October 27, 2009 / 1:29 PM / in 8 years

UPDATE 2-Inmet shares drop as profit sags, cuts outlook

* Q3 EPS C$1.10 vs analyst forecast C$1.34

* Lowers copper, zinc, gold production outlook

* Shares drop 5.1 percent to C$59.70

TORONTO, Oct 27 (Reuters) - Inmet Mining’s IMN.TO third-quarter profit fell a steeper than expected 18 percent, as production hiccups forced it to cut its full-year production outlook, sending its shares down more than 5 percent on Tuesday.

The Toronto-based company said output was lower than expected at three of its mines, leading to the weaker full-year outlook and sluggish profit.

Inmet earned C$61.6 million ($57.6 million), or C$1.10 a share, down from C$75.1 million, or C$1.55 a share, a year earlier.

The results missed analysts’ estimates of a profit of C$1.34 a share, as polled by Thomson Reuters I/B/E/S.

Quarterly sales fell 3 percent to C$241.1 million, as higher metal prices offset lower overall sales volumes.

Inmet, which raised C$348 million in an equity sale in June, mines base and precious metals at four operations in Canada and Europe. It also owns an 18 percent stake in the Ok Tedi copper and gold mine in Papua New Guinea and plans to develop the massive Cobre Panama copper deposit in Panama.

Problems starting up its Las Cruces mine in Spain led to production that was “significantly” below the company’s expectations during the quarter.

“We do not expect any of these issues to affect the long-term production of the plant,” Inmet said in a statement.

Output at the Cayeli mine in Turkey and the Ok Tedi mine also missed expectations due to lower ore grades.

Inmet now expects 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.

In July, it forecast production of 100,000 tonnes of copper, 78,000 tonnes of zinc, 230,000 ounces of gold and 411,000 tonnes of pyrite.

Just before midday on Tuesday, the company’s shares were down C$3.20 at C$59.70 on the Toronto Stock Exchange, touching their lowest point in nearly three weeks and underperforming other TSX base metal miners.

Costs of sales retreated year-over-year as mining activity wound down at the Troilus mine in Canada, and production came from stockpiles.

Inmet said it expects costs to rise in the fourth quarter assuming it reaches commercial production at Las Cruces. Costs for consumables and energy are expected to remain at recent levels.

$1=$1.07 Canadian Reporting by Cameron French and Euan Rocha; editing by Rob Wilson

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