July 29, 2008 / 1:59 PM / in 10 years

UPDATE 1-Inmet Mining halves profit as zinc price drops

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TORONTO, July 29 (Reuters) - Inmet Mining IMN.TO said on Tuesday its second-quarter profit fell 51 percent, as lower zinc prices took a C$53-million bite out of its second-quarter sales.

The Canadian metals producer, which has offered C$345 million ($337.3 million) in cash to take over Petaquilla Copper PTC.TO, earned C$67.7 million, or C$1.40 a share, in the quarter ended June 30. That’s about half the C$138.1 million, or C$2.86 a share, it earned a year earlier.

The results fell short of expectations, with analysts polled by Reuters forecasting an average profit of C$2.22 a share before exceptional items.

Gross quarterly sales fell 12 percent to C$281.5 million, from $320 million a year earlier.

Inmet, which operates mines in Turkey, Finland and Canada, produced 19,300 tonnes of copper and 21,000 tonnes of zinc, and 59,900 ounces of copper in the quarter.

Realized prices for zinc tumbled 46 percent to 94 U.S. cents per pound from $1.75 per pound in the year-earlier quarter, while copper prices inched up to $3.83 per pound, from $3.71 per pound. Gold prices rose 26 percent to $725 per ounce from $575 per ounce.

For the year, the company expects to produce 93,100 tonnes of copper, 78,700 tonnes of zinc and 268,400 ounces of gold. That compares with an earlier projection of 103,800 tonnes of copper, 78,700 tonnes of zinc and 284,500 ounces of gold in 2008.

Inmet said the lower forecast for copper was due to a delay in direct ore shipping at the Las Cruces mine in Spain and the lower gold estimate was a result of lower expected grades at Ok Tedi in Papua New Guinea.

Inmet has offered C$2 a share for Petaquilla Copper, with whom Inmet is a partner on the Petaquilla copper project in Panama. Teck Cominco TCKb.TO is also involved in the project. ($1=$1.02 Canadian) (Reporting by John McCrank; Editing by Bernadette Baum)

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