter processing charges and freight

We do not expect any significant changes in pricing in the last quarter of this year because the majority of our sales have set pricing under long-term contracts. We should, however, see some benefit from a small number of copper spot sales, since terms are more favourable now than they were earlier in the year.

Las Cruces began producing copper in June. Its copper cathode production is sold directly to copper fabricators, bypassing the smelters and eliminating smelting and refining charges.

We expect our ocean freight costs to be about 20 percent lower than they were in 2008 because of the general slowdown in global economic activity.

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

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
    (thousands)             2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Direct production
     costs by operation
      Çayeli             $18,583   $22,622   -18%   $58,889   $68,600   -14%
      Pyhäsalmi           14,026    14,090      -    45,391    44,045    +3%
      Troilus             12,671    23,787   -47%    43,588    66,079   -34%
      Ok Tedi(1)          24,418    24,129    +1%    70,679    65,514    +8%
    -------------------------------------------------------------------------
    Total direct
     production costs     69,698    84,628   -18%   218,547   244,238   -11%
    Inventory changes       (179)   (2,179)  -92%     1,493    (3,375) -144%
    Reclamation, accretion
     and other non-cash
     expenses              3,187     2,499   +28%    16,397    13,224   +24%
    -------------------------------------------------------------------------
    Total cost of sales  $72,706   $84,948   -14%  $236,437  $254,087    -7%
    -------------------------------------------------------------------------
    (1) Our 18 percent share of Ok Tedi's direct production costs.
    

Direct production costs in 2009 were lower than they were last year mainly because Troilus completed mining in April and began recovering ore from its lower cost stockpiles. Çayeli has also seen the benefit of continued efficiencies and lower labour costs from the drop in value of the Turkish lira.

2009 outlook for cost of sales

We expect cost of sales to increase in the fourth quarter assuming we begin commercial production at Las Cruces. The cost of consumables and energy should remain at recent levels. The total amount we spend in Canadian dollars will also be affected by the value of the US dollar and euro relative to the Canadian dollar.

Depreciation was higher than last year

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
    (thousands)             2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Depreciation by
     operation
      Çayeli              $2,980    $3,369   -12%    $9,826    $8,298   +18%
      Pyhäsalmi            1,473     2,343   -37%     6,237     6,725    -7%
      Troilus              3,401     2,149   +58%    10,121     6,285   +61%
      Ok Tedi              6,704     3,534   +90%    17,657     8,452  +109%
    -------------------------------------------------------------------------
                         $14,558   $11,395   +28%   $43,841   $29,760   +47%
    -------------------------------------------------------------------------
    

Depreciation is higher than last year mainly because we started depreciating the mine tailings management plant at Ok Tedi, as well as assets associated with an increase in our asset retirement obligations at Troilus.

2009 outlook for depreciation

We expect depreciation to be between $60 and $70 million for 2009 depending on when Las Cruces achieves commercial production.

Corporate costs

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

    
    Investment and other income was higher due to the impact of repaying Las
    Cruces' credit facility
    -------------------------------------------------------------------------
                                    three months ended     nine months ended
                                          September 30          September 30
    (thousands)                        2009       2008       2009       2008
    -------------------------------------------------------------------------
    Interest income                  $1,135     $6,308     $3,878    $21,994
    Dividend and royalty income         300      1,650        985      3,154
    Loss on recognition of
     settlement of interest rate
     swap contract                  (14,823)         -    (14,823)         -
    Gain on recognition of
     settlement of foreign currency
     forward contract                35,615          -     35,615          -
    Foreign exchange gain (loss)    (17,417)   (16,553)    (9,319)   (28,268)
    Other                            (1,222)     3,128     (7,485)     1,049
    -------------------------------------------------------------------------
                                     $3,588    $(5,467)    $8,851    $(2,071)
    -------------------------------------------------------------------------

    Interest income is lower than last year because market yields this year
    have been lower, and we have had a lower average cash balance.

    Recognition of interest rate swap contract and foreign currency forward
    contract
    

On July 31, 2009, we repaid 100 percent of Las Cruces' US dollar denominated bank credit facility (see also Long-term debt repayments and settlement of interest rate swap contract on page 27), and replaced it with intergroup debt using the proceeds from our equity offering. Las Cruces terminated its interest rate swap contracts on July 20, 2009 paying out $16 million for early termination. This had the following effects on investment and other income during the third quarter:

    
    -   when we converted the Las Cruces debt from euro to US dollars in
        2008, Las Cruces settled a foreign exchange forward contract and
        received proceeds of $52 million. We deferred the proceeds in
        accumulated other comprehensive income, and have been amortizing it
        to income over the term of the debt. When we repaid the debt, we
        realized the remaining deferred gain of $36 million in investment and
        other income.
    -   when we repaid the debt, we recorded the $15 million interest rate
        swap loss that we had deferred in accumulated other comprehensive
        income in investment and other income.
    

Foreign exchange gain (loss)

We have a foreign exchange gain or loss when:

    
    -   we revalue certain foreign denominated assets and liabilities
    -   we distribute funds from our self-sustaining operations and recognize
        the foreign exchange we previously deferred on our original
        investment and on funds as they accumulated.
    

Foreign exchange gains (losses) are a result of the following:

    
    -------------------------------------------------------------------------
                                    three months ended     nine months ended
                                          September 30          September 30
    (millions)                         2009       2008       2009       2008
    -------------------------------------------------------------------------
    Revaluation of US dollar
     denominated bank credit
     facility at Las Cruces         $(1,348)  $(12,895)    $2,460   $(12,895)
    Revaluation of US dollar cash
     held in Canada                 (13,976)        16    (14,395)       (11)
    Distribution of funds from
     subsidiaries                    (1,439)         -      2,473    (20,384)
    Revaluation of short-term
     foreign intergroup loans,
     cash and other monetary items     (654)    (3,674)       143      5,022
    -------------------------------------------------------------------------
                                   $(17,417)  $(16,553)   $(9,319)  $(28,268)
    -------------------------------------------------------------------------

    Revaluation of US dollar denominated bank credit facility at Las Cruces
    -----------------------------------------------------------------------
    

These foreign exchange movements resulted when we revalued the US dollar credit facility at Las Cruces into euros (its functional currency). We replaced this credit facility with intergroup debt as of July 31, 2009. There will be foreign exchange fluctuations on the intergroup debt, but these will not appear on the financial statements because they will be eliminated when consolidated.

    
    Revaluation of US dollar cash held in Canada
    --------------------------------------------
    

At June 30, we had US $229 million set aside to fund Las Cruces' repayment of its credit facility. We transferred the cash to Las Cruces later in July, but in that time the Canadian dollar increased in value, resulting in a foreign exchange loss of $14 million.

2009 outlook for investment and other income

Investment and other income is affected by cash balances, interest rates and exchange rates. We expect to repatriate funds only from Ok Tedi over the rest of 2009. Because Ok Tedi distributes its earnings more frequently, the effect of repatriation is normally not that significant.

At September 30, 2009, we held (euro)14 million in Canada that could be affected by foreign exchange gains or losses.

Asset impairment

We made a decision in 2008 not to proceed with the Cerattepe project. All work ceased on the project and we took a $34 million charge to write down the assets to net realizable value. We took an additional impairment charge of $6 million in the first quarter of 2009, as well as a $6 million tax recovery.

Income tax expense was higher because of higher earnings at Ok Tedi

    
    -------------------------------------------------------------------------
                                three months ended          nine months ended
                                      September 30               September 30
    (thousands)             2009      2008  change     2009      2008  change
    -------------------------------------------------------------------------
    Çayeli                $5,641    $6,428   -12%    $7,272   $34,207   -79%
    Pyhäsalmi              4,339     6,418   -32%     6,644    18,866   -65%
    Ok Tedi               18,924     7,174  +164%    37,933    50,324   -25%
    Las Cruces             7,682    (5,167) -249%     7,949    (5,001) -259%
    Corporate              2,658     2,526    +5%    22,388     8,060  +178%
    -------------------------------------------------------------------------
                         $39,244   $17,379  +126%   $82,186  $106,456   -23%
    -------------------------------------------------------------------------
    Consolidated
     effective tax rate      37%       20%   +17%       31%       30%    +1%
    -------------------------------------------------------------------------
    

Our tax expense changes as our earnings change. We also recorded a $6 million tax recovery at Çayeli in the first quarter, related to the impairment on Cerattepe.

The tax expense at Corporate is a provision for Quebec mining duties, as well as a reduction in our future income tax asset to reflect Troilus' earnings. We reduced our future income tax asset by $10 million for the nine months of 2009 and $1 million for the quarter. We also recorded Quebec mining duties of $11 million for the nine months and $2 million for the quarter. The $14 million foreign exchange loss on the revaluation of the US dollars held in Corporate was not tax effected because of tax losses in Canada.

The increase in the consolidated effective tax rate in the quarter is due to three main reasons:

    
    -   the $14 million foreign exchange loss in Canada not tax effected
    -   $7 million of foreign exchange gains recorded in Las Cruces on the
        new intergroup US dollar denominated debt which is taxed in Las
        Cruces. The foreign exchange impact eliminates in the consolidated
        financial statements
    -   in the third quarter of 2009 there is proportionately more income in
        higher tax rate jurisdictions. This is exacerbated by a relatively
        low effective tax rate at Ok Tedi in the third quarter of 2008 where
        taxes payable were reduced by kina denominated foreign exchange
        losses
    

2009 outlook for income tax expense

We are not expecting any further changes in statutory tax rates at our operations this year. We do, however, expect to expense approximately $12 million in Quebec mining duties, depending on Troilus' 2009 net income.

Results of our operations

2009 estimates

Our financial review by operation includes estimates for our 2009 operating earnings and operating cash flows. We used our 2009 objectives for production and cost per tonne of ore milled to build these estimates, along with the following assumptions for the remaining three months of the year:

    
    -------------------------------------------------------------------------
    Copper price                   US $2.70 per pound
    Zinc price                     US $0.75 per pound
    Gold price                     US $960 per ounce
    Copper treatment cost          US $75 per tonne
    Zinc treatment cost            US $192 per tonne
    US $ to C$ exchange rate       $1.10
    euro to C$ exchange rate       $1.54
    Working capital                Assume no changes for the year
    -------------------------------------------------------------------------
    

Çayeli

    
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
                              September 30             September 30 objective
    -------------------------------------------------------------------------
                      2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)    290      259   +12%      851      817    +4%    1,170
    Tonnes of ore
     milled per day  3,200    2,800   +12%    3,100    3,000    +4%    3,200
    -------------------------------------------------------------------------
    Grades (percent)
      copper           3.1      4.0   -23%      3.2      3.7   -14%      3.4
      zinc             6.5      5.2   +25%      6.2      6.0    +3%      6.1
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      copper            72       82   -12%       76       80    -5%       78
      zinc              72       66    +9%       70       71    -1%       70
    -------------------------------------------------------------------------
    Production
     (tonnes)
      copper         6,400    8,600   -26%   21,000   24,400   -14%   31,100
      zinc          13,600    8,900   +53%   37,100   34,900    +6%   50,200
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled
     (C$)              $64      $87   -26%      $69      $84   -18%      $68
    -------------------------------------------------------------------------

    Production results surpass 2008 achievement and we are approaching our
    2009 target
    

Ore processing at Çayeli exceeded our 2008 levels, which is a good accomplishment given that 2008 was a record year. Mill throughput in the quarter was slightly below our budget because of several small production interruptions, mainly related to power supply interruptions and minor equipment failures. Nonetheless, we expect to come close to our original 1.2 million annual throughput objective.

Copper grades this quarter and year to date were lower than last year, and than plan. Interruptions in stope sequencing required us to mine 55 percent secondary stopes this quarter, and higher proportions of production came from the lower mine, which has lower grades.

Zinc grades were higher this quarter and for the year to date compared to last year because of the sequence of stopes.

The effect was lower copper production and higher zinc production compared to last year, both for the quarter and year to date.

Operating costs this quarter and year to date were lower than last year, mainly because of lower labour costs, cost savings programs and a reduction in the cost of key commodities, like copper sulphate and electricity.

2009 outlook for production and costs

Although copper grades and recoveries should improve in the fourth quarter, we expect to mill 1.17 million tonnes of ore, and grades to average 3.4 percent for copper and 6.1 percent for zinc. Grades are lower than our initial objectives. We have therefore lowered our annual production outlook to 31,100 tonnes of copper and 50,200 tonnes of zinc.

Royalties have a significant effect on costs and are variable depending on earnings. Cost per tonne of ore milled included $8 per tonne in royalties in the third quarter and $5 per tonne year to date. We estimate that royalties will be $3 per tonne out of our total 2009 objective of $68 per tonne of ore milled, depending on metal prices.

The current three-year labour agreement with the union expired in May 2009, and negotiations ended in the third quarter without reaching an agreement. The government appointed a labour relations conciliator to examine the positions of both sides and we await their report. Pay increases for the Çayeli workers have historically been higher than Turkish inflation levels, but we believe this is not sustainable. We will continue to manage labour cost escalations to maintain our competitiveness and achieve a long term improvement in our labour costs, recognizing that this position could result in a labour disruption.

Financial review

Lower earnings because of lower sales volumes

    
    -------------------------------------------------------------------------
    (millions of Canadian         three months         nine months   revised
     dollars unless         ended September 30  ended September 30 objective
     otherwise stated)          2009      2008      2009      2008      2009
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)      6,800     9,900    20,100    23,300    31,100
    Zinc sales (tonnes)       10,000    10,400    37,500    41,600    50,200
                           --------------------------------------------------
    Gross copper sales           $43       $59      $116      $180      $179
    Gross zinc sales              19        17        63        87        89
    Other metal sales              6         3        12        11        20
                           --------------------------------------------------
    Gross sales                   68        79       191       278       288
    Smelter processing
     charges and freight         (18)      (18)      (55)      (65)      (83)
    -------------------------------------------------------------------------
    Net sales                    $50       $61      $136      $213      $205
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled
     (thousands)                 290       259       851       817     1,170
    Direct production costs
     ($ per tonne)               $64       $87       $69       $84       $68
    -------------------------------------------------------------------------
    Direct production costs      $19       $23       $59       $69       $80
    Change in inventory           (1)        2        (1)        2         -
    Depreciation and other
     non-cash costs                3         4        12        11        18
    -------------------------------------------------------------------------
    Operating costs              $21       $29       $70       $82       $98
    -------------------------------------------------------------------------
    Operating earnings           $29       $32       $66      $131      $107
    -------------------------------------------------------------------------
    Operating cash flow          $30       $40       $45       $90      $100
    -------------------------------------------------------------------------
    

The objective for 2009 uses the assumptions listed on page 13.

The table below shows what contributed to the change in operating earnings and operating cash flow between 2009 and 2008.

    
    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Higher (lower) metal prices, denominated in
     Canadian dollars                                       $8          $(53)
    Lower sales volumes                                    (14)          (24)
    (Higher) lower smelter processing charges               (2)            3
    (Higher) lower royalty                                  (2)            2
    Lower operating costs                                    7             8
    Higher depreciation                                      -            (2)
    Other                                                    -             1
    -------------------------------------------------------------------------
    Lower operating earnings, compared to 2008             $(3)         $(65)
    Lower tax expense because earnings were lower            1            19
    Changes in working capital (see note 3 on page 45)     (10)           (2)
    Other                                                    2             3
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2008           $(10)         $(45)
    -------------------------------------------------------------------------
    

Spending in 2009 will be limited to sustaining capital

    
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
                              September 30             September 30 objective
                      2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Capital
     spending       $4,100   $4,600   -11%  $10,600  $16,700   -37%  $18,000
    -------------------------------------------------------------------------
    

Capital spending in the quarter and year to September was for mine equipment replacements, some mill upgrades and mine development.

2009 outlook for capital spending

For the remainder of the year, Çayeli expects to spend about $7 million for equipment replacements and enhancements, and additional mine development.

Pyhäsalmi

    
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
                              September 30             September 30 objective
                      2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)    344      359    -4%    1,048    1,050      -    1,390
    Tonnes of ore
     milled per day  3,700    3,900    -4%    3,800    3,800      -    3,800
    -------------------------------------------------------------------------
    Grades (percent)
      copper           1.1      1.0   +10%      1.1      1.0   +10%      1.1
      zinc             2.6      1.8   +44%      1.9      2.2   -14%      2.1
      sulphur            -     43.0  -100%     41.6     41.4      -       41
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      copper            96       94    +2%       96       95    +1%       95
      zinc              90       88    +2%       89       91    -2%       88
    -------------------------------------------------------------------------
    Production
     (tonnes)
      copper         3,700    3,300   +12%   11,000    9,900   +11%   14,000
      zinc           8,100    5,700   +42%   17,400   21,000   -17%   25,800
      pyrite             -  177,800  -100%  323,000  483,500   -33%  388,000
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled
     (C$)              $41      $39    +5%      $43      $42    +2%      $41
    -------------------------------------------------------------------------
    

Higher zinc grades in the quarter increase zinc production

Pyhäsalmi maintained its strong production record in the third quarter of 2009, processing at an annualized rate of 1.4 million tonnes.

Copper production is higher this quarter and year to date, compared to last year, mainly because grades are higher. Zinc production this quarter was higher than planned and higher than the third quarter of 2008 because changes in stope sequencing resulted in higher grades. We did not produce any pyrite this quarter because of the continuing lack of demand. Pyhäsalmi sold 99,000 tonnes of pyrite in the third quarter of 2009 compared to 225,000 tonnes in the same quarter last year.

2009 outlook for production and costs

We expect zinc grades to continue to be high in the fourth quarter. We increased our copper production objective for the year to 14,000 tonnes from 13,000 tonnes, and zinc to 25,800 tonnes from 22,600 tonnes, to reflect higher grades and throughput. Because of continuing lack of demand, we lowered our pyrite production objective to 388,000 tonnes.

Financial review

    
    Lower earnings because of a significant decline in pyrite prices and
    volumes

    -------------------------------------------------------------------------
    (millions of Canadian         three months         nine months   revised
     dollars unless         ended September 30  ended September 30 objective
     otherwise stated)          2009      2008      2009      2008      2009
    -------------------------------------------------------------------------
    Sales analysis
    Copper sales (tonnes)      3,800     3,200    10,900     9,900    14,000
    Zinc sales (tonnes)        7,600     6,600    17,400    20,900    25,800
    Pyrite sales (tonnes)     99,000   225,000   296,000   491,700   388,000
                           --------------------------------------------------
    Gross copper sales           $26       $24       $63       $80       $84
    Gross zinc sales              16        12        33        43        46
    Other metal sales              6        32        29        61        35
                           --------------------------------------------------
    Gross sales                   48        68       125       184       165
    Smelter processing
     charges and freight         (12)      (22)      (34)      (47)      (45)
    -------------------------------------------------------------------------
    Net sales                    $36       $46       $91      $137      $120
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled
     (thousands)                 344       359     1,048     1,050     1,390
    Direct production costs
     ($ per tonne)               $41       $39       $43       $42       $41
    -------------------------------------------------------------------------
    Direct production costs      $14       $14       $45       $44       $57
    Change in inventory            -         -        (1)        -         -
    Depreciation and other
     non-cash costs                1         2         8         8        10
    -------------------------------------------------------------------------
    Operating costs              $15       $16       $52       $52       $67
    -------------------------------------------------------------------------
    Operating earnings           $21       $30       $39       $85       $53
    -------------------------------------------------------------------------
    Operating cash flow          $25       $28       $46       $79       $49
    -------------------------------------------------------------------------
    

The objective for 2009 uses the assumptions listed on page 13.

The table below shows what contributed to the change in operating earnings and operating cash flow between 2009 and 2008.

    
    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Lower metal prices, denominated in Canadian
     dollars                                               $(1)         $(29)
    Lower pyrite sales, net of costs to sell               (20)          (29)
    Lower smelter processing charges                         7            10
    Higher sales volumes                                     5             3
    Other                                                    -            (1)
    -------------------------------------------------------------------------
    Lower operating earnings, compared to 2008             $(9)         $(46)
    Lower tax expense because of lower earnings              2            12
    Changes in working capital                               -             2
    Other                                                    4            (1)
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2008            $(3)         $(33)
    -------------------------------------------------------------------------
    

Capital spending to sustain and improve

    
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
                              September 30             September 30 objective
    (thousands)       2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Capital
     spending       $2,000   $2,500   -20%   $5,800   $5,800      -   $8,000
    -------------------------------------------------------------------------
    

We spent $5.8 million in the year for mine equipment replacements, replacement of zinc flotation cells and renovation of process water pumps. The new zinc cells were installed in September and are expected to be operational in late November when pyrite production resumes.

2009 outlook for capital spending

For the remainder of the year, we expect to spend about $2 million mainly to complete the above projects.

Las Cruces

Commercial production anticipated for the fourth quarter

Las Cruces produced 2,200 tonnes of copper cathode in the quarter. This was significantly below our expectations, and was the result of typical start-up issues encountered in the plant.

Mining operations have progressed well. Las Cruces stockpiled more than 100,000 tonnes of plant feed before the anticipated rainy season, and started stripping for Phase III of the mine.

The process challenges have been typical in the commissioning of a complex plant and are related to equipment operation, adjustment and component reliability. This quarter, for example, we needed to repair one of the thickeners, which had corroded parts, and two other thickeners, which needed adjustments to prevent jamming. There were also problems operating the belt and pressure filters in the quarter, which have since been resolved. All problems are corrected when they happen. In some cases we have had to use a short term solution to keep production going and will wait until next year to implement the longer term solution, when we receive parts or complete more detailed analyses. We do not expect any of these problems to have any long term effect on the performance of the metallurgical plant.

We are focusing on ramping up production to reach the design capacity of 72,000 tonnes of copper cathode per year. Our goal continues to be to reach full production by February 2010 and commercial production (about 60 percent of design capacity) in the fourth quarter of 2009.

Capital update

Las Cruces construction is complete and on budget, and, as at the end of September, only (euro)4 million of the (euro)504 million construction budget remained to be spent. The following table shows total spending for the project to the end of September 2009 and our capital objective for the rest of the year:

    
    -------------------------------------------------------------------------
                                                          revised      total
                                                        objective    project
                                      up to January to October to estimate at
                                   December  September   December   December
    (millions)                     31, 2008       2009       2009   31, 2009
    -------------------------------------------------------------------------
    Construction capital          (euro)448   (euro)52    (euro)4  (euro)504
    Mine development                      6         10          7         23
    Permanent water treatment plant       -          -          9          9
    Sustaining capital                    -          7          9         16
    Capitalized interest                 18          6          -         24
    Pre-operating costs capitalized,
     net of sales                         -         11         (5)         6
    Value added tax                      25        (15)       (10)         -
    Other                                 5         (3)         3          5
    -------------------------------------------------------------------------
    Capital expenditures          (euro)502   (euro)68   (euro)17  (euro)587
    -------------------------------------------------------------------------
    

2009 outlook

The table below shows expected production for 100 percent of Las Cruces for 2009 and for the mine life.

    
    -------------------------------------------------------------------------
                                                   2009 target  life of mine
    -------------------------------------------------------------------------
    Tonnes of ore processed (thousands)                    140        17,492
    -------------------------------------------------------------------------
    Strip ratio                                             40          12.5
    -------------------------------------------------------------------------
    Copper cathode grades             (percent)            8.8           6.2
    -------------------------------------------------------------------------
    Copper cathode production         (tonnes)          11,000       979,000
    -------------------------------------------------------------------------
    Cost per tonne of ore processed   (C $)               $220           $87
    -------------------------------------------------------------------------
    Copper in ore grades
     (for direct shipping)            (percent)           13.6          14.0
    -------------------------------------------------------------------------
    Copper in ore production
     (for direct shipping)            (tonnes)           4,200        18,200
    -------------------------------------------------------------------------
    

Our expectation for copper production includes 11,000 tonnes of copper cathode and 4,200 tonnes of copper in ore. We do not expect to ship ore directly to smelters in 2009, but should ship this ore in the first quarter of 2010, subject to regulatory approval.

Las Cruces produced 425 tonnes of copper cathode from October 1 to October 25, and plans to produce 600 tonnes in the last week of October, 4,000 tonnes in November and 3,700 tonnes in December. We expect commercial production for reporting purposes to begin in either November or December, but this will depend on actual production and the consistency of plant performance.

The current labour agreement with the unionized workers expires at the end of 2009. The metal workers union negotiate pay increases with the regional employers association and not directly with Las Cruces. Any disruptions during the negotiations could impact production. There are a number of labour disruptions scheduled by the union for the month of November. Las Cruces is taking measures to prevent these disruptions from affecting its operations, but the union and the regional employers association will ultimately make the decision; there are no guarantees these efforts will be successful.

Troilus

    
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
                              September 30             September 30 objective
                      2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)  1,487    1,444    +3%    4,506    4,295    +5%    6,000
    Tonnes of ore
     milled per
     day            16,200   15,900    +3%   16,500   15,700    +5%   16,500
    -------------------------------------------------------------------------
    Strip ratio          -      1.6  -100%      0.1      1.4   -93%      0.1
    -------------------------------------------------------------------------
    Grades
      gold (grams/
       tonne)         0.65     0.95   -32%     0.91     0.95    -4%     0.81
      copper
       (percent)      0.08     0.12   -33%     0.12     0.09   +33%     0.11
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      gold              84       85    -1%       84       84      -       83
      copper            90       94    -4%       92       94    -2%       92
    -------------------------------------------------------------------------
    Production
      gold
       (ounces)     26,200   38,000   -31%  111,000  110,800      -  130,000
      copper
       (tonnes)      1,000    1,600   -38%    4,900    3,700   +32%    6,000
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled
     (C$)               $9      $16   -44%      $10      $15   -33%       $9
    -------------------------------------------------------------------------
    

Troilus continues to process stockpiled ore

Troilus continued to process ore from its low-grade stockpile. This has lowered gold grades and production compared to last year, both in the quarter and year to date, and lowered the cost per tonne of ore milled.

Gold grades from the stockpile have been higher than we anticipated.

Troilus continued its ongoing site restoration this quarter, and finished placing moraine on dumps and safety berms around the pits.

2009 outlook for production and costs

Troilus will continue to recover stockpiled ore for the rest of the year, and should meet its copper production target. We have revised the gold production objective to 130,000 ounces to reflect higher grades produced during the third quarter. We reduced the mill throughput objective to reflect the impact of harder ores.

We will be submitting our revised closure plan to the provincial authorities in the fourth quarter. We will also continue to lay off mining and maintenance personnel as primary reclamation activities and pit clean up are completed.

Financial review

Lower operating costs improved earnings this quarter

    
    -------------------------------------------------------------------------
    (millions of Canadian         three months         nine months   revised
     dollars unless         ended September 30  ended September 30 objective
     otherwise stated)          2009      2008      2009      2008      2009
    -------------------------------------------------------------------------
    Sales analysis
    Gold sales (ounces)       25,400    38,000   113,700   109,400   130,000
    Copper sales (tonnes)      1,000     1,500     4,900     3,500     6,000
                           --------------------------------------------------
    Gross gold sales             $26       $26      $126       $77      $145
    Gross copper sales             7         8        31        26        38
    Other metal sales              1         1         2         2         3
                           --------------------------------------------------
    Gross sales                   34        35       159       105       186
    Smelter processing
     charges and freight          (2)       (2)      (11)       (7)      (13)
    -------------------------------------------------------------------------
    Net sales                    $32       $33      $148       $98      $173
    -------------------------------------------------------------------------
    Cost analysis
    Tonnes of ore milled
     (thousands)               1,487     1,444     4,506     4,295     6,000
    Direct production costs
     ($ per tonne)                $9       $16       $10       $15        $9
    -------------------------------------------------------------------------
    Direct production costs      $13       $24       $44       $66       $54
    Change in inventory           (1)        -         2        (1)        -
    Depreciation and other
     non-cash costs                6         3        17        10        24
    -------------------------------------------------------------------------
    Operating costs              $18       $27       $63       $75       $78
    -------------------------------------------------------------------------
    Operating earnings           $14        $6       $85       $23       $95
    -------------------------------------------------------------------------
    Operating cash flow          $16        $7       $94       $21      $106
    -------------------------------------------------------------------------
    

The objective for 2009 uses the assumptions listed on page 13.

The table below shows what contributed to the change in operating earnings and operating cash flow between 2009 and 2008.

    
    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Higher gold price denominated in Canadian dollars       $9           $46
    Higher (lower) copper price denominated in
     Canadian dollars                                        2            (7)
    Higher (lower) sales volumes                           (11)            9
    Higher smelter processing charges                        -            (2)
    Lower operating costs                                    9            19
    Higher depreciation                                     (1)           (4)
    Other                                                    -             1
    -------------------------------------------------------------------------
    Higher operating earnings, compared to 2008             $8           $62
    Changes in working capital                              (6)            2
    Add back of higher depreciation                          1             4
    Non-cash hedging                                        (5)           (5)
    Settlement of gold forwards                             12            12
    Reclamation spending                                    (1)           (2)
    -------------------------------------------------------------------------
    Higher operating cash flow, compared to 2008            $9           $73
    -------------------------------------------------------------------------
    

Ok Tedi

    
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
                              September 30             September 30 objective
    (100 percent)     2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Tonnes of ore
     milled (000's)  5,800    5,600    +4%   16,400   16,100    +2%   22,600
    Tonnes of ore
     milled per
     day            63,300   61,300    +4%   60,000   58,800    +2%   62,000
    -------------------------------------------------------------------------
    Strip ratio        2.0      1.6   +25%      1.8      1.6   +13%      1.6
    -------------------------------------------------------------------------
    Grades
      copper
       (percent)       0.8      0.8      -      0.8      0.9   -11%      0.8
      gold (grams/
       tonne)          1.0      1.0      -      1.0      1.0      -      1.1
    -------------------------------------------------------------------------
    Mill recoveries
     (percent)
      copper            86       88    -2%       86       87    -1%       86
      gold              66       71    -7%       67       73    -8%       68
    -------------------------------------------------------------------------
    Production
      copper
       (tonnes)     40,700   40,700      -  115,800  119,100    -3%  159,000
      gold
       (ounces)    122,200  140,100   -13%  370,200  381,300    -3%  520,000
    -------------------------------------------------------------------------
    Cost per tonne
     of ore milled
     (C$)              $23      $24    -4%      $24      $23    +4%      $24
    -------------------------------------------------------------------------

    Throughput should improve after the mine tailings management plant
    reaches its designed performance
    

Ok Tedi is in the final stages of commissioning changes to the tailings management plant to increase its sulphur processing capacity. The initial results are encouraging, but they indicate that the pyrite plant thickener cannot handle high sulphur tailings, and a redesigned launder is under construction. This meant Ok Tedi could mine only ores with low sulphur content in the third quarter and year to date.

In spite of this, copper grades were consistent with expectations, while gold grades were lower than expected.

Mill throughput this quarter and year to date was similar to last year, but lower than expected because of low grinding rates on certain ores and certain mechanical availability issues. A number of these issues were resolved during a maintenance shutdown in August.

On June 2, we entered into a non-binding draft term sheet with PNG Sustainable Development Programme Limited (PNG SDPL), the 52 percent majority shareholder of Ok Tedi Mining Limited (OTML). In the draft term sheet, we propose to exchange our 18 percent equity interest in OTML for a 5 percent net smelter return (NSR) royalty from OTML on product revenues from the Ok Tedi mine. Before the transaction can proceed, we need, among other things, the consent of the Independent State of Papua New Guinea, which owns 30 percent of OTML (and is currently reviewing the draft term sheet), and the consent of BHP Billiton Ltd., which previously ceded its 52 percent interest in OTML to PNG SDP.

2009 outlook for production and costs

We have adjusted our objectives for 2009 to compensate for the shortfall in production year to date. Ok Tedi has not completed its commissioning of the mine tailings management plant, but it does not expect grades in the fourth quarter to be impacted by sulphur grade restrictions.

Until the mine tailings management plant is completed and working at designed levels, Ok Tedi can put only a limited amount of sulphur in the ore feed. Staying within these limits is a constraint on mining and, if the project is delayed, could result in shortfalls in ore tonnes or grades.

The pit drainage tunnel project is behind schedule because there have been changes to the construction plan but we expect it to be completed in the fourth quarter. The tunnel is critical because it allows water to drain freely from the pit until the end of the mine life. Ok Tedi has installed a temporary pumping system so mining can continue uninterrupted while the tunnel is being completed.

Financial review

    
    Higher earnings and operating cash flow in the third quarter due to
    higher copper and gold prices

    -------------------------------------------------------------------------
    (millions of Canadian         three months         nine months   revised
     dollars unless         ended September 30  ended September 30 objective
     otherwise stated)          2009      2008      2009      2008      2009
    -------------------------------------------------------------------------
    Sales analysis at 18%
    Copper sales (tonnes)      8,100     7,500    20,500    22,400    28,600
    Gold sales (ounces)       25,700    23,100    69,400    68,600    93,600
                           --------------------------------------------------
    Gross copper sales           $62       $45      $138      $178      $201
    Gross gold sales              28        20        77        58       105
    Other metal sales              1         1         3         3         6
                           --------------------------------------------------
    Gross sales                  $91        66      $218       239       312
    Smelter processing
     charges and freight          (9)       (8)      (23)      (27)      (34)
    -------------------------------------------------------------------------
    Net sales                    $82       $58      $195      $212      $278
    -------------------------------------------------------------------------
    Cost analysis at 18%
    Tonnes of ore milled
     (thousands)               1,050     1,000     3,000     2,950     4,070
    Direct production costs
     ($ per tonne)               $23       $24       $24       $23       $24
    -------------------------------------------------------------------------
    Direct production costs      $24       $24       $71       $66       $98
    Change in inventory            2        (4)        2        (4)        -
    Depreciation and other
     non-cash costs                7         4        20        12        28
    -------------------------------------------------------------------------
    Operating costs              $33       $24       $93       $74      $126
    -------------------------------------------------------------------------
    Operating earnings           $49       $34      $102      $138      $152
    -------------------------------------------------------------------------
    Operating cash flow          $47       $25       $61      $106      $121
    -------------------------------------------------------------------------
    

The objective for 2009 uses the assumptions listed on page 13.

The table below shows what contributed to the change in operating earnings and operating cash flow between 2009 and 2008.

    
    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Higher (lower) copper prices, denominated in
     Canadian dollars                                      $14          $(25)
    Higher gold prices, denominated in Canadian
     dollars                                                 5            18
    Lower sales volumes                                     (2)          (19)
    (Higher) lower smelter processing and
     freight charges                                        (1)            3
    (Higher) lower operating costs                           1            (4)
    Higher depreciation                                     (3)           (9)
    Other                                                    1             -
    -------------------------------------------------------------------------
    Higher (lower) operating earnings,
     compared to 2008                                      $15          $(36)
    Change in tax expense because of change in
     earnings                                              (18)           20
    Changes in net working capital (see note 3 on
     page 45)                                               16           (38)
    Add back of higher depreciation                          3             9
    Other                                                    6             -
    -------------------------------------------------------------------------
    Higher (lower) operating cash flow, compared
     to 2008                                               $22          $(45)
    -------------------------------------------------------------------------
    

Capital spending on pit drainage

Ok Tedi's capital spending this quarter and for the year was mainly for the pit drainage project.

    
    -------------------------------------------------------------------------
                        three months ended        nine months ended   revised
                              September 30             September 30 objective
    (18 percent)      2009     2008 change     2009     2008 change      2009
    -------------------------------------------------------------------------
    Capital
     spending       $3,300  $7,800    -58%   $9,900  $26,700   -63%  $21,000
    -------------------------------------------------------------------------
    

2009 outlook for capital spending

For the remainder of the year, Ok Tedi plans to spend US $55 million (our 18 percent share is $11 million) on a second dredge, the pit drainage project and other capital projects.

Status of our development project

    
    Cobre Panama
    (formerly Petaquilla)
    

Drilling

We completed the drilling program in June and in the third quarter completed preliminary pit designs and mine plan based on 70 percent of the data from that drill program. Before we can establish a final mineral reserve estimate for Cobre Panama we must integrate the remaining data, complete final pit designs and a mine plan, and complete the front-end engineering and design (FEED) study. Preliminary results, however, indicate that we can expect to meet or exceed our target for mineral reserves that would support a minimum mine life of 30 years at a throughput rate of 150,000 tonnes per day.

Social and environmental impact assessment

Baseline reports are mostly complete, and impact assessments and management plans are being prepared. We expect to complete the impact assessment (ESIA) by the end of 2009.

Engineering

We continued with engineering work and began third party reviews of all aspects of the project so that improvements can be incorporated into the FEED study. We expect to issue the FEED study in the first quarter of 2010. The base case for the FEED study is a throughput rate of 150,000 tonnes of ore per day, which equates to an average annual production of about 275,000 tonnes of copper for the first 10 years. An extensive metallurgical testing program to further review the throughput rate and explore opportunities to optimize this rate is nearing completion and the results are being incorporated into mine planning.

We signed a Joint Development Agreement (JDA) with Suez Energy Central America, S.A., a subsidiary of GDF Suez, the world's largest independent power provider, to develop a coal-fired electric generating plant in parallel with the development of Cobre Panama. This plant would supply all the electricity required for operation of the project. The JDA governs the working relationship between the parties during the design of the power plant and includes a term sheet governing a future power purchase agreement, which could be signed by mid 2010 (prior to detailed design, procurement and construction of the power plant).

2009 outlook for development

Once the final FEED study is complete and the ESIA is submitted for approval to the Panamanian regulatory authorities, we plan to begin detailed engineering no later than the middle of 2010. Once the ESIA is approved we can begin the permitting process for construction. With the timely receipt of permits and a positive development decision, construction could be completed by the end of 2014.

We have continued our process to obtain potential partners for the development of Cobre Panama and will evaluate the suitability of all potential partners. Proposals could take a variety of forms or structures including, but not limited to, direct investments in the project, financing related to concentrate purchases, direct investments in Inmet or other forms of financing. We plan to pursue these opportunities but there can be no assurance that any transaction will be consummated.

Managing our liquidity

We plan our financing strategy by looking at our long-term financial requirements and our future capital needs, and deciding on the optimal mix of cash, future operating cash flow, credit facilities and project financing.

Our capital structure includes a liquidity cushion that gives us the flexibility to deal with operational disruptions or general market downturns, like the current weakness in the global economy.

    
    -------------------------------------------------------------------------
                                    three months ended     nine months ended
                                          September 30          September 30
    (millions)                         2009       2008       2009       2008
    -------------------------------------------------------------------------
    CASH FROM OPERATING ACTIVITIES
    Çayeli                              $30        $40        $45        $90
    Pyhäsalmi                            25         28         46         79
    Troilus                              16          7         94         21
    Ok Tedi                              47         25         61        106
    Corporate development and
     exploration not included
     in operations' cash flow            (1)        (3)        (5)        (7)
    General and administration           (5)        (3)       (14)       (10)
    Corporate taxes                      (2)        (3)       (12)        (8)
    Foreign exchange loss
     on US dollar cash                  (14)         -        (14)         -
    Other                                (7)         7         (4)        23
    -------------------------------------------------------------------------
                                         89         98        197        294
    -------------------------------------------------------------------------
    CASH FROM INVESTING AND FINANCING

    Acquisition of Petaquilla Copper,
     net of cash acquired                 -       (337)         -       (337)
    Investment in Cobre Panama
     prior to consolidation               -         (8)         -        (12)
    Loans to other Cobre
     Panama shareholders                  -         (9)         -        (13)
    (Acquisition) disposition
     of investments                    (100)         -       (100)         2
    Capital spending                    (24)       (94)      (205)      (327)
    Proceeds from issuance of common
     shares, net of transaction costs     -          -        334          -
    Long-term debt - borrowings           -          -          -        106
                   - repayments        (232)       (14)      (315)       (14)
    Funding by non-controlling
     shareholder                          6          1         50         36
    Financial assurance deposits        (43)        (1)       (52)       (15)
    Dividends paid on common shares       -          -         (5)        (5)
    Subsidies received                    5          -         71          3
    Settlement of interest
     rate swap contract                 (16)         -        (16)         -
    Settlement of foreign
     currency forward contract            -          -          -         52
    Foreign exchange on cash
     held in foreign currency           (22)         -        (34)        24
    Other                                (1)         1         (1)         1
    -------------------------------------------------------------------------
                                       (427)      (461)      (273)      (499)
    -------------------------------------------------------------------------
    Decrease in cash                   (338)      (363)       (76)      (205)
    Cash and short-term investments
      Beginning of period               835        999        573        841
      End of period                    $497       $636       $497       $636
    -------------------------------------------------------------------------
    

OPERATING ACTIVITIES

Key components of the change in operating cash flows

    
    -------------------------------------------------------------------------
                                                  three months   nine months
                                                         ended         ended
    (millions)                                    September 30  September 30
    -------------------------------------------------------------------------
    Higher (lower) earnings from operations
     (see page 4)                                          $11          $(84)
    Non-cash changes in operating earnings:
      Add back higher depreciation
       in earnings from operations                           3            14
      Troilus non-cash hedging in revenue in 2008           (5)           (5)
    Lower (higher) tax expense                             (19)           43
    Lower interest income                                   (5)          (18)
    Realized foreign exchange loss on
     US dollar cash held at Corporate                      (14)          (14)
    Troilus settlement of gold forward in 2008              12            12
    Changes in working capital                               5           (35)
    Other                                                    3           (10)
    -------------------------------------------------------------------------
    Lower operating cash flow, compared to 2008            $(9)         $(97)
    -------------------------------------------------------------------------
    

Operating cash flows to date this year are lower than they were in 2008 because operating earnings are down, lower interest income, foreign exchange losses on corporate US dollar cash and we spent more on working capital. About $48 million of the reduction in cash flow year to date comes from our repayment to smelters of excess provisional payments they made in 2008 before copper prices dropped.

2009 outlook for cash from operating activities

Volatile markets make it more difficult than usual to estimate commodity prices and foreign exchange rates. The table below shows estimated operating cash flow at each operation, based on the market assumptions listed on page 13, and the assumptions in Results of our operations, which starts on page 13.

2009 estimated operating cash flow by operation

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

    (millions)
    -----------------------------------------------------
    Çayeli                                          $100
    Pyhäsalmi                                         49
    Troilus                                          106
    Ok Tedi                                          121
    Las Cruces                                         -
    -----------------------------------------------------
                                                    $376
    -----------------------------------------------------
    

INVESTING AND FINANCING

Capital spending

    
    -------------------------------------------------------------------------
                                  three months         nine months   revised
                            ended September 30  ended September 30 objective
    (millions)                  2009      2008      2009      2008      2009
    -------------------------------------------------------------------------
    Çayeli                        $4        $5       $11       $17       $18
    Pyhäsalmi                      2         3         6         6         8
    Troilus                        -         1         -         1         -
    Ok Tedi                        3         8        10        27        21
    Las Cruces                   (10)       72       108       262       133
    Cobre Panama                  25         8        70        12        94
    Cerattepe                      -         6         -        14         -
    -------------------------------------------------------------------------
                                 $24      $103      $205      $339      $274
    -------------------------------------------------------------------------
    

Please see Results of our operations and Status of our development project for a discussion of actual results and our 2009 objective. In the third quarter of 2009 Las Cruces received a VAT refund of $50 million which resulted in the negative capital expenditures.

Proceeds from issuing common shares

On June 25 we completed a public offering of 7.825 million common shares of Inmet Mining, on a bought deal basis, at a price of $44.50 per share, for aggregate gross proceeds of $348 million ($334 million net of transaction costs).

We used US $240 million of this to repay the debt under Las Cruces' project financing facility, and will use the balance for general corporate purposes.

Long-term debt repayments and settlement of interest rate swap contract

In the first half of 2009, Las Cruces made its first scheduled repayment of US $12 million under Tranche A of its credit facility. It also repaid (euro)42 million under Tranche B (an amount equal to the subsidies received).

On July 31, 2009, Las Cruces repaid the remaining US $203 million under Tranche A, (euro)5 million under Tranche B and cash collateralized $32 million in letters of credit that had been secured under the credit facility. This eliminated the Las Cruces project credit facility. We funded 100 percent of the repayment through an intercompany loan. Leucadia guarantees 30 percent of this loan.

Las Cruces paid $16 million in July to terminate its interest rate swap contract, in connection with the decision to repay the credit facility.

Acquisition of investments

This quarter, we bought $100 million in long term Canadian government and corporate bonds with credit ratings of A to AAA, to increase our return on the cash we have set aside for capital spending at Cobre Panama.

Settlement of foreign currency forward contract in 2008

On June 30, 2008, when we converted the Las Cruces debt from euro to US dollars, Las Cruces settled a foreign exchange forward contract and received proceeds of $52 million.

Acquisition of Petaquilla Copper in 2008

On September 19, 2008, we acquired 95 percent of the outstanding common shares of Petaquilla Copper Ltd. for $337 million in cash (net of $23 million in cash acquired). We acquired the remaining 5 percent in the fourth quarter of 2008.

2009 outlook for investing and financing

We expect capital spending to be $274 million in 2009. The more significant items include:

    
    - $88 for the Las Cruces processing plant
    - $94 million for work on the development plan at Cobre Panama
    - $10 million for pit development and $7 million for an underground
      drainage tunnel at Ok Tedi.
    

Until we start receiving significant proceeds from sales at Las Cruces, we plan to fund its costs using sponsor contributions.

Financial condition

CASH

Our cash and cash equivalents balance at September 30, 2009 was $497 million. This included cash and money market instruments that mature in 90 days or less, and short-term investments that mature in 91 days to a year.

Our policy is to invest excess cash in highly liquid investments of the highest credit quality and to limit our exposure to individual counterparties to minimize the risk associated with these investments. We base our decisions about the length of maturities on our cash flow requirements, rates of return and other factors.

The economic downturn appears to have approached a trough, but we are still monitoring the potential for a second wave. We have moved some of our government funds to prime funds and have created a bond portfolio that should provide better yields with minimal change to our investment risk. At September 30, 2009, we held cash and short-term investments in the following:

    
    - Short-term debt instruments issued by Canadian Crown Corporations
    - Highest rated asset backed commercial paper programs sponsored by
      leading Canadian financial institutions backed by global style
      liquidity lines
    - AAA rated treasury funds and money market funds managed by leading
      international fund managers investing in money market and short-term
      debt securities and fixed income securities issued by leading
      international financial institutions and their sponsored securitization
      vehicles
    - Cash, term and overnight deposits with leading Canadian and
      international financial institutions benefiting directly and indirectly
      from support programs by various governments and central banks.
    

See note 4 on page 46 in the consolidated financial statements for more details about where our cash is invested.

The bond portfolio (Held to maturity investments) is comprised of 30 percent Government of Canada bonds, 50 percent Provincial bonds and 20 percent corporate bonds, with average maturities of three years.

Our restricted cash balance of $108 million as at September 30, 2009 included:

    
    - $27 million in trust for future reclamation at Ok Tedi
    - $16 million of cash collateralized letters of credit for Inmet
    - $63 million related to issuing letters of credit to suppliers at Las
      Cruces, a reclamation bond and for its labour bond to the government
    - $2 million for future reclamation at Pyhäsalmi.
    

Las Cruces' restricted cash increased by $32 million in the third quarter, mainly to secure its reclamation bond that had previously been secured under the credit facility.

COMMON SHARES

    
    -------------------------------------------------------------------------
    Common shares outstanding as of
     September 30, 2009 and October 27, 2009                      56,106,660
    -------------------------------------------------------------------------
    Deferred share units outstanding as of
     September 30, 2009
     (redeemable on a one-for-one basis for common shares)            89,425
    -------------------------------------------------------------------------
    

Dividend Declaration

Inmet's board of directors has declared an eligible dividend of $0.10 per common share payable on December 15, 2009 to common shareholders of record as at November 30, 2009.

FINANCIAL INSTRUMENTS

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

    
    -------------------------------------------------------------------------
    Type of    Expiry         Quantity            Price  C$ marked-to-market
     contract                                                 gain (loss) at
                                                          September 30, 2009
    -------------------------------------------------------------------------
    Copper
     forward
     sales
      Ok Tedi
                 2009  0.8 million lbs  US $2.41 per lb     $(0.4) 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.    $(3.3 million)(2)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) At a copper price of US $2.81 per pound.
    (2) At a gold price of US $997 per ounce.
    

Accounting changes

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

The Accounting Standards Board confirmed in February 2008 that International Financial Reporting Standards (IFRS) will replace current Canadian GAAP for financial periods beginning on and after January 1, 2011. IFRS is based on a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and disclosure.

While the adoption of IFRS will not change the actual cash flows we generate, it will result in changes to our reported financial position and results of operations.

We have prepared a comprehensive IFRS convergence plan that addresses the changes in accounting policy, restatement of comparative periods, internal control over financial reporting, modification of existing systems, the training and awareness of staff, as well as other related business matters. Senior financial management who report to and are overseen by Inmet's Audit Committee are responsible for planning and implementing the conversion.

To date, we have preliminarily determined all of our significant accounting policies, prepared sample financial statements and assessed the impacts on our systems and processes. We have been working alongside our auditors in drafting our accounting policies to ensure they agree with our choices and that we are choosing policies that are consistent with our peers in the industry. By the end of 2009 we plan to quantify, where possible, the impact these new policies have on our financial statements, and document the related internal controls. This exercise will either validate our accounting policy choices or tell us to rethink them. Our goal is to restate our December 31, 2009 Canadian GAAP balance sheet to IFRS in the first quarter of 2010.

We are not expecting significant changes to the carrying values of property, plant and equipment based on the work we have done to date. We do, however, expect significant effects on our accounting for business combinations on a go-forward basis. Exposure drafts on future income taxes and on accounting for joint venture interests, which includes our investment in Ok Tedi, could have significant effects on our financial statements. We will continue to monitor these exposure drafts and amend our convergence plan as required.

Supplementary financial information

Pages 32 and 33 include supplementary financial information about cash costs. These measures do not fall into the category of generally accepted accounting principles.

We use unit cash cost information as a key performance indicator, both on a segmented and consolidated basis. We have included cash costs as supplementary information because we believe our key stakeholders use these measures as a financial indicator of our profitability and cash flows before the effects of capital investment and financing costs, such as interest.

Since cash costs are not recognized measures under Canadian generally accepted accounting principles they should not be considered in isolation of earnings or cash flows. There is also no standard way to calculate cash costs, so they are not a reliable way to compare us to other companies.

About Inmet

Inmet is a Canadian-based global mining company that produces copper, zinc and gold. We have interests in five mining operations in locations around the world: Çayeli, Las Cruces, Pyhäsalmi, Troilus and Ok Tedi. We also have a 100 percent interest in Cobre Panama, a development property in Panama.

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

Third quarter conference call

    
    Will be held on
    - Wednesday, October 28, 2009
    - 8:30 a.m. Eastern Time
    - webcast available at
      www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2837120
      or www.inmetmining.com.

    You can also dial in by calling
    - Local or international: +1.416.644.3421
    - Toll-free within North America: +1.866.250.4877

    Starting 10:30 a.m. (ET) Wednesday October 28, 2009, conference call
    replay will be available
    - Local or international: +1.416.640.1917 passcode 4171149 followed by
      the number sign.
    - Toll-free within North America: +1.877.289.8525 passcode 4171149
      followed by the number sign.



    INMET MINING CORPORATION
    Supplementary financial information

    Cash costs

    2009 For the nine months ended September 30
                                                                   per ounce
                                  per pound of copper                of gold
                         ----------------------------------------- ----------
                                                            TOTAL
                          ÇAYELI  PYHÄSALMI    OK TEDI     COPPER    TROILUS
    ---------------------------------------------------- --------- ----------
    (US dollars)
    Direct production
     costs                 $1.01      $1.61      $1.28      $1.24       $336
    Royalties and
     variable compensation  0.08          -       0.04       0.05          -
    Smelter processing
     charges and freight    1.15       0.89       0.41       0.80         83
    Metal credits          (1.50)     (1.86)     (1.44)     (1.55)      (248)
                         ----------------------------------------- ----------

    Cash cost              $0.74      $0.64      $0.29      $0.54       $171
                         ----------------------------------------- ----------
                         ----------------------------------------- ----------


    2008 For the nine months ended September 30
                                                                   per ounce
                                  per pound of copper                of gold
                         ----------------------------------------- ----------
                                                            TOTAL
                          ÇAYELI  PYHÄSALMI    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
                         ----------------------------------------- ----------
                         ----------------------------------------- ----------

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



    Reconciliation of cash costs to statements of earnings

    2009 For the nine months ended September 30
                                                                   per ounce
                                  per pound of copper                of gold
                         ----------------------------------------- ----------
    (millions of Canadian
     dollars, except where                                  TOTAL
     otherwise noted)     ÇAYELI  PYHÄSALMI    OK TEDI     COPPER    TROILUS
    ---------------------------------------------------- --------- ----------
    GAAP reference       page 15    page 17    page 23               page 21

    Direct production
     costs                   $59        $45        $71       $175        $44
    Smelter processing
     charges and freight      55         34         23        112         11
    By product sales         (75)       (62)       (80)      (217)       (33)
    Adjust smelter
     processing and
     freight, and sales
     to production basis       1          1          2          4          -
                         ----------------------------------------- ----------
    Operating costs
     net of metal credits    $40        $18        $16        $74        $22
    US $ to C$
     exchange rate         $1.17      $1.17      $1.17      $1.17      $1.17
    Inmet's share of
     production (000's)   46,300     24,300     45,900    116,500    111,000
                         ----------------------------------------- ----------
    Cash cost              $0.74      $0.64      $0.29      $0.54       $171
                         ----------------------------------------- ----------
                         ----------------------------------------- ----------


    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)     ÇAYELI  PYHÄSALMI    OK TEDI     COPPER    TROILUS
    ---------------------------------------------------- --------- ----------
    GAAP reference       page 15    page 17    page 23               page 21

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



    Cash costs

    2009 For the three months ended September 30
                                                                   per ounce
                                  per pound of copper                of gold
                         ----------------------------------------- ----------
                                                            TOTAL
                          ÇAYELI  PYHÄSALMI    OK TEDI     COPPER    TROILUS
    ---------------------------------------------------- --------- ----------
    (US dollars)

    Direct production
     costs                 $1.09      $1.57      $1.28      $1.27       $441
    Royalties and
     variable compensation  0.11          -       0.09       0.08          -
    Smelter processing
     charges and freight    1.38       1.21       0.45       0.95         81
    Metal credits          (2.12)     (2.21)     (1.40)     (1.84)      (282)
                         ----------------------------------------- ----------
    Cash cost              $0.46      $0.57      $0.42      $0.46       $240
                         ----------------------------------------- ----------
                         ----------------------------------------- ----------


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

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

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



    Reconciliation of cash costs to statements of earnings

    2009 For the three months ended September 30
                                                                   per ounce
                                  per pound of copper                of gold
                         ----------------------------------------- ----------
    (millions of Canadian
     dollars, except where                                  TOTAL
     otherwise noted)     ÇAYELI  PYHÄSALMI    OK TEDI     COPPER    TROILUS
    ---------------------------------------------------- --------- ----------
    GAAP reference       page 15    page 17    page 23               page 21

    Direct production
     costs                   $19        $14        $24        $57        $13
    Smelter processing
     charges and freight      18         12          9         39          2
    By product sales         (25)       (22)       (29)       (76)        (8)
    Adjust smelter
     processing and
     freight, and sales
     to production basis      (5)         1          3         (1)         -
                         ----------------------------------------- ----------
    Operating costs net
     of metal credits         $7         $5         $7        $19         $7
    US $ to C$
     exchange rate         $1.10      $1.10      $1.10      $1.10      $1.10
    Inmet's share of
     production (000's)   14,100      8,200     16,100     38,400     26,200
                         ----------------------------------------- ----------
    Cash cost              $0.46      $0.57      $0.42      $0.46       $240
                         ----------------------------------------- ----------
                         ----------------------------------------- ----------


    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)     ÇAYELI  PYHÄSALMI    OK TEDI     COPPER    TROILUS
    ---------------------------------------------------- --------- ----------
    GAAP reference       page 15    page 17    page 23               page 21

    Direct production
     costs                   $23        $14        $24        $61        $24
    Smelter processing
     charges and freight      18         22          8         48          2
    By product sales         (20)       (44)       (21)       (85)        (9)
    Adjust smelter
     processing and
     freight, and sales
     to production basis      (1)         5         (1)         3          -
                         ----------------------------------------- ----------
    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     38,000
                         ----------------------------------------- ----------
    Cash cost              $0.99     ($0.42)     $0.64      $0.60       $432
                         ----------------------------------------- ----------
                         ----------------------------------------- ----------



    INMET MINING CORPORATION
    Quarterly review
    (unaudited)

    Latest Four Quarters
    -------------------------------------------------------------------------
    (thousands of Canadian             2009       2009       2009       2008
     dollars, except per              Third     Second      First     Fourth
     share amounts)                 quarter    quarter    quarter    quarter
    -------------------------------------------------------------------------
    STATEMENTS OF EARNINGS
    Gross sales                   $ 241,121  $ 213,042  $ 239,152  $ 139,626
    Smelter processing
     charges and freight            (41,607)   (40,589)   (40,540)   (32,870)
    Cost of sales                   (72,706)   (73,827)   (89,904)   (91,715)
    Depreciation                    (14,558)   (13,604)   (15,679)   (14,844)
                                  -------------------------------------------
                                    112,250     85,022     93,029        197
    Corporate development
     and exploration                 (1,963)    (2,727)    (3,232)    (1,971)
    General and administration       (5,147)    (4,785)    (4,124)    (3,289)
    Investment and other
     income (expense)                 3,588     16,466    (11,203)     8,057
    Asset impairment                      -          -     (6,419)   (36,275)
    Interest expense                   (496)      (493)      (492)      (490)
    Capital tax expense                (744)      (125)      (125)    (1,304)
    Income tax
     (expense) recovery             (39,244)   (24,052)   (18,890)       767
    Non-controlling interest         (6,693)    (2,778)     2,783      1,794
                                  -------------------------------------------
    Net income (loss)             $  61,551  $  66,528  $  51,327   ($32,514)
                                  -------------------------------------------
    Net income (loss)
     per common share             $    1.10  $    1.37  $    1.06     ($0.67)
                                  -------------------------------------------
    Diluted net income
     (loss) per common share      $    1.09  $    1.36  $    1.06     ($0.67)
                                  -------------------------------------------



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



    INMET MINING CORPORATION
    Consolidated balance sheets

                                                   September 30  December 31
    (thousands of Canadian dollars)                        2009         2008
    -------------------------------------------------------------------------
                                                     (unaudited)
    Assets

    Current assets:
      Cash and short-term investments (note 4)         $496,625     $572,733
      Restricted cash (note 5)                           15,231        8,311
      Accounts receivable                               114,306      135,742
      Inventories                                        93,015       74,362
      Future income tax asset                            11,132       14,311
                                                   --------------------------
                                                        730,309      805,459

    Restricted cash (note 5)                             92,852       52,893

    Property, plant and equipment                     1,852,583    1,950,535

    Investments in equity securities (note 6)            28,054       17,514

    Held to maturity investments (note 7)               100,093            -

    Future income tax asset                               1,671        5,499

    Derivatives (note 8)                                      -        4,327

    Other assets                                          3,034        5,031
                                                   --------------------------
                                                     $2,808,596   $2,841,258
    -------------------------------------------------------------------------


    Liabilities

    Current liabilities:
      Accounts payable and accrued liabilities         $147,435     $212,527
      Derivatives (note 8)                                  433        8,693
      Future income tax liabilities                       5,161            -
      Current portion of long-term debt (note 9)              -      109,666
                                                   --------------------------
                                                        153,029      330,886

    Long-term debt (note 9)                             203,445      384,848

    Asset retirement obligations                        124,288      126,782

    Derivatives (note 8)                                  3,253       16,417

    Other liabilities (note 11)                          32,197       27,122

    Future income tax liabilities                        13,955       15,971

    Non-controlling interest                             82,073       71,449
                                                   --------------------------
                                                        612,240      973,475
                                                   --------------------------

    Commitments (note 10)

    Shareholders' equity

    Share capital (note 13)                             670,062      337,464

    Contributed surplus                                  62,552       61,925

    Stock based compensation                              4,459        2,688

    Retained earnings                                 1,457,652    1,283,074

    Accumulated other comprehensive income (note 14)      1,631      182,632
                                                   --------------------------

                                                      2,196,356    1,867,783
                                                   --------------------------
                                                     $2,808,596   $2,841,258
    -------------------------------------------------------------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented balance sheets

    2009 As at September 30

    (unaudited)             CORPORATE       ÇAYELI    PYHÄSALMI      TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                     (Turkey)    (Finland)     (Canada)

    Assets

    Cash and short-term
     investments             $179,904     $117,499      $90,663      $     -
    Other current assets        7,333       42,461       34,880       20,281
    Restricted cash            16,459            -        1,880            -
    Property, plant
     and equipment                985      124,571       69,231       17,261
    Investments in
     equity securities         28,054            -            -            -
    Held to maturity
     investments              100,093            -            -            -
    Other non-current
     assets                     1,813          403            -            -
                           --------------------------------------------------
                             $334,641     $284,934     $196,654      $37,542
                           --------------------------------------------------

    Liabilities

    Current liabilities       $21,605      $30,300      $17,891       $8,320
    Long-term debt             18,675            -            -            -
    Asset retirement
     obligations               23,551        8,830       15,707        9,936
    Derivatives                     -            -            -            -
    Other liabilities           4,752        5,432            -            -
    Future income
     tax liabilities            2,351        2,381        9,019            -
    Non-controlling interest        -            -            -            -
                           --------------------------------------------------
                                    $70,934    $46,943    $42,617    $18,256
                           --------------------------------------------------


    2009 As at September 30
                                                          COBRE
    (unaudited)               OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    Assets

    Cash and short-term
     investments              $51,080      $53,073       $4,406     $496,625
    Other current assets       57,463       70,681          585      233,684
    Restricted cash            26,621       47,892            -       92,852
    Property, plant
     and equipment             85,145    1,025,580      529,810    1,852,583
    Investments in
     equity securities              -            -            -       28,054
    Held to maturity
     investments                    -            -            -      100,093
    Other non-current assets    1,074        1,415            -        4,705
                           -------------------------------------- -----------
                             $221,383   $1,198,641     $534,801   $2,808,596
                           -------------------------------------- -----------

    Liabilities

    Current liabilities       $37,244      $31,234       $6,435     $153,029
    Long-term debt                  -      184,770            -      203,445
    Asset retirement
     obligations               22,536       43,728            -      124,288
    Derivatives                 3,253            -            -        3,253
    Other liabilities           1,309       20,704            -       32,197
    Future income
     tax liabilities                -          204            -       13,955
    Non-controlling interest        -       82,073            -       82,073
                           -------------------------------------- -----------
                              $64,342     $362,713       $6,435     $612,240
                           -------------------------------------- -----------



    2008 As at December 31

                            CORPORATE       ÇAYELI    PYHÄSALMI      TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                     (Turkey)    (Finland)     (Canada)

    Assets

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

    Liabilities

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


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

    Assets

    Cash and short-term
     investments              $37,547      $33,981       $1,110     $572,733
    Other current assets       43,148       66,774          843      232,726
    Restricted cash            16,667       17,779            -       52,893
    Property, plant
     and equipment            105,145    1,065,435      532,466    1,950,535
    Investments in
     equity securities              -            -            -       17,514
    Other non-current assets    7,039        2,356            -       14,857
                           -------------------------------------- -----------
                             $209,546   $1,186,325     $534,419   $2,841,258
                           -------------------------------------- -----------

    Liabilities

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



    INMET MINING CORPORATION
    Consolidated statements of earnings
    (unaudited)

                                    Three Months Ended     Nine Months Ended
    (thousands of Canadian dollars        September 30          September 30
     except per share amounts)         2009       2008       2009       2008
    --------------------------------------------------- ---------------------
    Gross sales                    $241,121   $247,495   $693,315   $805,239

    Smelter processing
     charges and freight            (41,607)   (49,502)  (122,736)  (146,868)

    Cost of sales                   (72,706)   (84,948)  (236,437)  (254,087)

    Depreciation                    (14,558)   (11,395)   (43,841)   (29,760)

    --------------------------------------------------- ---------------------
                                    112,250    101,650    290,301    374,524

    Corporate development
     and exploration                 (1,963)    (3,548)    (7,922)    (8,649)

    General and administration       (5,147)    (3,411)   (14,056)    (9,849)

    Investment and other
     income (expense) (note 15)       3,588     (5,467)     8,851     (2,071)

    Asset impairment (note 18)            -          -     (6,419)         -

    Interest expense                   (496)      (476)    (1,481)    (1,394)

    Capital tax expense                (744)      (125)      (994)      (375)

    Income tax expense (note 16)    (39,244)   (17,379)   (82,186)  (106,456)

    Non-controlling interest         (6,693)     3,813     (6,688)     3,706

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

    Net income                      $61,551    $75,057   $179,406   $249,436
    --------------------------------------------------- ---------------------

    Basic net income per
     common share (note 17)           $1.10      $1.55      $3.51      $5.17
    --------------------------------------------------- ---------------------

    Diluted net income per
     common share (note 17)           $1.09      $1.55      $3.50      $5.16
    --------------------------------------------------- ---------------------

    Weighted average shares
         outstanding (000's)         56,107     48,282     51,062     48,282
    --------------------------------------------------- ---------------------
    (see accompanying notes)



    INMET MINING CORPORATION
    Segmented statements of earnings
    (unaudited)

    2009 For the nine months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                     (Turkey)    (Finland)     (Canada)

    Gross sales             $       -     $191,344     $125,244     $158,676
    Smelter processing
     charges and freight            -      (55,094)     (33,802)     (10,990)
    Cost of sales              (1,401)     (60,549)     (46,079)     (52,953)
    Depreciation                    -       (9,826)      (6,237)     (10,121)
                           --------------------------------------------------
                               (1,401)      65,875       39,126       84,612

    Corporate development
     and exploration           (4,581)        (971)      (2,370)           -
    General and
     administration           (14,056)           -            -            -
    Investment and other
     income (expense)         (10,798)         822         (421)         645
    Asset impairment
     charges                        -       (6,419)           -            -
    Interest expense           (1,481)           -            -            -
    Capital tax expense          (994)           -            -            -
    Income tax expense        (22,388)      (7,272)      (6,644)           -
    Non-controlling interest        -            -            -            -
                           --------------------------------------------------
    Net income               ($55,699)     $52,035      $29,691      $85,257
                           --------------------------------------------------
                           --------------------------------------------------


    2009 For the nine months ended September 30
                                                         COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    Gross sales              $218,051     $      -     $      -     $693,315
    Smelter processing
     charges and freight      (22,850)           -            -     (122,736)
    Cost of sales             (75,455)           -            -     (236,437)
    Depreciation              (17,657)           -            -      (43,841)
                           -------------------------------------- -----------
                              102,089            -            -      290,301

    Corporate development
     and exploration                -            -            -       (7,922)
    General and
     administration                 -            -            -      (14,056)
    Investment and other
     income (expense)          (3,299)      21,902            -        8,851
    Asset impairment
     charges                        -            -            -       (6,419)
    Interest expense                -            -            -       (1,481)
    Capital tax expense             -            -            -         (994)
    Income tax expense        (37,933)      (7,949)           -      (82,186)
    Non-controlling interest        -       (6,688)           -       (6,688)
                           -------------------------------------- -----------
    Net income                $60,857       $7,265     $      -     $179,406
                           -------------------------------------- -----------
                           -------------------------------------- -----------


    2008 For the nine months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      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               8,483        2,140         (228)       4,083
    Interest expense           (1,394)           -            -            -
    Capital tax expense          (375)           -            -            -
    Income tax expense         (8,060)     (34,207)     (18,866)           -
    Non-controlling interest        -            -            -            -
                           --------------------------------------------------
    Net income               ($19,166)     $98,576      $63,991      $26,653
                           --------------------------------------------------
                           --------------------------------------------------


    2008 For the nine months ended September 30
                                                         COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    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                 241      (16,790)           -       (2,071)
    Interest expense                -            -            -       (1,394)
    Capital tax expense             -            -            -         (375)
    Income tax expense        (50,324)       5,001            -     (106,456)
    Non-controlling interest        -        3,706            -        3,706
                           -------------------------------------- -----------
    Net income                $87,465      ($8,083)     $     -     $249,436
                           -------------------------------------- -----------
                           -------------------------------------- -----------


    2009 For the three months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                     (Turkey)    (Finland)     (Canada)

    Gross sales            $        -      $67,612      $48,262      $34,279
    Smelter processing
     charges and freight            -      (17,580)     (12,485)      (2,272)
    Cost of sales                (409)     (18,263)     (13,504)     (14,510)
    Depreciation                    -       (2,980)      (1,473)      (3,401)
                           --------------------------------------------------
                                 (409)      28,789       20,800       14,096

    Corporate development
     and exploration           (1,207)         (70)        (686)           -
    General and
     administration            (5,147)           -            -            -
    Investment and
     other income (expense)   (17,218)        (248)           1          284
    Asset impairment charges        -            -            -            -
    Interest expense             (496)           -            -            -
    Capital tax recovery         (744)           -            -            -
    Income tax expense         (2,658)      (5,641)      (4,339)           -
    Non-controlling interest        -            -            -            -
                           --------------------------------------------------

    Net income               ($27,879)     $22,830      $15,776      $14,380
                           --------------------------------------------------


    2009 For the three months ended September 30
                                                          COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    Gross sales               $90,968    $       -     $      -     $241,121
    Smelter processing
     charges and freight       (9,270)           -            -      (41,607)
    Cost of sales             (26,020)           -            -      (72,706)
    Depreciation               (6,704)           -            -      (14,558)
                           -------------------------------------- -----------
                               48,974            -            -      112,250

    Corporate development
     and exploration                -            -            -       (1,963)
    General and
     administration                 -            -            -       (5,147)
    Investment and
     other income (expense)      (813)      21,582            -        3,588
    Asset impairment charges        -            -            -            -
    Interest expense                -            -            -         (496)
    Capital tax recovery            -            -            -         (744)
    Income tax expense        (18,924)      (7,682)           -      (39,244)
    Non-controlling interest        -       (6,693)           -       (6,693)
                           -------------------------------------- -----------
                              $29,237       $7,207     $      -      $61,551
                           -------------------------------------- -----------


    2008 For the three months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      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         (2,526)      (6,428)      (6,418)           -
    Non-controlling interest        -            -            -            -
                           --------------------------------------------------
    Net income                ($1,425)     $23,596      $22,394       $7,798
                           --------------------------------------------------


    2008 For the three months ended September 30
                                                          COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    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         (7,174)       5,167            -      (17,379)
    Non-controlling interest        -        3,813            -        3,813
                           -------------------------------------- -----------
    Net income                $30,827      ($8,133)    $      -      $75,057
                           -------------------------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of cash flows
    (unaudited)

                                    Three Months Ended     Nine Months Ended
                                          September 30          September 30
    (thousands of Canadian dollars)    2009       2008       2009       2008
    --------------------------------------------------- ---------------------

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

    Net income                      $61,551    $75,057   $179,406   $249,436
    Add (deduct) items
     not affecting cash:
      Depreciation                   14,558     11,395     43,841     29,760
      Future income tax               5,427      2,126     16,746     (1,930)
      Accretion expense               1,180      1,085      3,655      3,229
      Non-controlling interest        6,693     (3,813)     6,688     (3,706)
      Asset impairment (note 18)          -          -      6,419          -
      Foreign exchange loss (gain)    2,951     11,257     (5,897)    30,147
      Gain on recognition of foreign
       currency forward contract
       settlement (note 15)         (35,615)         -    (35,615)         -
      Loss on recognition of
       interest rate swap contract
       settlement (note 15)          14,823          -     14,823          -
      Other                           3,198      1,704     10,808      4,913
    Settlement of gold
     forward contracts                    -    (12,399)         -    (12,399)
    Settlement of asset
     retirement obligations          (2,093)      (638)    (4,849)    (1,462)
    Net change in non-cash
     working capital (note 3)        16,604     12,031    (39,055)    (4,475)
                                   ------------------------------------------
                                     89,277     97,805    196,970    293,513
                                   ------------------------------------------

    Cash provided by (used in)
     investing activities

    Capital spending                (23,789)   (94,371)  (204,911)  (326,813)
    (Acquisition) disposition
     of investments (note 7)       (100,000)         -   (100,000)     1,521
    Sale of short-term
     investments                     53,958     29,254      8,707    204,239
    Acquisition of Petaquilla
     Copper, net of cash acquired         -   (336,911)         -   (336,911)
    Investment in Cobre Panama
     prior to consolidation               -     (8,412)         -    (12,167)
    Loans to other Cobre
     Panama shareholders                  -     (9,143)         -    (13,234)
                                   ------------------------------------------
                                    (69,831)  (419,583)  (296,204)  (483,365)
                                   ------------------------------------------

    Cash provided by (used in) financing activities

    Long-term debt:
      Borrowings                          -          -          -    106,240
      Repayment (note 9)           (232,101)   (13,871)  (314,603)   (13,871)
    Issuance of common
     shares (note 13)                     -          -    334,284          -
    Funding by non-controlling
     shareholder                      5,676      1,432     49,617     36,188
    Settlement of foreign
     currency forward contract            -          -          -     52,256
    Financial assurance deposits
     (notes 5 and 9)                (43,078)    (1,344)   (51,818)   (15,316)
    Dividends paid on
     common shares                        -          -     (4,828)    (4,828)
    Settlement of interest rate
     swap contract (note 8)         (15,982)         -    (15,982)         -
    Subsidies received (note 12)      4,730          -     70,939      3,233
    Other                            (1,251)       (46)    (1,341)      (138)
                                   ------------------------------------------
                                   (282,006)   (13,829)    66,268    163,764
                                   ------------------------------------------

    Cash assumed on
     consolidation of Cobre Panama        -      2,201          -      2,201
                                   ------------------------------------------

    Foreign exchange change
     on cash held in
     foreign currency               (21,535)        18    (34,435)    23,586
                                   ------------------------------------------

    Decrease in cash               (284,095)  (333,388)   (67,401)      (301)

    Cash:
      Beginning of period           753,753    855,592    537,059    522,505
                                   ------------------------------------------
      End of period                 469,658    522,204    469,658    522,204

    Short-term investments           26,967    114,079     26,967    114,079
                                   ------------------------------------------

    Cash and short-term
     investments                   $496,625   $636,283   $496,625   $636,283
    -------------------------------------------------------------------------
    (see accompanying notes)

    (1)Supplementary cash flow
     information:

      Cash interest paid               $972     $1,657    $10,867     $9,779
      Cash taxes paid                $7,189    $44,163    $17,828   $124,412
    -------------------------------------------------------------------------



    INMET MINING CORPORATION
    Segmented statements of cash flows
    (unaudited)

    2009 For the nine months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                     (Turkey)    (Finland)     (Canada)

    Cash provided by (used
     in) operating activities
      Before net change
       in non-cash
       working capital       ($49,832)     $60,713      $37,886      $96,113
      Net change
       in non-cash
       working capital            947      (15,612)       8,009       (2,495)
                           --------------------------------------------------
                              (48,885)      45,101       45,895       93,618
                           --------------------------------------------------

    Cash provided by (used
     in) investing activities
      Capital spending           (278)     (10,631)      (5,823)           -
      Purchase of long-term
       investments           (100,000)           -            -            -
      Sale of short-term
       investments              8,707            -            -            -
                           --------------------------------------------------
                              (91,571)     (10,631)      (5,823)           -
                           --------------------------------------------------

                           --------------------------------------------------
    Cash provided by
     (used in) financing
     activities               329,201            -            -            -
                           --------------------------------------------------


    Foreign exchange change
     on cash held in
     foreign currency               -      (20,512)      (5,462)           -
                           --------------------------------------------------

    Intergroup funding
     (distributions)         (241,372)     (89,340)      (9,923)     (93,618)
                           --------------------------------------------------

    Increase (decrease)
     in cash                  (52,627)     (75,382)      24,687            -
    Cash:
      Beginning of period     205,564      192,881       65,976            -
                           --------------------------------------------------
      End of period           152,937      117,499       90,663            -
    Short-term investments     26,967            -            -            -
                           --------------------------------------------------

    Cash and short-term
     investments             $179,904     $117,499      $90,663     $      -
                           --------------------------------------------------


    2009 For the nine months ended September 30
                                                          COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    Cash provided by (used
     in) operating activities
      Before net change
       in non-cash
       working capital        $91,145    $       -     $      -     $236,025
      Net change
       in non-cash
       working capital        (29,904)           -            -      (39,055)
                           -------------------------------------- -----------
                               61,241            -            -      196,970
                           -------------------------------------- -----------
    Cash provided by (used
     in) investing activities
      Capital spending         (9,907)    (108,147)     (70,125)    (204,911)
      Purchase of long-term
       investments                  -            -            -     (100,000)
      Sale of short-term
       investments                  -            -            -        8,707
                           -------------------------------------- -----------
                               (9,907)    (108,147)     (70,125)    (296,204)
                           -------------------------------------- -----------

                           -------------------------------------- -----------
    Cash provided by
     (used in) financing
     activities               (11,965)    (250,968)           -       66,268
                           -------------------------------------- -----------

    Foreign exchange change
     on cash held in
     foreign currency          (7,612)       (731)         (118)     (34,435)
                           -------------------------------------- -----------

    Intergroup funding
     (distributions)          (18,224)    378,938        73,539            -
                           -------------------------------------- -----------

    Increase (decrease)
     in cash                   13,533      19,092        3,296       (67,401)
    Cash:
      Beginning of period      37,547      33,981        1,110       537,059
                           -------------------------------------- -----------
      End of period            51,080      53,073        4,406       469,658
    Short-term investments          -           -            -        26,967
                           -------------------------------------- -----------

    Cash and short-term
     investments              $51,080     $53,073       $4,406      $496,625
                           -------------------------------------- -----------


    2008 For the nine months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      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
     Cobre Panama               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     $      -
                           --------------------------------------------------


    2008 For the nine months ended September 30
                                                          COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    Cash provided by (used
     in) operating activities
      Before net change
       in non-cash
       working capital        $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
     Cobre Panama                   -            -            -        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
                           -------------------------------------- -----------


    2009 For the three months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      TROILUS
    -------------------------------------------------------------------------
    (thousands of
     Canadian dollars)                     (Turkey)    (Finland)     (Canada)

    Cash provided by (used
     in) operating activities
      Before net change
       in non-cash
       working capital       ($28,693)     $25,746      $22,518      $17,254
      Net change
       in non-cash
       working capital            868        4,174        2,136       (1,322)
                           --------------------------------------------------
                              (27,825)      29,920       24,654       15,932
                           --------------------------------------------------
    Cash provided by (used
     in) investing activities
      Capital spending            (17)      (4,076)      (2,045)           -
      Sale (purchase) of
       long-term investments (100,000)           -            -            -
      Purchase of
       short-term investments  53,958            -            -            -
      Loans to Petaquilla
       shareholders                 -            -            -            -
                           --------------------------------------------------
                             ($46,059)      (4,076)      (2,045)           -
                           --------------------------------------------------

                           --------------------------------------------------
    Cash provided by (used
     in) financing activities     (63)           -            -            -
                           --------------------------------------------------

    Foreign exchange
     change on cash held
     in foreign currency            -       (9,837)      (3,810)           -
                           --------------------------------------------------

    Intergroup funding
     (distributions)         (248,439)         827      (22,878)     (15,932)
                           --------------------------------------------------

    Increase (decrease)
     in cash                 (322,386)      16,834       (4,079)           -
    Cash:
      Beginning of period     475,323      100,665       94,742            -
                           --------------------------------------------------
      End of period           152,937      117,499       90,663            -
    Short-term investments     26,967            -            -            -
                           --------------------------------------------------

    Cash and short-term
     investments             $179,904     $117,499      $90,663     $      -
                           --------------------------------------------------
                           --------------------------------------------------


    2009 For the three months ended September 30
                                                          COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    Cash provided by (used
     in) operating activities
      Before net change
       in non-cash
       working capital        $35,848     $      -     $      -      $72,673
      Net change
       in non-cash
       working capital         10,748            -            -       16,604
                           -------------------------------------- -----------
                               46,596            -            -       89,277
                           -------------------------------------- -----------
    Cash provided by (used
     in) investing activities
      Capital spending         (3,317)      10,403      (24,737)     (23,789)
      Sale (purchase) of
       long-term investments        -            -            -     (100,000)
      Purchase of
       short-term investments       -            -            -       53,958
      Loans to Petaquilla
       shareholders                 -            -            -            -
                           -------------------------------------- -----------
                               (3,317)      10,403      (24,737)    ($69,831)
                           -------------------------------------- -----------

                           -------------------------------------- -----------
    Cash provided by (used
     in) financing activities (11,216)    (270,727)           -     (282,006)
                           -------------------------------------- -----------

    Foreign exchange
     change on cash held
     in foreign currency       (5,661)      (2,102)        (125)     (21,535)
                           -------------------------------------- -----------

    Intergroup funding
     (distributions)          (18,119)     280,195       24,346            -
                           -------------------------------------- -----------

    Increase (decrease)
     in cash                    8,283       17,769         (516)    (284,095)
    Cash:
      Beginning of period      42,797       35,304        4,922      753,753
                           -------------------------------------- -----------
      End of period            51,080       53,073        4,406      469,658
    Short-term investments          -            -            -       26,967
                           -------------------------------------- -----------

    Cash and short-term
     investments              $51,080      $53,073       $4,406     $496,625
                           -------------------------------------- -----------
                           -------------------------------------- -----------


    2008 For the three months ended September 30

                            CORPORATE       ÇAYELI    PYHÄSALMI      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)
      Sale (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
     Cobre Panama               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     $      -
                           --------------------------------------------------


    2008 For the three months ended September 30
                                                          COBRE
                              OK TEDI   LAS CRUCES       PANAMA        TOTAL
    ------------------------------------------------------------- -----------
    (thousands of          (Papua New
     Canadian dollars)         Guinea)      (Spain)     (Panama)

    Cash provided by (used
     in) operating activities
      Before net change
       in non-cash
       working capital        $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)
      Sale (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
     Cobre Panama                   -            -            -        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
                           -------------------------------------- -----------



    INMET MINING CORPORATION
    Consolidated statements of retained earnings
    (unaudited)

                                  Three Months Ended       Nine Months Ended
    (thousands of                       September 30            September 30
     Canadian dollars)              2009        2008        2009        2008
    ------------------------------------------------- -----------------------

    Retained earnings,
     beginning of period      $1,396,101  $1,244,313  $1,283,074  $1,074,762
    Net income                    61,551      75,057     179,406     249,436
    Dividends on common shares         -           -      (4,828)     (4,828)
                             ------------------------ -----------------------
    Retained earnings,
     end of period            $1,457,652  $1,319,370  $1,457,652  $1,319,370
    ------------------------------------------------- -----------------------
    (see accompanying notes)



    Consolidated statements of comprehensive income
    (unaudited)

                                  Three Months Ended       Nine Months Ended
    (thousands of                       September 30            September 30
     Canadian dollars)              2009        2008        2009        2008
    ------------------------------------------------- -----------------------

    Net income                   $61,551     $75,057    $179,406    $249,436
                             ------------------------ -----------------------

    Other comprehensive income
     (loss) for the period:
      Changes in fair value
       of gold forward
       sales contracts              (775)      3,593      (1,880)     (3,690)

      Changes in fair value
       of interest rate
       swap contract              (1,081)       (445)      3,903        (327)

      Changes in fair value
       of foreign exchange
       forward contract                -           -           -       7,054

      Changes in fair
       value of investments          986      (2,930)     10,387      (4,676)

      Currency translation
       adjustments              (103,221)    (24,030)   (174,798)     40,456

    Reclassification to net
     income of gains
     (losses) realized:
      Gain on sale of investment       -           -           -        (256)

      Troilus gold hedge loss          -       7,932           -      24,372

      Ok Tedi gold hedge loss          -           -           -       1,013

      Amortization of deferred
       Troilus gold hedges             -      (1,361)          -      (4,083)
      Amortization of gain
       on foreign exchange
       forward contract           (2,626)     (3,195)     (5,657)     (3,195)
      Recognition of gain
       on foreign exchange
       forward contract
       (note 15)(1)              (28,158)          -     (28,158)          -

      Recognition of loss on
       interest rate swap
       contract (note 15)(2)      11,711           -      11,711           -

      Foreign exchange loss
      (gain) on reduction of
      net investment in
      self-sustaining foreign
      operations (note 15)         1,439           -      (2,473)     20,384
    Income tax recovery
     (expense) related to
     other comprehensive
     income (note 19)              8,822           -       5,685           -
                             -------------------------- ---------------------
                                (112,903)    (20,436)   (181,280)     77,052
                             -------------------------- ---------------------
    Comprehensive income
     (loss)                     ($51,352)    $54,621     ($1,874)   $326,488
    --------------------------------------------------- ---------------------
    (see accompanying notes)
    (1) Gain of $35,615 net of non-controlling interest of $7,457.
    (2) Loss of $14,823 net of non-controlling interest of $3,112.



    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). These statements do,
        however, follow the same accounting policies and methods of
        application used in our most recent annual consolidated financial
        statements, except for the differences explained in note 2. You
        should read our interim statements in conjunction with our annual
        statements, which you can find in our 2008 Annual Review.

        The interim consolidated financial statements have been approved by
        Inmet's board of directors and have been reviewed by our external
        auditors.

    2.  Changes in accounting policies

        Effective January 1, 2009, we adopted CICA Handbook Section 3064,
        Goodwill and Intangible Assets, which replaces Section 3062 -
        Goodwill and Other Intangible Assets and Section 3450 - Research and
        Development Costs. This new standard establishes standards for the
        recognition, measurement, presentation and disclosure of goodwill
        subsequent to its initial recognition and of intangible assets. It
        provides guidance for recognizing internally developed intangible
        assets, and ensuring consistent treatment of all intangible assets,
        whether separately acquired or internally developed. Standards
        concerning goodwill are unchanged from the standards included in the
        previous section. The adoption of this standard did not have an
        impact on our consolidated financial statements.

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

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

    3.  Statement of cash flows

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

    For the nine months ended September 30, 2009
    -------------------------------------------------------------------------

    (thousands)  Corporate    Çayeli Pyhäsalmi   Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------

    Accounts
     receivable(1)   ($272) ($17,674) ($8,108)   ($1,180) ($53,308) ($80,542)
    Inventories          -      (585)    (375)     5,428     1,149     5,617
    Accounts payable
     and accrued
     liabilities    (1,319)    1,028    2,625     (6,743)     (799)   (5,208)
    Taxes            5,247     1,621   13,867          -    23,846    44,581
    Other           (2,709)       (2)       -          -      (792)   (3,503)
    -------------------------------------------------------------------------
                      $947  ($15,612)  $8,009    ($2,495) ($29,904) ($39,055)
    -------------------------------------------------------------------------


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

    (thousands)  Corporate    Çayeli Pyhäsalmi   Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------

    Accounts
     receivable    $10,753   ($1,188)  $11,987      $533   $18,254   $40,339
    Inventories          -      (992)      (91)   (1,194)   (8,587)  (10,864)
    Accounts
     payable and
     accrued
     liabilities   (10,530)    1,335       891   (3,462)    (1,408)  (13,174)
    Taxes           (1,752)  (12,718)   (6,726)       -        375   (20,821)
    Other              108        32         -        -        (95)       45
    -------------------------------------------------------------------------
                   ($1,421) ($13,531)   $6,061  ($4,123)    $8,539   ($4,475)
    -------------------------------------------------------------------------
    (1) Includes changes in accounts payable related to metal sales.


    For the three months ended September 30, 2009
    -------------------------------------------------------------------------

    (thousands)  Corporate    Çayeli Pyhäsalmi   Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------

    Accounts
     receivable      ($338)  ($1,996)  ($1,905)    ($685)  ($4,908)  ($9,832)
    Inventories          -      (804)     (765)    1,490     1,161     1,082
    Accounts
     payable and
     accrued
     liabilities      1,552    6,550     1,368     (2,127)  (1,181)    6,162
    Taxes               (95)     449     3,438          -   16,175    19,967
    Other              (251)     (25)        -          -     (499)     (775)
    -------------------------------------------------------------------------
                       $868   $4,174    $2,136    ($1,322) $10,748   $16,604
    -------------------------------------------------------------------------


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

    (thousands)  Corporate    Çayeli Pyhäsalmi   Troilus   Ok Tedi     Total
    -------------------------------------------------------------------------

    Accounts
     receivable     $1,921   $12,617    $2,625    $5,646   $16,778   $39,587
    Inventories          -     2,188       623     1,126    (7,085)   (3,148)
    Accounts payable
     and accrued
     liabilities      (259)     (631)      971    (2,995)    2,824       (90)
    Taxes           (4,890)      537    (2,456)        -   (18,011)  (24,820)
    Other               60       (78)        -       421        99       502
    -------------------------------------------------------------------------
                   ($3,168)  $14,633    $1,763    $4,198   ($5,395)  $12,031
    -------------------------------------------------------------------------

    4.  Cash and short-term investments

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

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Cash:
        Liquidity funds                                $199,852     $276,301
        Bankers' acceptances                             28,932       64,293
        Money market funds                               67,476       38,683
        Term deposits                                    59,920       78,041
        Overnight deposits                               10,576       14,684
        Bank deposits                                   102,902       52,429
        Provincial short-term notes                           -       12,628
                                                 ----------------------------
                                                        469,658      537,059
        Short-term investments:
        Provincial short-term notes                           -       35,674
        Commercial paper                                 26,967            -
        ---------------------------------------------------------------------
                                                         26,967       35,674
        ---------------------------------------------------------------------
        Total cash and short-term investments          $496,625     $572,733
        ---------------------------------------------------------------------

    5.  Restricted cash

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Collateralized cash for
         letter of credit facility                      $16,459      $16,343
        In trust for Ok Tedi rehabilitation              26,621       16,667
        Collateralized cash for letters
         of credit - Las Cruces                          63,123       26,090
        Collateralized cash for Pyhäsalmi reclamation     1,880        2,104
        ---------------------------------------------------------------------
                                                        108,083       61,204
        Less current portion:
          Collateralized cash for letters
           of credit - Las Cruces                       (15,231)      (8,311)
        ---------------------------------------------------------------------
                                                        $92,852      $52,893
        ---------------------------------------------------------------------

        Las Cruces' restricted cash which secures a restoration bond
        increased by (euro)5 million in the first quarter and
        (euro)15 million in the third quarter. Also in the third quarter, Las
        Cruces' restricted cash securing subsidies advanced increased by
        (euro)5 million. The increases in the third quarter result from
        repayment of its credit facility which also included a letter of
        credit facility (note 9).

        During the third quarter, Ok Tedi paid US $50 million in trust to
        fund future rehabilitation (our share was US $9 million).

    6.  Investments in equity securities

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Available-for-sale equity securities:
          Premier Gold Mines Ltd.                       $25,704      $15,309
          Other                                           2,350        2,205
        ---------------------------------------------------------------------
                                                        $28,054      $17,514
        ---------------------------------------------------------------------

    7.  Held to maturity investments

        During the third quarter, we purchased $100 million of long-term
        Canadian government and corporate bonds with credit ratings of A to
        AAA. The bonds mature between December 2010 and June 2014. We have
        designated these bonds as held to maturity investments and measure
        them at amortized cost.

    8.  Derivatives

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Derivative asset:
          Ok Tedi copper forward sales contracts             $-       $4,327
        Derivative liabilities:
          Ok Tedi gold forward sales contracts           $3,253       $1,670
          Ok Tedi copper forward sales contracts            433            -
          Las Cruces interest rate swap contracts             -       23,440
        ---------------------------------------------------------------------
                                                         $3,686      $25,110
        ---------------------------------------------------------------------

        In connection with the decision to repay the credit facility (note
        9), Las Cruces paid $16 million in the third quarter to terminate its
        interest rate swap contract. The $15 million interest rate swap loss
        that was deferred in accumulated other comprehensive income was
        recognized in investment and other income (note 15).

    9.  Long-term debt

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Credit facility - Tranche A                          $-     $262,504
                        - Tranche B                           -       80,364
        Promissory note                                  18,675       19,741
        Loans from non-controlling shareholder          184,770      131,905
        ---------------------------------------------------------------------
                                                        203,445      494,514
        Less current portion:
        Credit facility - Tranche A                           -      (29,302)
                        - Tranche B                           -      (80,364)
        ---------------------------------------------------------------------
                                                       $203,445     $384,848
        ---------------------------------------------------------------------

        Credit facility

        In the first half of 2009, Las Cruces made its first scheduled
        repayment of US $12 million under Tranche A of its credit facility.
        It also repaid (euro)42 million under Tranche B (an amount equal to
        the subsidies received).

        On July 31, 2009, Las Cruces repaid the remaining US $203 million
        under Tranche A, (euro)5 million under Tranche B and cash
        collateralized $32 million in letters of credit that had been secured
        under the credit facility. This eliminated the Las Cruces project
        credit facility. We funded 100 percent of the repayment through an
        intercompany loan. Leucadia guarantees 30 percent of this loan


        Loans from non-controlling shareholder

        During the second quarter, Las Cruces received intercompany loan
        advances of (euro)40 million. 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)118 million, is
        reflected in long-term debt at September 30, 2009. Loans from
        non-controlling shareholders approximate fair value because the loans
        accrue interest at prevailing market rates.

    10. Commitments

        Our operations have the following capital commitments as at
        September 30, 2009:

        -  Ok Tedi has committed approximately $93 million (our
           proportionate share is $16.7 million) to capital expenditures
           related to the mine waste management project.

        -  Las Cruces has committed $8 million related to the purchase of
           material and supplies and certain operating costs.

        -  Cobre Panama has committed $152 million for the design and supply
           of certain mill equipment.

    11. Leases

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

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

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

    12. Las Cruces subsidies

        Las Cruces received (euro)3 million of subsidy grants during the
        third quarter of 2009 and (euro)40 million year to date. This
        operation must meet certain minimum employment and share capital
        requirements for a five year period, otherwise subsidies received
        must be repaid. Las Cruces expects to meet these conditions and has
        recognized total subsidies of (euro)53 million as a reduction of the
        cost of the related property, plant and equipment.

    13. Share capital

        On June 25, 2009, we completed a public offering of 7.825 million
        common shares, on a bought deal basis, at a price of $44.50 per share
        for aggregate gross proceeds of $348 million ($333 million net of
        transaction costs).

    14. Accumulated other comprehensive income (AOCI)

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

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

        (thousands)
        ---------------------------------------------------------------------
        Unrealized losses on gold forward sales contracts
         (net of tax of $1,030)                                      ($2,402)
        Unrealized gains on foreign exchange forward contract(1)      21,023
        Unrealized losses on interest rate swap contracts(2)          (9,962)
        Unrealized gains on investments (net of tax of $667)           3,314
        Currency translation adjustment                              170,659
        ---------------------------------------------------------------------
        AOCI, December 31, 2008                                     $182,632
        Impact on adoption of EIC 173 - January 1, 2009 (note 2)         279
        Other comprehensive income for the nine months
         ending September 30, 2009                                  (181,280)
        ---------------------------------------------------------------------
        AOCI, September 30, 2009                                      $1,631
        ---------------------------------------------------------------------

        AOCI September 30, 2009 comprises:
        Unrealized losses on gold forward sales contracts
         (net of tax of $1,594)                                      ($3,718)
        Unrealized gains on investments (net of tax of $2,407)        11,961
        Currency translation adjustment                               (6,612)
        ---------------------------------------------------------------------
        AOCI, September 30, 2009                                      $1,631
        ---------------------------------------------------------------------
        (1) Net of tax of $12,792 and non-controlling interest of $8,956.
        (2) Net of tax of $6,102 and non-controlling interest of $4,270.

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

        ---------------------------------------------------------------------
                                                   September 30  December 31
        (thousands)                                        2009         2008
        ---------------------------------------------------------------------
        Pyhäsalmi (euro functional currency)             $1,570      $17,480
        Las Cruces (euro functional currency)            22,571       57,947
        Çayeli (US dollar functional currency)          (14,427)      24,751
        Ok Tedi (US dollar functional currency)         (13,387)       6,224
        Cobre Panama (US dollar functional currency)     (2,939)      64,257
        ---------------------------------------------------------------------
                                                        ($6,612)    $170,659
        ---------------------------------------------------------------------

        The US dollar to Canadian dollar exchange rate was $1.07 at September
        30, 2009 and $1.22 at December 31, 2008. The euro to Canadian dollar
        exchange rate was $1.57 at September 30, 2009 and $1.70 at December
        31, 2008.

    15. Investment and other income

        ---------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                        September 30            September 30
        (thousands)                 2009        2008        2009        2008
        ---------------------------------------------------------------------
        Interest income           $1,135      $6,308      $3,878     $21,994
        Foreign exchange
         gain (loss)             (17,417)    (16,553)     (9,319)    (28,268)
        Loss on recognition
         of settlement of Las
         Cruces interest rate
         swap contract (note 8)  (14,823)          -     (14,823)          -

        Gain on recognition of
         settlement of Las
         Cruces foreign exchange
         forward contract         35,615           -      35,615           -

        Dividend and
         royalty income              300       1,650         985       3,154
        Mark to market on
         Ok Tedi copper
          forward contracts         (802)      3,780      (3,228)       (636)
        Other                       (420)       (652)     (4,257)      1,685
        ---------------------------------------------------------------------
                                  $3,588     ($5,467)     $8,851     ($2,071)
        ---------------------------------------------------------------------

        Foreign exchange

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

        Foreign exchange gain (loss) is a result of:

        ---------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                        September 30            September 30
        (thousands)                 2009        2008        2009        2008
        ---------------------------------------------------------------------
        Translation of Las Cruces'
         US dollar-denominated
         bank credit facility    ($1,348)   ($12,895)     $2,460    ($12,895)
        Translation of US
         dollar - denominated
         cash held at corporate  (13,976)         16     (14,395)        (11)
        Distribution of funds
         from subsidiaries        (1,439)          -       2,473     (20,384)
        Translation of
         other-monetary assets
         and liabilities            (654)     (3,674)        143       5,022
        ---------------------------------------------------------------------
                                ($17,417)   ($16,553)    ($9,319)   $(28,268)
        ---------------------------------------------------------------------

        Gain on foreign exchange forward contract

        When we converted the Las Cruces debt from euro to US dollars in
        2008, Las Cruces settled a foreign exchange forward contract and
        received proceeds of $52 million. We deferred the proceeds in
        accumulated other comprehensive income, and have been amortizing it
        to income over the term of the debt. When we repaid the debt, we
        realized the remaining deferred gain of $37 million in investment and
        other income.

    16. Income tax expense

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

    For the nine months ended September 30, 2009
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Çayeli Pyhäsalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current income
     taxes         $12,220   $17,654    $6,114   $29,452       $ -   $65,440
    Future income
     taxes          10,168   (10,382)      530     8,481     7,949    16,746
    -------------------------------------------------------------------------
                   $22,388    $7,272    $6,644   $37,933    $7,949   $82,186
    -------------------------------------------------------------------------


    For the nine months ended September 30, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Çayeli Pyhäsalmi   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   $18,886   $50,324   ($5,001) $106,456
    -------------------------------------------------------------------------


    For the three months ended September 30, 2009
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Çayeli Pyhäsalmi   Ok Tedi    Cruces     Total
    -------------------------------------------------------------------------

    Current income
     taxes          $2,056    $7,048    $4,356   $20,357       $ -   $33,817
    Future income
     taxes             602    (1,407)      (17)   (1,433)    7,682     5,427
    -------------------------------------------------------------------------
                    $2,658    $5,641    $4,339   $18,924    $7,682   $39,244
    -------------------------------------------------------------------------


    For the three months ended September 30, 2008
    -------------------------------------------------------------------------
                                                               Las
    (thousands)  Corporate    Çayeli Pyhäsalmi   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
    -------------------------------------------------------------------------

    17. 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)                 2009        2008        2009        2008
        ---------------------------------------------------------------------
        Net income available
         to common shareholders  $61,551     $75,057    $179,406    $249,436
        ---------------------------------------------------------------------


        (thousands)
        ---------------------------------------------------------------------
        Weighted average common
         shares outstanding       56,107      48,282      51,062      48,282
        Plus incremental shares
         from assumed conversions:
        Deferred share units          89          78          89          78
        Long term incentive
         plan units                   43           -          43           -
        ---------------------------------------------------------------------
        Diluted weighted
         average common
         shares outstanding       56,239      48,360      51,194      48,360
        ---------------------------------------------------------------------


        (Canadian dollars
         per share)
        ---------------------------------------------------------------------
        Basic net income
         per common share          $1.10       $1.55       $3.51       $5.17
        Dilutive effect from
         assumed conversions of
         deferred share units and
         long term incentive plan
         units per common share   ($0.01)          -      ($0.01)      (0.01)
        ---------------------------------------------------------------------
        Diluted net income
         per common share          $1.09       $1.55       $3.50       $5.16
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    18. Asset impairment

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

    19. Income taxes recovery (expense) included in other comprehensive
        income

        ---------------------------------------------------------------------
                                  Three months ended       Nine months ended
                                        September 30            September 30
        (thousands)                 2009        2008        2009        2008
        ---------------------------------------------------------------------
        Changes in fair value
         of gold forward
         sales contracts            $233       ($678)       $564       ($962)
        Changes in fair value
         of interest rate
         swap contracts              411         272      (1,482)        200
        Changes in fair value
         of foreign exchange
         forward contracts             -         (19)          -      (4,338)
        Changes in fair value
         of investments             (165)        590      (1,740)      1,025
        Recognition of gain
         on foreign exchange
         forward contract         12,792           -      12,792           -
        Recognition of loss
         on interest rate swap
         contract                 (4,449)          -      (4,449)          -
        ---------------------------------------------------------------------
                                  $8,822        $165      $5,685     ($4,075)
        ---------------------------------------------------------------------
    

SOURCE INMET MINING CORPORATION

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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