July 26, 2011 / 1:53 PM / in 7 years

Inmet shares slide as results, outlook disappoint

* Inmet continues to face hurdles at Las Cruces mine

* Shares fall 5.7 in early trading on the TSX

TORONTO, July 26 (Reuters) - Shares of Inmet Mining Corp IMN.TO fell 5.7 percent on Tuesday morning after the Canadian base metal miner reported disappointing quarterly results and cut its full-year production outlook due to operational problems.

The second-quarter results were hurt primarily by higher copper production costs along with lower than expected copper output and sales volumes. [ID:nL3E7IP3US]

“Inmet reported a relatively disappointing quarter, which was magnified by a delay in shipments,” wrote Canaccord Genuity analyst Orest Wowkodaw in a note to clients. “More important, the company disclosed yet another setback in the ramp-up at Las Cruces.”

The Las Cruces copper mine in Spain began production in mid-2009, but equipment failures and operational problems have delayed the ramp-up of the plant and hurt financial results.

“While the company continues to make visible progress at Las Cruces, we believe the process is nevertheless frustrating for investors as a new problem seems to emerge every time an existing problem is solved. We view the company’s guidance of reaching full capacity at Las Cruces by year-end as overly optimistic,” said Wowkodaw.

Shares of Inmet fell C$4 to C$66 in early trading on the Toronto Stock Exchange.

$1=$0.94 Canadian Reporting by Euan Rocha; editing by Peter Galloway

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