Inmet Mining Corporation
TSX : IMN

Inmet Mining Corporation

July 31, 2007 13:56 ET

Inmet Announces 2007 Second Quarter Earnings of $2.86 Per Share

TORONTO, ONTARIO--(Marketwire – July 31, 2008) – Inmet Mining Corp. (TSX:IMN) -

All amounts in Canadian dollars unless indicated otherwise

We regret that in the second quarter on June 25, 2007, a contractor employee at Cayeli suffered fatal injuries when he fell down a finger raise connecting to an ore pass. As a result, Cayeli commissioned an independent investigation to determine the cause of this tragic accident and to recommend and implement measures to minimize the potential for this kind of accident from happening again. Cayeli remains committed to pursuing all measures necessary to provide its workers and contractors with a safe working environment.



Highlights

- Higher net income per share

Net income per share this quarter was $2.86 compared to $2.74 for the
same period in 2006.

- Higher operating cash flow per share

Operating cash flow before working capital increased to $133 million
or $2.76 per common share compared to $125 million or $2.60 for the
same period in 2006.

- Update to our annual production estimates

We produced 19,100 tonnes of copper, 16,600 tonnes of zinc and
54,800 ounces of gold in the second quarter. Our updated annual
production objectives are: copper 80,700 tonnes, zinc 82,800 tonnes
and gold 238,000 ounces. The revised objectives reflect an updated
mine plan at Ok Tedi to minimize the fluorine content in its
concentrate, changes in the zinc mining plan at Cayeli and lower
expected throughput at Troilus.

- Ok Tedi concludes on the Community Mine Continuation Agreements
(CMCAs)

On June 29, Ok Tedi signed a Memorandum of Agreement which concluded
the scheduled mid-term review of the CMCAs that were first negotiated
in 2002. Inmet's share of the CMCA payments will be US $3 million per
year for the next six years, compared to the approximately
US $1 million per year under the previous agreement.

- Progress at Las Cruces continues

Plant construction is 30 percent completed and more than 50 percent
of the required pre-strip material has been removed from the pit.

- Cerattepe moving forward

We continued to move the Cerattepe project forward after receiving
the construction and operating permit, and have sent out the
contracts for the ramp development and surface installations for
tender.

- Petaquilla work plan approved

Teck Cominco, Petaquilla Copper and Inmet agreed to a work plan to
pursue the accelerated development of the Petaquilla copper deposit
in Panama.

- Disposed of our interest in Wolfden Resources Inc.

We disposed of our shares in Wolfden to Zinifex Canadian Enterprises
Inc. for cash proceeds of $51.4 million or $3.81 per share, and
recorded a gain of $11.7 million.

Key financial data

-------------------------------------------------------------------------
three months ended June 30 six months ended June 30
2007 2006 change 2007 2006 change
-------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS

(thousands, except per share amounts)

Sales

Gross sales $320,018 $317,624 +1% $606,632 $527,858 +15%

Net income

Net income $138,050 $132,090 +5% $239,128 $211,651 +13%

Net income

per share $ 2.86 $ 2.74 +4% $ 4.95 $ 4.40 +13%

Adjusted net

income(1) $126,320 $132,090 -4% $227,398 $187,746 +21%

Adjusted net

income per

share(1) $ 2.62 $ 2.74 -4% $ 4.71 $ 3.90 +21%

Cash flow(1)

Cash flow

provided by

operating

activities

(before

working

capital) $133,443 $125,452 +6% $243,337 $190,977 +27%

Capital

spending $ 82,079 $ 12,215 +572% $134,014 $ 37,104 +261%

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

Cash flow

provided by

operating

activities

per share

(before

working

capital) $ 2.76 $ 2.60 +6% $ 5.04 $ 3.97 +27%

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

OPERATING HIGHLIGHTS

Production(2)

Copper

(tonnes) 19,100 20,700 -8% 38,600 40,200 -4%

Zinc

(tonnes) 16,600 18,000 -8% 38,700 36,600 +6%

Gold

(ounces) 54,800 62,300 -12% 110,800 124,900 -11%

Cash costs

Copper

(US $ per

pound)

(1),(3) $ 0.15 $ 0.28 -46% $ 0.12 $ 0.34 -65%

Gold

(US $ per

ounce)(1) $ 338 $ 310 +9% $ 393 $ 342 +15%

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

As at As at

June 30 December 31

FINANCIAL CONDITION 2007 2006

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

Current ratio 5.9 to 1 5.1 to 1

Long-term debt to

total capitalization 13% 10%

Net working capital

balance (millions) $841 $666

Cash balance (millions) $803 $640

Shareholders' equity

(millions) $1,242 $1,073

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

(1) See reconciliation of non-GAAP measures on page 34 to see how these

items are calculated.

(2) Inmet's share.

(3) Cayeli and Pyhdsalmi zinc production and Ok Tedi gold production are

included as metal credits.

The business environment

The following have a significant impact on our business.

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

three months six months

ended June 30 ended June 30

2007 2006 2007 2006

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

Metal prices

Copper (per pound) US $3.71 US $3.69 US $3.27 US $3.20

Zinc (per pound) US $ 1.75 US $1.50 US $1.54 US $1.29

Gold (per ounce) US $575 US $534 US $569 US $496

Treatment charges(1)

Copper (per tonne) US $63 US $94 US $66 US $90

Zinc (per tonne)(2) US $224 US $104 US $222 US $105

Freight charges(1)

Copper (per tonne) US $55 US $45 US $43 US $41

Zinc (per tonne) US $37 US $12 US $31 US $14

Statutory tax rates

Cayeli 27% 20% 27% 20%

Pyhdsalmi 26% 26% 26% 26%

Ok Tedi 37% 37% 37% 37%

Exchange rates

1 US $ to C$ $1.10 $1.12 $1.14 $1.14

1 euro to C$ $1.46 $1.41 $1.50 $1.40

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

(1) Per dry metric tonne of concentrate.

(2) Zinc treatment charges are based on a zinc price of US $3,700 per

tonne in 2007 and US $1,400 per tonne in 2006, and reflect

provisional terms.


Metal prices

Higher copper and zinc prices increased our gross sales this quarter by $7 million and by $30 million for the first six months of the year. Higher metal prices increased our earnings and cash flow, but also increased certain costs such as income taxes, the royalties we pay at Cayeli, and employee bonus compensation we pay at Ok Tedi.

Treatment charges

Treatment charges are one component of smelter processing charges. We also pay smelters for content losses and price participation. Copper treatment charges are lower in 2007 compared to 2006 because we negotiated more favourable contract terms with smelters. Zinc treatment charges, as expected, are significantly higher in 2007 compared to 2006.

Freight charges

The lack of available vessels increased shipping rates this quarter. Shipping rates, as measured by the Baltic Dry Index, increased 12 percent from the end of the first quarter 2007 and also hit a historical ten-year high. The zinc freight charges we realized this quarter were also significantly higher because shipments in the same period last year were made to destinations closer to our operations.

Exchange rates

Revenue and earnings as expressed in Canadian dollars were negatively affected in the second quarter and year to date compared to the same periods last year because of the continued strengthening of the Canadian dollar relative to the US dollar. This lowered gross sales in the second quarter by $8 million and year to date by $1 million. It also lowered net income in the second quarter by $4 million but did not impact our net income year to date.

Second quarter report

In this report, Inmet means Inmet Mining Corporation and we, us and our mean Inmet and/or its subsidiaries and joint ventures.

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.



Where to find it

Our financial results ........................... 6

Key changes in 2007 ............................. 6

Understanding our performance ................... 7

Earnings from operations ...................... 8

Corporate costs ............................... 12

Results of our operations ....................... 14

Cayeli ........................................ 14

Pyhdsalmi ..................................... 17

Troilus ....................................... 19

Ok Tedi ....................................... 22

Status of our development projects .............. 25

Las Cruces .................................... 25

Cerattepe ..................................... 26

Petaquilla .................................... 27

Managing our liquidity .......................... 28

Accounting changes .............................. 31

Managing risk ................................... 32

Non-GAAP measures ............................... 34

Quarterly review ................................ 35

Consolidated financial statements ............... 36

Our financial results

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

(thousands,

except

per share three months ended June 30 six months ended June 30

amounts) 2007 2006 change 2007 2006 change

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

EARNINGS FROM

OPERATIONS(1)

Cayeli $64,854 $58,987 +10% $124,426 89,206 +39%

Pyhdsalmi 44,890 39,068 +15% 76,332 58,234 +31%

Troilus 3,718 3,627 +3% 6,530 2,690 +143%

Ok Tedi 65,391 66,092 -1% 105,406 103,649 +2%

Other (355) (468) -24% (843) (954) -12%

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

178,498 167,306 +7% 311,851 252,825 +23%

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

DEVELOPMENT

AND

EXPLORATION

Corporate

development and

exploration (1,836) (1,456) +26% (2,678) (2,910) -8%

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

CORPORATE COSTS

General and

administration (2,162) (2,624) (5,002) (4,994)

Investment and

other income 1,572 2,587 8,862 4,380

Interest expense (424) (391) (862) (782)

Income and

capital taxes (48,783) (33,486) (84,433) (60,927)

Non-

controlling

interest (545) 154 (340) 154

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

(50,342) (33,760) +49% (81,775) (62,169) +32%

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

Net income

before other

items $126,320 132,090 -4% $227,398 187,746 +21%

Gain on sale

of Wolfden 11,730 - 11,730 -

Gain on sale

of Izok - - - 23,905

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

Net income $138,050 $132,090 5% $239,128 $211,651 +13%

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

Basic net

income per

share $2.86 $2.74 +4% $4.95 $4.40 +13%

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

Diluted net

income per

share $2.86 $2.74 +4% $4.95 $4.39 +13%

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

Weighted

average

shares

outstanding 48,278 48,197 48,278 48,148

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

(1) Sales less smelter processing charges and freight, cost of sales,

depreciation and provisions for mine rehabilitation.

Key changes in 2007

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

three months six months

ended ended

(millions) June 30 June 30 see page

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

EARNINGS FROM OPERATIONS

Sales Higher metal prices

denominated in Canadian dollars $9 $44 8

Higher (lower) sales volumes (6) 19 9

Costs

Lower smelter processing charges

and freight 10 9 11

Higher operating costs (3) (9) 11

Other 1 (4)

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

Increase in earnings from

operations, compared to 2006 $11 $59

CORPORATE COSTS

Higher taxes from higher income - (8) 13

Change in tax rates (16) (16) 13

Gain on sale of Wolfden 12 12 12

Gain on sale of Izok recorded in

the previous year - (25) 12

Other (1) 5

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

Increase in net income, compared

to 2006 $6 $27

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


Understanding our performance

Metal prices and exchange rates

Copper prices increased this quarter, fluctuating closer to the record highs in the same quarter of last year. The average London Metal Exchange (LME) copper cash price this quarter was US $3.47 per pound, compared to US $3.27 per pound in 2006 - an increase of 6 percent.

The average LME zinc price this quarter was US $1.66 per pound, compared to US $1.49 per pound in 2006 - an increase of 11 percent. The price of gold continued to increase this quarter to an average LME price of US $667 per ounce compared to US $627 per ounce in 2006, mainly because of the decrease in value of the US dollar. The gold price we ultimately realized was slightly lower because we had hedged some production at Troilus and Ok Tedi.

The higher Canadian dollar relative to the US dollar reduced costs at our operations on a Canadian dollar basis, but also lowered gross sales. The net result was a decrease in gross sales this quarter of $8 million relative to rates prevailing in the same period in 2006, and a decrease in net income of $4 million. Year to date, sales were reduced by $1 million and net income by nil compared to 2006.

The following table shows the metal prices, in US dollars and Canadian dollars, and exchange rates we realized this quarter (the prices we realize include finalization adjustments - see Gross sales on next page).



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

three months ended three months ended

June 30 June 30

2007 2006 2007 2006 C$ change

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

Copper (per pound) US $3.71 US $3.69 C$ 4.08 C$ 4.13 -1%

Zinc (per pound) US $1.75 US $1.50 C$ 1.92 C$ 1.68 +14%

Gold (per ounce) US $575 US $534 C$ 632 C$ 598 +6%

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

1 US$ to C$ $1.10 $1.12

1 euro to C$ $1.46 $1.41

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

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

six months ended six months ended

June 30 June 30

2007 2006 2007 2006 C$ change

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

Copper (per pound) US $3.27 US $3.20 C$ 3.73 C$ 3.65 +2%

Zinc (per pound) US $1.54 US $1.29 C$ 1.76 C$ 1.47 +19%

Gold (per ounce) US $569 US $496 C$ 649 C$ 565 +14%

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

1 US$ to C$ $1.14 $1.14

1 euro to C$ $1.50 $1.40

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


EARNINGS FROM OPERATIONS

We calculate earnings from operations by taking the revenues generated from the sale of metals, less the costs associated with those sales, and then subtracting depreciation charges for capital investments and provisions for mine rehabilitation.



1. Gross sales were flat this quarter but 15 percent higher year to
date...

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

three months ended June 30 six months ended June 30

(thousands) 2007 2006 change 2007 2006 change

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

Gross sales

by operation

Cayeli $112,208 $105,563 +6% $229,942 $176,778 +30%

Pyhdsalmi 75,807 72,133 +5% 141,147 121,242 +16%

Troilus 25,849 29,558 -13% 56,091 48,241 +16%

Ok Tedi(1) 106,154 110,370 -4% 179,452 181,597 -1%

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

$320,018 $317,624 +1% $606,632 $527,858 +15%

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

Gross sales by metal

Copper $189,056 $196,524 -4% $332,380 $315,607 +5%

Zinc 82,702 71,655 +15% 172,483 125,059 +38%

Gold 36,816 39,014 -6% 77,873 68,263 +14%

Other 11,444 10,431 +10% 23,896 18,929 +26%

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

$320,018 $317,624 +1% $606,632 $527,858 +15%

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

(1) Our 18 percent share of Ok Tedi's sales.

... because of higher copper, zinc and gold prices for the year to date

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

three months ended six months ended

(millions) June 30 June 30

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

Higher (lower) copper prices,

denominated in C$ $(4) $1

Higher zinc prices, denominated in C$ 11 29

Higher gold prices and other metal

prices, denominated in C$ 2 10

Higher (lower) sales volumes (6) 34

Other (1) 5

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

Increase in gross sales, compared

to 2006 $2 $79

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


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

We made the following finalization adjustments for sales recorded in the first quarter of 2007 that were settled this quarter:



- we increased copper sales by US $11 million

- we increased zinc sales by US $4 million.

At the end of this quarter, the following sales had not been settled:

- 29 million pounds of copper provisionally priced at US $3.44 per

pound

- 9 million pounds of zinc provisionally priced at US $1.54 per pound.


The finalization adjustment we record for these sales will depend on the actual price we receive on final settlement.

...and because of lower gold sales volume during the second quarter



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

three months ended June 30 six months ended June 30

2007 2006 change 2007 2006 change

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

Sales volumes

Copper

(tonnes) 20,900 21,200 -1% 40,900 38,800 +5%

Zinc

(tonnes) 19,700 19,500 +1% 44,900 38,900 +15%

Gold

(ounces) 59,000 64,200 -8% 120,800 119,200 +1%

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


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

Sales volumes of gold this quarter were lower than the second quarter of last year because gold production was down at Troilus and Ok Tedi. Sales volumes of zinc year to date were higher than the same period in 2006 mainly because production was up and zinc shipments from Cayeli in late 2006 were deferred to 2007. Sales volumes of copper year to date were higher than 2006 because of the timing of shipments at Ok Tedi in the previous year.

Production



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

three months ended six months ended revised

June 30 June 30 objective

Inmet's share 2007 2006 change 2007 2006 change 2007

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

Copper (tonnes)

Ok Tedi 6,700 8,800 14,900 18,000 31,300

Cayeli 8,100 8,400 15,600 14,900 33,200

Pyhdsalmi 3,600 2,800 6,900 5,900 12,900

Troilus 700 700 1,400 1,400 3,300

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

19,100 20,700 -8% 38,600 40,200 -4% 80,700

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

Zinc (tonnes)

Cayeli 8,300 6,800 20,200 16,900 44,400

Pyhdsalmi 8,300 11,200 18,500 19,700 38,400

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

16,600 18,000 -8% 38,700 36,600 +6% 82,800

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

Gold (ounces)

Troilus 35,100 36,300 68,300 74,000 149,800

Ok Tedi 19,700 26,000 42,500 50,900 88,200

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

54,800 62,300 -12% 110,800 124,900 -11% 238,000

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

Pyrite (tonnes)

Pyhdsalmi 98,400 136,100 -28% 258,900 277,900 -7% 537,000

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

Compared to 2006, this quarter:

- copper production was lower because throughput at Ok Tedi was down.

The impact of this was reduced to some extent by higher grades and

throughput at Pyhdsalmi.

- zinc production was lower mainly because of lower grades and

recoveries at Pyhdsalmi. The impact of this was partially reduced by

higher grades and throughput at Cayeli.

- gold production was lower because throughput was down at both Troilus

and Ok Tedi. The effect of this was partially reduced by higher

grades at Troilus.


2007 outlook for sales

We expect sales of all metals this year to be consistent with our revised 2007 production estimates. We have revised our 2007 production estimates to reflect higher fluorine content in the ore at Ok Tedi, changes in the zinc mining plan at Cayeli and lower expected throughput at Troilus.

The total amount we will receive in Canadian dollars is affected by US dollar denominated metal prices and the exchange rate between the US dollar and Canadian dollar.

2. Copper cash costs this quarter were lower than 2006

We measure cost performance at our operations by tracking costs per pound of copper or ounce of gold in US dollars.

Cash costs include:



- direct production costs, such as labour, fuel, consumables and other

costs directly related to the production of metals

- plus smelter processing charges and freight

- less revenue from the sale of by-product metals (metal credits).

The table below shows our cash cost by operation.

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

three months ended six months ended revised

June 30 June 30 objective

(US $) 2007 2006 change 2007 2006 change 2007

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

Cash cost

per pound

of copper

Cayeli(1) $0.33 $0.81 -59% $0.27 $0.60 -55% $0.00

Pyhdsalmi

(1,2) (1.87) (2.92) -36% (1.69) (1.63) +4% (2.02)

Ok Tedi(3) 1.00 0.81 +23% 0.82 0.77 +6% 0.68

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

$0.15 $0.28 -46% $0.12 $0.34 -65% $(0.04)

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

Cash cost

per ounce

of gold

Troilus(4,5) $338 $310 +9% $393 $342 +15% $358

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

To estimate the by-product credits for our 2007 objectives, we used:

(1) a zinc price of US $1.59 per pound

(2) a euro to US dollar exchange rate of US $1.30

(3) a gold price of US $650 per ounce

(4) a copper price of US $3.18 per pound

(5) a US dollar to Canadian dollar exchange rate of $1.10.


Our cash cost per pound of copper this quarter was 46 percent lower than the same period last year mainly because:



- zinc metal credits were higher because metal prices were higher

- smelter processing charges and freight were lower because copper and

zinc price participation charges and copper treatment charges were

lower.


The table below shows the breakdown in our cash cost per pound of copper this quarter, and in the first half of 2007:



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

three months ended six months ended revised

June 30 June 30 objective

(US $) 2007 2006 change 2007 2006 change 2007

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

Cash cost

per pound

of copper

Direct

production

costs $1.11 $0.89 +25% $1.08 $0.92 +17% $1.01

Royalties and

variable

compen-

sation 0.14 0.15 -7% 0.09 0.10 -10% 0.10

Smelter

processing

charges and

freight 1.02 1.16 -12% 0.98 1.10 -11% 1.01

Metal

credits (2.12) (1.92) +10% (2.03) (1.78) +14% (2.16)

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

$0.15 $0.28 -46% $0.12 $0.34 -65% $(0.04)

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


Unit direct production costs for copper were higher because copper production was down and labour costs were up.

Our gold cash cost per ounce was higher this quarter compared to the same period in 2006 because of lower gold production and a stronger Canadian dollar.



Direct production costs and cost of sales

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

Our cost of sales this quarter was consistent with 2006...

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

three months ended June 30 six months ended June 30

(thousands) 2007 2006 change 2007 2006 change

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

Cost of sales

by operation

Cayeli $21,181 $19,308 +10% $45,478 $37,058 +23%

Pyhdsalmi 13,384 12,253 +9% 26,307 24,864 +6%

Troilus 18,104 20,212 -10% 40,132 35,513 +13%

Ok Tedi(1) 25,044 26,184 -4% 44,548 45,824 -3%

Other 355 468 -24% 843 954 -12%

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

$78,068 $78,425 -% $157,308 $144,213 +9%

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

(1) Our 18 percent share of Ok Tedi's cost of sales.

...mainly because lower sales volumes offset higher labour costs

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

three months ended six months ended

(millions) June 30 June 30

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

Higher (lower) sales volume $(2) $6

Labour costs 4 8

Other (2) (1)

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

Increase in cost of sales, compared to 2006 $- $13

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

Smelter processing charges and freight

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

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

three months ended June 30 six months ended June 30

(thousands) 2007 2006 change 2007 2006 change

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

Smelter

processing

charges and

freight by

operation

Cayeli $24,302 $25,214 -4% $55,470 $46,790 +19%

Pyhdsalmi 15,100 18,853 -20% 33,714 34,196 -1%

Troilus 2,020 2,929 -31% 4,713 5,087 -7%

Ok Tedi(1) 13,991 16,672 -16% 26,122 29,257 -11%

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

$55,413 $63,668 -13% $120,019 $115,330 +4%

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

Smelter

processing

charges and

freight by

metal

Copper $27,160 $36,144 -25% $54,640 $62,821 -13%

Zinc 25,071 24,826 +1% 58,786 47,521 +24%

Other 3,182 2,698 +18% 6,593 4,988 +32%

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

$55,413 $63,668 -13% $120,019 $115,330 +4%

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

(1) Includes our 18 percent share of Ok Tedi's smelter processing
charges and freight.


Copper treatment charges were lower in the second quarter compared to 2006 because of more favourable contract terms with smelters. Zinc treatment charges were higher in the second quarter and year to date compared to 2006 because of higher zinc sales.

2007 outlook for costs

We have revised our 2007 copper cash cost objective to US $(0.04) per pound from US $(0.01) per pound because we expect zinc metal prices to increase, and copper and zinc production to be higher for the rest of the year.



3. Depreciation was lower this quarter

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

three months ended June 30 six months ended June 30

(thousands) 2007 2006 change 2007 2006 change

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

Depreciation by

operation

Cayeli $1,871 $2,054 -9% $4,568 $3,724 +23%

Pyhdsalmi 2,433 1,959 +24% 4,794 3,948 +21%

Troilus 2,007 2,790 -28% 4,716 4,951 -5%

Ok Tedi 1,728 1,422 +22% 3,376 2,867 +18%

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

$8,039 $8,225 -2% $17,454 $15,490 +13%

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


Depreciation this quarter was lower at Cayeli and Troilus compared to the second quarter of last year because sales volumes were lower. Depreciation was higher at Pyhdsalmi because sales were up. Depreciation at Ok Tedi was higher because of the depreciation of recent capital additions for mining operations.

2007 outlook for depreciation

We expect depreciation to be approximately $34 million for 2007.

CORPORATE COSTS

This includes general and administration costs, taxes and interest. We also record income from investments in this category, as well as income we receive from other transactions.



1. Investment income was higher because of the gain on the sale of
Wolfden shares

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

three months six months

ended June 30 ended June 30

(thousands) 2007 2006 2007 2006

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

Gain on sale of Izok $- $- $- $23,905

Gain on sale of Wolfden 11,730 - 11,730 -

Interest and dividend income 8,265 2,657 16,144 4,237

Foreign exchange loss (9,400) (138) (9,545) (220)

Other 2,707 68 2,263 363

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

$13,302 $2,587 $20,592 $28,285

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


In 2006, we sold our interest in the Izok development property to Wolfden Resources Inc., and recorded a gain of $23.9 million. In exchange, we received 13.5 million common shares of Wolfden and 9.5 million common shares of Premier Gold Mining Ltd. This quarter, we disposed of our shares in Wolfden to Zinifex Canadian Enterprises Inc. for cash proceeds of $51.4 million or $3.81 per share, and recorded a gain of $11.7 million.

Interest income was higher this quarter compared to the same period last year because we had higher cash balances.

We recorded a foreign exchange loss of $9.4 million during the quarter because of the revaluation of certain short-term foreign currency intercompany loans and foreign currency cash balances, and the recognition of deferred foreign exchange losses from dividends from Ok Tedi.

2007 outlook for investment and other income

Investment and other income will be affected by cash balances, interest rates and exchange rates. Rising cash balances at our foreign operations may lead us to continue to repatriate funds. This could result in foreign exchange losses or gains depending on the strength or weakness in the Canadian dollar relative to the other currencies compared to when we initially invested in the operations, or the foreign exchange rate at which funds were accumulated. Based on the distributions we expect from operations for the rest of the year, and assuming the funds are repatriated at a US dollar to Canadian dollar exchange rate of $1.05, we expect an additional foreign exchange loss of about $10 million.



2. Income tax expense was higher than 2006

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

three months ended June 30 six months ended June 30

(thousands) 2007 2006 change 2007 2006 change

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

Cayeli $13,763 $(97) +14,289% $27,434 $9,302 +195%

Pyhdsalmi 10,379 9,012 +15% 17,286 13,029 +33%

Ok Tedi 23,291 24,372 -4% 37,908 38,105 -1%

Las Cruces 691 - - 486 - -

Corporate 659 199 +231% 1,319 491 +169%

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

$48,783 $33,486 +46% $84,433 $60,927 +39%

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


Taxes overall were higher compared to 2006 because of higher earnings. At Cayeli, the statutory tax rate is higher in 2007 because we started accruing for withholding taxes on net income again. The 2006 tax expense also takes into account the impact of a rate reduction. In June 2006, the Turkish government enacted tax legislation that reduced Cayeli's corporate tax rate to 20 percent from 30 percent effective January 1, 2006. The following table shows Cayeli's tax expense in more detail:



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

three months six months

ended June 30 ended June 30

(millions) 2007 2006 2007 2006

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

Current and future income tax expense $11 $13 $21 $19

Withholding tax expense 3 - 6 -

Reduction in tax rate - 2006 - (13) - (10)

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

$14 $- $27 $9

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


2007 outlook for income tax expense

We are not expecting any further changes in statutory tax rates at our operations in 2007.

Results of our operations

CAYELI



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

three months ended six months ended revised

June 30 June 30 objective

2007 2006 change 2007 2006 change 2007

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

Tonnes of ore

milled (000's) 249 224 +11% 508 447 +14% 1,060

Tonnes of ore

milled per

day 2,800 2,500 +11% 2,900 2,500 +14% 3,000

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

Grades (percent)

copper 3.9 4.2 -7% 3.7 3.9 -5% 3.8

zinc 5.3 4.3 +23% 5.7 5.3 +8% 6.0

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

Mill recoveries

(percent)

copper 83 91 -9% 83 85 -2% 82

zinc 63 72 -13% 70 72 -3% 71

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

Production

(tonnes)

copper 8,100 8,400 -4% 15,600 14,900 +5% 33,200

zinc 8,300 6,800 +22% 20,200 16,900 +20% 44,400

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


Fatality at Cayeli

On June 25, 2007, a contractor employee at Cayeli suffered fatal injuries when he fell down a finger raise connecting to an ore pass. As a result, Cayeli commissioned an independent investigation to determine the cause of this tragic accident and to recommend and implement measures to minimize the potential for this kind of accident from happening again. Cayeli remains committed to pursuing all measures necessary to provide its workers and contractors with a safe working environment.

Cayeli production up 11 percent in the quarter

Cayeli successfully commissioned the remaining two ore passes this quarter and the new ore handling system is now fully functional.

Ore containing bornite minerals, high grade clastic ore, and oxidized ore from an older mining area posed significant challenges to the process plant, resulting in lower metallurgical recoveries this quarter, particularly for zinc. As we expect to mine similar ores in the future, we are evaluating ways to ensure that we maximize metal recoveries. In the meantime, we will defer mining high grade zinc areas and have reflected this by revising Cayeli's annual objective for zinc production.

Despite lower zinc recoveries, zinc production was approximately 20 percent higher than in the second quarter of 2006 and year to date, because zinc grades and throughput were higher.

2007 outlook for production

We expect ore production over the following months to be in line with the annual objective of 1.1 million tonnes. Daily mill throughput should increase over the remaining six months of 2007 now that the new ore pass system is in full operation. Zinc grades should be lower than planned with the deferral of mining high grade zinc areas, during which time we will focus on resolving the metallurgical problems. We have therefore adjusted our annual production objective for zinc to 44,400 tonnes from our initial objective of 48,600 tonnes.

Cash costs were significantly lower

Cash costs were significantly lower than they were in the second quarter of 2006 and year to date because of higher zinc metal credits.



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

three months ended six months ended revised

June 30 June 30 objective

(US $) 2007 2006 change 2007 2006 change 2007

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

Cash cost

per pound

of copper

Direct

production

costs $0.93 $0.68 +37% $0.95 $0.77 +23% $0.90

Royalty

payments 0.16 0.20 -20% 0.14 0.14 - 0.19

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

Total direct

production

costs 1.09 0.88 +24% 1.09 0.91 +20% 1.09

Smelter

processing

charges and

freight 1.23 1.21 +2% 1.07 1.25 -14% 1.24

Metal

credits(1) (1.99) (1.28) +55% (1.89) (1.56) +21% (2.33)

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

Cash costs $0.33 $0.81 -59% $0.27 $0.60 -55% $0.00

Depreciation

and other

non-cash

costs 0.11 0.10 +10% 0.14 0.12 +17% 0.13

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

Total costs $0.44 $0.91 -52% $0.41 $0.72 -43% $0.13

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

(1) We used a zinc price of US $1.59 per pound to estimate the metal

credit in the 2007 objective for cash costs per pound of copper. For

every US $0.05 per pound change in the price of zinc, cash costs

would change by US $0.04 per pound.

Direct production costs this quarter were US $0.25 per pound higher than

2006

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

three months ended six months ended

(US $ per pound) June 30 June 30

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

Impact of lower (higher) copper

production $0.04 $(0.04)

Higher labour costs 0.08 0.07

Higher consumable and energy costs 0.07 0.07

Higher consumable volumes 0.02 0.05

Other 0.04 0.03

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

Increase in direct production costs,

compared to 2006 $0.25 $0.18

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


2007 outlook for costs

We have adjusted our unit cost objective for Cayeli to US $0.00 per pound, from our initial objective of US ($0.02) per pound, taking into consideration the impact of higher labour costs and higher zinc prices.

Capital spending higher than 2006



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

three months ended six months ended revised

(thousands of June 30 June 30 objective

(US$) 2007 2006 change 2007 2006 change 2007

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

Capital

spending $3,900 $3,100 +26% $8,300 $6,500 +28% $15,200

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


We have spent US $8.3 million to date in 2007. Of this, US $4.5 million was for the shaft extension project (US $1.8 million in the first quarter and US $2.7 million in the second quarter).

2007 outlook for capital spending

Capital spending for the rest of 2007 is allocated to mine development, loaders and for sustaining and other capital.

Operating earnings improved from 2006



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

three months ended June 30 six months ended June 30

2007 2006 change 2007 2006 change

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

Sales (tonnes)

copper 7,200 7,900 -9% 15,400 13,700 +12%

zinc 10,600 8,900 +19% 26,300 20,300 +30%

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

Operating

earnings

(millions) $64.9 $59.0 +10% $124.4 $89.2 +39%

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

Operating cash

flows

(millions) $62.7 $58.2 +8% $122.3 $85.2 +44%

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

...mainly because of higher metal prices and for the year to date also

because of higher zinc sales volumes

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

three months ended six months ended

(millions) June 30 June 30

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

Higher metal prices, denominated

in Canadian dollars $7 $21

Higher (lower) sales volumes (2) 17

Lower smelter processing charges 3 3

Higher operating costs (3) (5)

Other 1 (1)

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

Increase in operating earnings,

compared to 2006 $6 $35

Higher tax expense from higher rates

and higher taxable income (3) (8)

Changes in working capital 1 7

Other 1 3

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

Increase in operating cash flow,

compared to 2006 $5 $37

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


The positive change in working capital for the year to date is from lower accounts receivable.

PYHDSALMI



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

three months ended six months ended revised

June 30 June 30 objective

2007 2006 change 2007 2006 change 2007

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

Tonnes of ore

milled (000's) 346 319 +8% 671 672 - 1,370

Tonnes of ore

milled per

day 3,800 3,500 +8% 3,700 3,700 - 3,750

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

Grades (percent)

copper 1.1 0.9 +22% 1.1 0.9 +22% 1.0

zinc 2.6 3.7 -30% 3.0 3.1 -3% 3.1

sulphur 41 37 +11% 40 39 +3% 41

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

Mill recoveries

(percent)

copper 96 96 - 96 95 +1% 94

zinc 90 95 -5% 92 95 -3% 92

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

Production

(tonnes)

copper 3,600 2,800 +29% 6,900 5,900 +17% 12,900

zinc 8,300 11,200 -26% 18,500 19,700 -6% 38,400

pyrite 98,400 136,100 -28% 258,900 277,900 -7% 537,000

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


Pyhdsalmi expects to meet its annual objectives

Mill throughput during the second quarter was eight percent higher than the same period last year when the mine had to deal with a rupture in the main ore feed belt.

A combination of higher throughput and copper grades increased copper production by 29 percent for the quarter and 17 percent for the year to date, compared to the same periods last year. Zinc production, on the other hand, was 26 percent lower in the second quarter and six percent lower year to date because of a change in mining sequence in the second quarter that delayed mining a higher zinc grade stope until the fourth quarter of this year.

2007 outlook for production

We expect Pyhdsalmi to meet its production objectives for 2007.

Cash costs were higher because of lower metal credits

While zinc prices to date have been higher in 2007, zinc production has been down. The net effect increased cash costs in the second quarter and year to June compared to the same periods last year. The impact of this was reduced, however, by lower smelter costs. Pyhdsalmi finalized its zinc smelter contract terms in the second quarter and made a positive adjustment of $2 million (US $0.23 per pound) in the second quarter in relation to first quarter smelter processing charges.



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

three months ended six months ended revised

June 30 June 30 objective

(US $) 2007 2006 change 2007 2006 change 2007

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

Cash cost

per pound

of copper

Direct

production

costs $1.43 $1.65 -13% $1.52 $1.61 -6% $1.49

Smelter

processing

charges and

freight 1.34 2.52 -47% 1.66 2.11 -21% 1.84

Metal

credits(1) (4.64) (7.09) -35% (4.87) (5.35) -9% (5.35)

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

Cash costs $(1.87) $(2.92) -36% $(1.69) $(1.63) +4% $(2.02)

Depreciation

and other

non-cash

costs 0.29 0.31 -6% 0.30 0.29 +3% 0.30

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

Total costs $(1.58) $(2.61) -39% $(1.39) $(1.34) +4% $(1.72)

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

(1) We used a zinc price of US $1.59 per pound to estimate the metal

credit in the 2007 objective for cash costs per pound of copper, and

a euro to US dollar exchange rate of US $1.30. For every US $0.05 per

pound change in the price of zinc, cash costs would change by US

$0.11 per pound.

Direct production costs this quarter were US $0.22 per pound lower than

2006


This was mainly because of higher copper production, although the impact was reduced somewhat by a weaker US dollar.



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

three months ended six months ended

(US $ per pound) June 30 June 30

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

Weakened US dollar compared to

the euro $0.09 $0.11

Lower costs due to higher copper

production (0.43) (0.25)

Higher labour costs 0.10 0.05

Other 0.02 -

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

Decrease in direct production costs,

compared to 2006 $(0.22) $(0.09)

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


2007 outlook for costs

We have adjusted our annual cash cost objective for Pyhdsalmi to US ($2.02) per pound, from our initial objective of US ($1.61) per pound. This adjustment takes into consideration the impact of higher zinc prices and a weaker US dollar relative to the euro.

Minimum capital spending during the quarter



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

three months ended six months ended revised

June 30 June 30 objective

(thousands) 2007 2006 change 2007 2006 change 2007

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

Capital (euro) (euro) (euro) (euro) (euro)

spending 300 1,000 -70% 500 1,200 -58% 5,000

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


2007 outlook for capital spending

We expect the (euro)5 million in capital to be spent on mill equipment, the replacement of mine mobile equipment, and on other sustaining capital.



Operating earnings higher than last year

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

three months ended June 30 six months ended June 30

2007 2006 change 2007 2006 change

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

Sales (tonnes)

copper 3,400 2,800 +21% 6,800 6,000 +13%

zinc 9,100 10,700 -15% 18,600 18,700 -1%

pyrite 124,400 125,100 -1% 258,300 249,900 +3%

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

Operating

earnings

(millions) $44.9 $39.1 +15% $76.3 $58.2 +31%

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

Operating cash

flows

(millions) $10.5 $17.8 -41% $51.0 $41.3 +23%

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

...mainly because of higher metal prices

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

three months ended six months ended

(millions) June 30 June 30

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

Higher metal prices, denominated

in Canadian dollars $5 $14

Lower smelter processing charges

and freight 3 3

Higher (lower) sales volumes (1) 4

Other (1) (3)

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

Increase in operating earnings,

compared to 2006 $6 $18

Increased tax expense because of

higher earnings (2) (4)

Changes in working capital (11) (4)

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

Increase (decrease) in operating

cash flow, compared to 2006 $(7) $10

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


The negative change in working capital is mainly from the payment of income taxes and an increase in accounts receivable. Zinc receivables for the year have not been paid because zinc smelter contracts for 2007 were only finalized in June. We expect collection for those to be made in the third quarter.

TROILUS



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

three months ended six months ended revised

June 30 June 30 objective

2007 2006 change 2007 2006 change 2007

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

Tonnes of

ore milled

(000's) 1,487 1,627 -9% 3,122 3,235 -3% 6,500

Tonnes of ore

milled

per day 16,300 17,900 -9% 17,200 17,900 -3% 17,800

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

Strip ratio 1.0 1.6 -38% 1.0 1.7 -41% 1.1

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

Grades

gold

(grams/tonne) 0.90 0.83 +8% 0.84 0.86 -2% 0.87

copper

(percent) 0.05 0.05 - 0.05 0.05 - 0.05

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

Mill

recoveries

(percent)

gold 81 84 -4% 81 82 -1% 81

copper 88 87 +1% 86 87 -1% 87

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

Production

gold

(ounces) 35,100 36,300 -3% 68,300 74,000 -8% 149,800

copper

(tonnes) 700 700 - 1,400 1,400 - 3,300

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


Mill throughput affected by production interruptions during the second

quarter

The milling rate at Troilus this quarter was nine percent lower than the same period in 2006 because of restrictions in the ball mill circuit. Corrections to the ball mill circuit are underway and we expect mill throughput to pick up by the end of the year.

Higher gold grades this quarter reduced the impact of lower throughput and the net effect was a three percent decrease in gold production compared to the same period last year. Year to date, lower throughput combined with lower grades reduced gold production by eight percent compared to last year.

2007 outlook for production

We expect gold production at Troilus for 2007 to be 149,800 ounces compared to our original objective of 157,900 ounces because of the ball mill capacity restrictions experienced during the first half of the year.

Mining towards the end of 2007 and in 2008 should be exclusively from the 87 pit. The ore from this pit has higher copper grades. In anticipation, we plan to increase the copper cleaner capacity later in the year.

Lower production increased the cost per ounce

Costs were higher this quarter compared to the same period last year mainly because metal credits were lower. Year to date, costs were higher compared to last year because of lower metal credits and lower gold production.



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

three months ended six months ended revised

June 30 June 30 objective

(US $) 2007 2006 change 2007 2006 change 2007

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

Cash cost

per ounce

of gold

Direct

production

costs $480 $474 +1% $488 $458 +7% $469

Smelter

processing

charges and

freight 57 71 -20% 58 66 -12% 51

Metal

credits(1) (199) (235) -15% (153) (182) -16% (162)

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

Cash cost $338 $310 +9% $393 $342 +15% $358

Depreciation

and other

non-cash

costs 56 70 -20% 56 67 -16% 62

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

Total cost $394 $380 +4% $449 $409 +10% $420

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

(1) We used a copper price of US $3.18 per pound to estimate the metal

credit in the 2007 objective for cash costs per ounce of gold and a

US dollar to Canadian dollar exchange rate of $1.10.

Direct production costs this quarter were US $6 per ounce higher than

2006

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

three months ended six months ended

(US $ per ounce) June 30 June 30

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

Stronger Canadian dollar $10 $1

Higher costs due to lower production 15 38

Lower consumable costs (15) (21)

Other (4) 12

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

Increase in direct production costs,

compared to 2006 $6 $30

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

2007 outlook for unit costs


We have adjusted our unit cost objective to US $358 per ounce, from our original objective of US $348 per ounce, because we expect gold production to be lower.

Modest capital spending



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

three months ended six months ended revised

June 30 June 30 objective

(thousands) 2007 2006 change 2007 2006 change 2007

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

Capital

spending $200 $200 - $400 $600 -33% $2,000

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


2007 outlook for capital spending

The mine will spend approximately $2 million on copper cleaner cells in the mill, on the tailings dam lift and embankment enforcements, and on other sustaining capital.



Operating earnings higher for the first six months of 2007 due to higher
gold prices

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

three months ended June 30 six months ended June 30

2007 2006 change 2007 2006 change

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

Sales

gold

(ounces) 32,400 36,600 -11% 72,100 67,000 +8%

copper

(tonnes) 700 700 - 1,400 1,300 +8%

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

Operating

earnings

(millions) $3.7 $3.6 +3% $6.5 $2.7 +141%

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

Operating

cash flows

(millions) $4.2 $2.0 +110% $4.7 $(1.3) +462%

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

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

three months ended six months ended

(millions) June 30 June 30

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

Higher metal prices denominated

in Canadian dollars $- $5

Lower sales volumes (1) -

Lower (higher) operating costs

and depreciation 1 (1)

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

Increase in operating earnings,

compared to 2006 $- $4

Changes in working capital 3 4

Other (1) (2)

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

Increase in operating cash flow,

compared to 2006 $2 $6

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

OK TEDI

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

three months ended six months ended revised

June 30 June 30 objective

(100 percent) 2007 2006 change 2007 2006 change 2007

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

Tonnes of

ore milled

(000's) 6,400 7,400 -14% 13,000 14,100 -8% 27,000

Tonnes of

ore milled

per day 70,500 81,300 -14% 71,900 77,900 -8% 74,000

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

Strip ratio 1.1 1.4 -21% 1.2 1.7 -29% 1.1

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

Grades

copper

(percent) 0.7 0.7 - 0.7 0.8 -13% 0.7

gold

(grams/tonne) 0.7 0.8 -13% 0.8 0.9 -11% 0.8

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

Mill

recoveries

(percent)

copper 87 87 - 86 86 - 87

gold 72 73 -1% 72 70 +3% 72

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

Production

copper

(tonnes) 37,200 48,500 -23% 82,500 99,800 -17% 174,000

gold

(ounces) 109,300 144,200 -24% 236,500 282,600 -16% 490,000

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


High fluorine ore reduced throughput and copper and gold grades

During the quarter, Ok Tedi encountered skarn ores in the pit that contained unexpectedly high levels of fluorine. Smelters do not accept high fluorine concentrate because fluorine damages the brick lining of copper furnaces. Because of that, Ok Tedi reduced the amount of higher grade skarns it mined and added lower grade ores to the mill feed. This reduced the fluorine content in the concentrate to levels acceptable by smelters, but copper and gold head grades declined as a result, bringing copper and gold production well below last year's levels. It is expected that grades and throughput levels will return to normal levels by the end of the year when Ok Tedi opens up additional mining areas in the pit. In the meantime, Ok Tedi is evaluating technical methods to reduce fluorine levels in the concentrate. Ok Tedi's annual production targets have been adjusted to reflect the fluorine mitigation efforts.

2007 outlook for production

We expect Ok Tedi's production to be affected by the fluorine content in ore, and have reduced Ok Tedi's production objectives:

- We reduced the objective for copper production to 174,000 tonnes from

the original objective of 188,000 tonnes.

- We reduced the objective for gold production to 490,000 ounces from

the original objective of 507,000 ounces.

Conclusion on the CMCAs

On June 29, Ok Tedi concluded the scheduled mid-term review of the Community Mine Continuation Agreements (CMCAs) and signed a memorandum of agreement with most of the affected communities. Under the agreement, approximately 60,000 people in the Western Province will receive more than one billion Kina (about US $330 million) over the next six years.

Parties to the agreement are Ok Tedi, the PNG Sustainable Development Program Limited (PNG SDPL) and the Papua New Guinea National Government as well as 160 villages situated from near the mine to the delta at the mouth of the Fly River. The key elements of the agreement are:



- Under a regional development package, Ok Tedi has increased direct

compensation funds to four times the previous level, a commitment of

324 million Kina (US $110 million) over six and a half years.

- The PNG SDPL will fund development projects in the affected areas at

a minimum of 21.5 million Kina (US $7 million) each year or

129 million Kina (US $42 million) over six years.

- The PNG National Government has committed one sixth of the 30 percent

dividend it receives to development projects in the affected areas

and has set up a new trust to manage these funds. The value of this

commitment is estimated at 466 million Kina (US $155 million),

subject to future copper and gold prices.


Ok Tedi and PNG SDPL will also support the communities in setting up a new development foundation to implement the sustainable development projects negotiated as part of the CMCA review.

From the start of 2006, Inmet's share of the CMCA payments will be US $3 million per year (18 percent of Ok Tedi's contribution) compared to the approximately US $1 million per year under the prior agreement.

Costs higher mainly due to lower production



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

three months ended six months ended revised

June 30 June 30 objective

(US $) 2007 2006 change 2007 2006 change 2007

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

Cash cost

per pound

of copper

Direct

production

costs $1.14 $0.85 +34% $1.02 $0.80 +28% $0.98

Variable

compensation 0.18 0.15 +20% 0.08 0.11 -27% 0.06

Smelter

processing

charges and

freight 0.58 0.68 -15% 0.58 0.64 -9% 0.47

Metal

credits(1) (0.90) (0.87) +3% (0.86) (0.78) +10% (0.83)

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

Cash cost $1.00 $0.81 +23% $0.82 $0.77 +6% $0.68

Depreciation

and other

non-cash

costs 0.14 0.07 +100% 0.12 0.07 +71% 0.08

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

Total costs $1.14 $0.88 +30% $0.94 $0.84 +12% $0.76

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

(1) We used a gold price of US $650 per ounce to estimate the metal

credit in the 2007 objective for cash costs per pound of copper.

Direct production costs this quarter were US $0.29 per pound higher than

2006

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

three months ended six months ended

(US $ per pound) June 30 June 30

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

Increase in costs from

lower production $0.27 $0.18

Higher labour costs 0.01 0.01

Higher consumables cost 0.03 0.02

Other (0.02) 0.01

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

Increase in direct production costs,

compared to 2006 $0.29 $0.22

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

2007 outlook for costs


We revised the cash cost objective from our original objective for Ok Tedi of US $0.61 per pound to US $0.68 per pound of copper mainly because of the reduced copper production expectations.

Capital spending was higher because of the mine waste management program

Ok Tedi's capital spending this quarter was mainly for the mine waste management program and also for the pressure filtration plant and the in-pit crusher.



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

(100 percent) three months ended six months ended

(thousands June 30 June 30 objective

of US$) 2007 2006 change 2007 2006 change 2007

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

Capital

spending $32,100 $4,500 +613% $62,700 $16,800 +273% $209,000

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


2007 outlook for capital spending

Most of the capital spending at Ok Tedi, about US $115 million, for the balance of the year will be related to the mine waste management program. The remaining amount will be spent on capital required for pit drainage, mine equipment and other sustaining capital.

Operating earnings unchanged this quarter

Gold sales volumes this quarter were lower than in the second quarter of 2006, mainly because production was lower. Concentrate inventory was lowered by 57,000 tonnes this quarter, to 83,000 tonnes as at June 30, 2007.



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

three months ended June 30 six months ended June 30

(18 percent) 2007 2006 change 2007 2006 change

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

Sales

copper

(tonnes) 9,600 9,800 -2% 17,300 17,800 -3%

gold

(ounces) 26,500 27,600 -4% 48,700 52,200 -7%

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

Operating

earnings

(millions) $65.4 $66.1 -1% $105.4 $103.6 +2%

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

Operating

cash flows

(millions) $62.0 $57.4 +8% $70.0 $91.8 -24%

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

...as a result of the following

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

three months ended six months ended

(millions) June 30 June 30

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

Higher (lower) metal prices,

denominated in Canadian dollars $(2) $4

Lower sales volumes (2) (2)

Lower smelter processing charges 4 3

Higher operating costs (1) (3)

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

Increase (decrease) in operating

earnings, compared to 2006 $(1) $2

Decreased (increased) tax expense 1 -

Changes in net working capital 4 (21)

Other 1 (3)

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

Increase in operating cash flow,

compared to 2006 $5 $(22)

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


The negative change in working capital for the year to date is mainly because of higher accounts receivable.

Status of our development projects

Las Cruces

Quarterly development update

Removal of overburden and pre-stripping

By the end of the second quarter 2007, we had excavated 17.1 million cubic metres of overburden material from the area of the future pit. 6.6 million cubic metres of this was excavated in the second quarter alone. The remaining 10.9 million cubic metres should be removed by the end of 2007.

Detailed engineering and procurement About 90 percent complete.

Construction activities:



- Leach reactors have been erected and we have begun to install

baffles, fittings and the reactor lining.

- The primary crusher building is complete and we are making progress

on grinding foundations, thickeners, the SX area and the tank farm.

- Structural steel work is ongoing for the main process plant

facilities, including the electrowinning area.

- Construction continues on the dry tailings storage system. The

process involves constructing the berms required to encapsulate

filtered tailings.

- The main office building and warehouse are complete.


Recruiting employees

At the end of this quarter, the project employed over 1,200 people, including 78 who are employees of Las Cruces.

Capital spending and commitments

At the end of this quarter, we had spent and committed a total of (euro)326 million (or 70 percent) of the total estimated capital costs of (euro)463 million.

CERATTEPE

Quarterly development update

Moving the project forward

We received workplace construction permits this quarter, and submitted the environmental impact assessment (EIA) for the aerial tramway and received final approval in July. We also conducted geotechnical investigations at the mine site and began drilling for the ventilation raise investigation. We continue to maintain an active campaign of community dialogue and engagement to reinforce support for the project.

Updated capital and operating cost estimates

Following additional engineering and vendor quotations, we updated the capital and operating costs for Cerattepe as follows:



- Total capital costs - US $87 million (includes US $21 million for a

mill expansion at Cayeli).

- Operating costs - US $65 per tonne (includes transportation and

processing).

- Unit cash costs - US $0.72 per pound of copper.

Key project statistics

- Production for the life of mine - 1.4 million tonnes at a grade of

8.7 percent copper.

- Annual production level - 290,000 tonnes.

- Expected production start - first quarter 2009.


Legal

Since August 2006, Cerattepe has been affected by a local administrative court decision that governmental authorities had incorrectly exempted the project operating licences from environmental assessment regulations. In April of this year, the Danistay (Turkish Administrative Supreme Court) directed the lower court to review its decision and re-instated the validity of the licences on procedural grounds. In June, the local court confirmed its agreement with the Danistay's decision. The plaintiff has re-filed applications to have the licences cancelled, and has also applied for an injunction to stop work on the property. We intend to join in the proceedings and respond to the applications as we believe they are without merit.

Subject to the outcome of the legal proceedings, we will continue to move the project forward with a view to starting production by the end of the first quarter of 2009.

PETAQUILLA

Quarterly development update

Work plan approved by shareholders

In May, Teck Cominco, Petaquilla Copper and Inmet agreed to a work plan to pursue the accelerated development of the Petaquilla copper deposit in Panama. The work under the plan will advance the project through to completion of front-end engineering and design (FEED). It also provides for an updated social environmental impact assessment and includes programs to advance dialogue with local communities and other affected stakeholders. The budget for the plan is US $24 million, most of which will be funded by Teck Cominco.

Front-end Engineering and Design (FEED) program

The FEED program started this quarter and will include a review of the metallurgy, transportation alternatives, and co-ordination of the Social Environmental Impact Assessment with Golder Associates.

Updated Social Environmental Impact Assessment

Golder Associates will introduce programs that advance dialogue with local communities and other affected stakeholders.

2007 drill program

We expect to receive approval on this program from the Panamanian Mining and Environmental authority in August.

Managing our liquidity



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

three months ended six months ended

June 30 June 30

(millions) 2007 2006 2007 2006

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

CASH FROM OPERATING

ACTIVITIES

Cayeli $ 62 $ 58 $ 122 $ 85

Pyhasalmi 11 18 51 41

Troilus 4 2 5 (1)

Ok Tedi 62 58 70 92

General and administration (2) (3) (5) (5)

Other 1 (2) - (6)

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

138 131 243 206

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

CASH FROM INVESTING AND

FINANCING

Capital spending (82) (12) (134) (37)

Long-term borrowings 24 27 38 27

Funding from non-controlling

shareholder 21 7 26 9

Financial assurance deposits (7) 28 (17) (2)

Subsidies received - - - 5

Dividends paid on common

shares (5) (5) (5) (5)

Disposition of portfolio

investments 51 - 51 2

Foreign exchange on cash

held in foreign currency (32) (5) (34) (2)

Other (3) (4) (5) (8)

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

(33) 36 (80) (8)

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

Increase in cash 105 167 163 198

Cash and short-term investments

Beginning of period 698 283 640 252

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

End of period $ 803 $ 450 $ 803 $ 450

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

CASH FROM OPERATING ACTIVITIES

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

three six

months months

ended ended

(millions) June 30 June 30

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

Increased earnings from operations (see page 6) $ 11 $ 59

Non-cash changes in operating earnings:

Increased tax expense (4) (13)

Changes in working capital (2) (16)

Other 2 7

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

Increase in operating cash flow,

compared to 2006 $ 7 $ 37

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


Operating cash flows this quarter were higher than in the first quarter of 2006 because operating earnings were higher. The negative change in working capital is mainly because of lower accounts payable at Cayeli and Ok Tedi.

2007 outlook for operating activities

We expect high metal prices to continue to increase earnings and operating cash flows. The level of operating cash flows will depend on earnings and the accumulation or reduction of working capital.

CASH FROM INVESTING AND FINANCING



Capital spending

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

three months ended six months ended revised

June 30 June 30 objective

(millions) 2007 2006 2007 2006 2007

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

Cayeli $ 4 $ 3 $ 9 $ 7 $ 17

Pyhasalmi 1 1 1 2 7

Troilus - - - 1 2

Ok Tedi 7 - 13 3 41

Las Cruces 69 8 107 22 492

Cerattepe 1 - 3 1 15

Accruals and

other - - 1 1 -

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

$ 82 $ 12 $ 134 $ 37 $ 574

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


Refer to Results of our operations and Status of our development projects for a discussion of actual results and our 2007 objective.

Las Cruces borrowed an additional (euro)25 million this quarter, bringing the total amount borrowed under its credit facility to (euro)84 million. Las Cruces also provided an additional (euro)5 million this quarter to secure future contractual obligations for the construction of the process plant.

Our restricted cash balance of $51 million at June 30, 2007 includes:



- $11 million in trust for future rehabilitation at Ok Tedi

- $14 million of cash collateralized letters of credit for Inmet

- $26 million related to issuing letters of credit to suppliers, the

local townships and for dewatering at Las Cruces.


2007 outlook for investing and financing

We expect capital spending to be $574 million in 2007. Of that amount, we expect to spend $492 million for the continuing development of the Las Cruces mine based on its new cost estimate, and $28 million for the mine waste management program at Ok Tedi. The remaining expenditures are mostly for sustaining capital.

COMMON SHARES



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

Common shares outstanding as of June 30, 2007

and July 31, 2007 48,277,726

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

Deferred share units outstanding as of June 30

(redeemable on a one-for-one basis for common shares) 76,672

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


OFF BALANCE SHEET TRANSACTIONS

As at June 30, 2007, we had no off balance sheet transactions.

The following table shows our Troilus gold hedging transactions, the Ok Tedi gold and copper hedging transactions, the currency and interest rate hedges related to Las Cruces, and the respective marked-to-market valuations which have been recorded on our balance sheet as at June 30, 2007.

To equalize future payments under the recently negotiated CMCA agreements, Ok Tedi hedged a small portion (less than 4 percent for copper and gold) of their life-of-mine production.



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

C$ marked-to-

Type of Expiry Quantity Price market gain (loss)

contract at June 30 2007

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

Copper forward sales

Ok Tedi 2007 1.6 million lbs US $3.03 per lb

2008 3.2 million lbs US $2.78 per lb

2009 3.2 million lbs US $2.41 per lb

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

8.0 million lbs US $2.68 per lb $(3.6 million)(1)

Gold forward

sales

Troilus 2007 29,100 ounces US $352 per oz.

2008 58,200 ounces US $352 per oz.

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

87,300 ounces US $352 per oz. $(30.4 million)(2)

Ok Tedi 2007 10,100 ounces US $370 per oz.

2008 6,750 ounces US $372 per oz.

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

16,900 ounces US $371 per oz . $(5.1 million)(3)

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. $(0.3 million)(3)

Currency

forward

sales

(euro)

Las Cruces 2008 US $215 million 171.80 million $17.4 million

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

Interest rate swaps

Las Cruces 2008 US $179 million 5.2 percent $0.3 million

to (reducing in con-

2014 junction with debt

repayment schedule)

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

(1) At a copper price of US $3.48 per pound.

(2) At a gold price of US $651 per ounce.

(3) At a gold price of US $647 per ounce.


Accounting changes

We adopted several new CICA - Handbook sections.

Section 3855 - Financial instruments - recognition and measurement

This section establishes standards for recognizing and measuring financial assets, financial liabilities and non-financial derivatives. It requires that financial assets and liabilities including derivatives be recognized on the balance sheet when we become a party to the contractual provisions of the financial instrument or a non-financial derivative contract. All financial instruments should be measured at fair value on initial recognition except for certain related party transactions. Measurement in subsequent periods depends on whether the financial instruments have been classified as held-for-trading, available-for-sale, held-to-maturity, loans and receivables, or other liabilities.

Effective January 1, 2007, we classify cash and short-term investments, accounts receivable, investments, restricted cash, accounts payable and accrued liabilities as held-for-trading and record them on the balance sheet at fair value. We record long-term debt at amortized cost.

3865 - Hedges

This section specifies when and how we can use hedge accounting for hedging strategies: fair value hedges, cash flow hedges and hedges of a foreign currency exposure of a net investment in a self-sustaining foreign operation.

All of our hedges at January 1, 2007 qualified for cash flow hedge accounting. The contracts are reflected at fair value on the balance sheet.

1530 - Comprehensive income

This section calls for a statement of comprehensive income and its components. Other comprehensive income includes unrealized gains and losses on financial assets classified as available-for-sale, unrealized foreign currency translation amounts arising from self-sustaining foreign operations, and changes in the fair value of the effective portion of cash flow hedging instruments.

Effective January 1, 2007, we include unrealized fair value of our cash flow hedges, investments and foreign currency translation adjustment in accumulated other comprehensive income, net of tax. The change in fair value this quarter of the effective portion of our cash flow hedges, investments and foreign currency translation adjustments is included in other comprehensive income for the period, net of tax.

Turn to note 2 on page 45 in the Interim consolidated financial statements for more details about the transitional adjustments.

The CICA has also recently issued new accounting pronouncements:

In December 2006, the CICA issued Handbook Section 3862, Financial Instruments - Disclosure and Section 3863, Financial Instruments - Presentation which will become effective for us beginning on January 1, 2008. Section 3862 replaces the disclosure portion of Section 3861. It places increased emphasis on disclosing the nature and extent of risks arising from both recognized and unrecognized financial instruments, and how these risks are managed. Section 3863 carries forward the presentation requirements from Section 3861.

In June 2007, the CICA issued Handbook Section 3031, Inventories which will become effective for us beginning on January 1, 2008. This section requires that inventory be recorded at the lower of cost or net realizable value, which is our current accounting policy. The section also clarifies the allocation of fixed production overhead, requires consistent use of either first-in, first-out or weighted average to measure inventories, and requires that any previous write-downs be reversed when the value of inventories increases. The amount of the reversal is limited to the amount of the original write-down.

We are reviewing the above standards, and have not yet determined the impact, if any, on our consolidated financial statements.

Managing risk

The following is an update to the discussion, only where required, of the key risks associated with our business and the strategies we use to manage them. You can find the full discussion in the annual Management's discussion and analysis in Inmet's 2006 annual report.

Development at Las Cruces

Las Cruces is a development project, and while we are confident that the project will add value as planned, there is still significant uncertainty. Risks associated with detailed engineering, construction of mine and processing facilities, cost increases due to inflation, permitting, legal proceedings and relations with local communities will continue to exist and could have a negative effect on the project.

A local non-governmental group has initiated several legal proceedings claiming that various governmental approvals for the project were not granted according to regulatory requirements. We believe these claims are without merit and are vigourously defending against them. Two of these proceedings were dismissed in 2006. The other two proceedings are outstanding.

Development at Cerattepe

The Danistay (Turkish Administrative Supreme Court) directed the local court to review its decision to cancel our operating licences for the project. The Artvin based local non-governmental groups have re-filed their applications to cancel the operating licenses and have also applied for an interim injunction on all mining activities. We have resumed permitting and on- site work, but an adverse ruling in the future could have an impact or stop our progress. The Danistay's decision does not finally resolve the status of the licences but they remain valid pending a new decision from the local court. There remains a risk that the licences could yet again be cancelled, in which case we would have to suspend permitting and on-site work.

Sensitivity analysis

The table below shows you the effect of key variables on our net income, based on our revised objectives for 2007.



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

Would change

Would change our 2007

our 2007 net net income per

A change of: income by: share by:

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

Metal prices

Copper (per pound) US $0.10 $13 million $0.26

Zinc (per pound) US $0.05 $5 million $0.11

Gold (per ounce)(1) US $10 $2 million $0.03

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

Exchange rates

Canadian dollar

per US dollar C$0.05 $18 million $0.37

Canadian dollar

per euro C$0.05 $4 million $0.08

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

Treatment and

refining charges

Copper treatment

charge per tonne US $10

and copper

refining charge

per pound US $0.10 $4 million $0.08

Zinc treatment

charge per tonne US $10 $1 million $0.03

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

Freight and energy

costs

Concentrate freight

per tonne 10% $3 million $0.06

Fuel price per

litre $0.10 $3 million $0.07

Electricity per

kilowatt hour $0.01 $2 million $0.05

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

(1) Calculations include hedging in place at December 31, 2006.


About Inmet

Inmet is a Canadian-based global mining company that produces copper, zinc and gold. We have interests in four mining operations in locations around the world: Cayeli, Pyhasalmi, Troilus and Ok Tedi. We also have interests in two development properties, Las Cruces and Cerattepe, and one pre-development property, Petaquilla.

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

Second quarter conference call

Will be held on

- Wednesday, August 1, 2007

- 11:00 a.m. (ET)

webcast available at www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1929180 or

www.inmetmining.com.

You can also dial in by calling

- Local or international: +1.416.644.3425

- Toll-free within North America: +1.800.732.1073

INMET MINING CORPORATION

Non-GAAP measures

Reconciliation of copper cash costs to statements of earnings



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

(millions of Canadian three months ended six months ended

dollars, except where June 30 June 30

otherwise noted) 2007 2006 2007 2006

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

Cost of sales per

financial statements $60 $58 $117 $108

Smelter processing

charges and freight

per financial statements 53 61 115 110

Zinc, gold and other sales (112) (100) (230) (177)

Inventory and

receivable changes 7 (3) 12 (5)

Less - non-cash items (1) (1) (2) (2)

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

Operating costs net

of metal credits $7 $15 $12 $34

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

US $ to C$ exchange rate $1.10 $1.12 $1.14 $1.14

Inmet's share of copper

production

(000's pounds) 40,700 44,100 82,200 85,500

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

Copper cash cost

(per pound) US $0.15 US $0.28 US $0.13 US $0.34

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

Reconciliation of gold cash costs to statements of earnings

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

(millions of Canadian three months ended six months ended

dollars, except where June 30 June 30

otherwise noted) 2007 2006 2007 2006

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

Cost of sales per

financial statements $18 $21 $40 $36

Smelter processing

charges and freight

per financial statements 2 3 5 5

Copper and other sales (8) (9) (13) (14)

Inventory and

receivable changes 1 (2) (2) 2

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

Operating costs net

of metal credits $13 $13 $30 $29

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

US $ to C$ exchange rate $1.10 $1.12 $1.14 $1.14

Inmet's share of gold

production (ounces) 35,100 36,300 68,300 74,000

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

Gold cash cost

(per ounce) US $338 US $310 US $393 US $342

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

Reconciliation of net income to adjusted net income

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

(millions of Canadian three months ended six months ended

dollars, except where June 30 June 30

otherwise noted) 2007 2006 2007 2006

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

Net income per financial

statements $138,050 $132,090 $239,128 $211,651

Deduct gain on sale of

Wolfden 11,730 - 11,730 -

Deduct gain on sale of

Izok - - - 23,905

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

Adjusted net income $126,320 $132,090 $227,398 $187,746

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

Weighted average

shares outstanding 48,278 48,197 48,278 48,148

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

Adjusted net income

per share $2.62 $2.74 $4.71 $3.90

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

Reconciliation of operating cash flow to operating cash flow

before working capital

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

(millions of Canadian three months ended six months ended

dollars, except where June 30 June 30

otherwise noted) 2007 2006 2007 2006

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

Operating cash flow per

financial statements $137,731 $131,324 $242,711 $205,884

Deduct: Net change in

non-cash working

capital per

financial

statements 4,288 5,872 (626) 14,907

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

Operating cash flow

before working capital $133,443 $125,452 $243,337 $190,977

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

Weighted average

shares outstanding 48,278 48,197 48,278 48,148

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

Operating cash flow

before working capital

per share $2.76 $2.60 $5.04 $3.97

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



INMET MINING CORPORATION

Quarterly review

(unaudited)

Latest Four Quarters

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

(thousands of Canadian 2007 2007 2006 2006

dollars, except per Second First Fourth Third

share amounts) quarter quarter quarter quarter

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

STATEMENTS OF EARNINGS

Gross sales $ 320,018 $ 286,614 $ 258,911 $ 301,100

Smelter processing

charges and freight (55,413) (64,606) (65,005) (60,270)

Cost of sales (78,068) (79,240) (66,593) (73,892)

Depreciation (8,039) (9,415) (9,057) (9,025)

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

178,498 133,353 118,256 157,913

Corporate development

and exploration (1,836) (842) (4,136) (2,708)

General and

administration (2,162) (2,840) (6,128) (2,618)

Investment and other

income 13,302 7,290 16,697 2,257

Interest expense (424) (438) (425) (412)

Capital tax (expense)

recovery (274) (274) - 41

Income tax expense (48,509) (35,376) (26,679) (42,902)

Non-controlling

interest (545) 205 (165) 11

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

Net income $ 138,050 $ 101,078 $ 97,420 $ 111,582

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

Net income per common

share $ 2.86 $ 2.09 $ 2.02 $ 2.31

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

Diluted net income per

common share $ 2.86 $ 2.09 $ 2.02 $ 2.31

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

Previous Four Quarters

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

(thousands of Canadian 2006 2006 2005 2005

dollars, except Second First Fourth Third

per share amounts) quarter quarter quarter quarter

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

STATEMENTS OF EARNINGS

Gross sales $ 317,624 $ 210,234 $ 190,901 $ 178,170

Smelter processing

charges and freight (63,668) (51,662) (46,131) (42,184)

Cost of sales (78,425) (65,788) (67,305) (64,569)

Depreciation (8,225) (7,265) (7,879) (7,849)

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

167,306 85,519 69,586 63,568

Corporate development

and exploration (1,456) (1,454) (2,893) (1,888)

General and

administration (2,624) (2,370) (2,119) (1,351)

Investment and other

income (expense) 2,587 25,698 985 (3,401)

Interest expense (391) (391) (392) (409)

Capital tax expense (246) (245) (499) (198)

Income tax expense (33,240) (27,196) (19,022) (20,387)

Non-controlling

interest 154 - - -

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

Net income $ 132,090 $ 79,561 $ 45,646 $ 35,934

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

Net income per

common share $ 2.74 $ 1.65 $ 0.95 $ 0.80

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

Diluted net income

per common share $ 2.74 $ 1.64 $ 0.95 $ 0.80

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



INMET MINING CORPORATION

Consolidated balance sheets

June 30 December 31

(thousands of Canadian dollars) 2007 2006

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

(unaudited)

Assets

Current assets:

Cash and short-term investments $803,004 $640,186

Restricted cash (note 5) 15,216 -

Accounts receivable 133,017 122,645

Inventories 52,409 58,323

Future income tax asset 8,749 7,567

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

1,012,395 828,721

Restricted cash (note 5) 36,213 35,759

Property, plant and equipment 657,415 548,637

Investments (note 6) 26,799 53,002

Future income tax asset 16,428 21,750

Deferred charges - 2,408

Derivatives (note 7) 17,700 -

Other assets 28,584 42,663

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

$1,795,534 $1,532,940

Liabilities

Current liabilities:

Accounts payable and accrued liabilities $171,802 $163,106

Long-term debt (note 8) 165,574 109,080

Reclamation liabilities 69,341 65,812

Derivatives (note 7) 39,372 -

Other liabilities 20,365 30,617

Future income tax liabilities 37,402 42,366

Non-controlling interest 49,873 49,125

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

553,729 460,106

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

Commitments (note 9)

Shareholders' equity

Share capital 337,338 337,338

Contributed surplus 66,999 66,999

Stock based compensation 1,072 915

Retained earnings 903,305 669,385

Accumulated other comprehensive loss (note 10) (66,909) (1,803)

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

1,241,805 1,072,834

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

$1,795,534 $1,532,940

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

(see accompanying notes)

INMET MINING CORPORATION

Segmented balance sheets

2007 As at June 30

(unaudited) CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Assets

Cash and short-term

investments $371,768 $265,531 $65,027 $ -

Other current assets 11,390 30,110 69,978 22,806

Restricted cash 14,500 - - -

Property, plant and

equipment 636 114,923 66,234 29,399

Investments 26,799 - - -

Derivatives - - - -

Other assets 29,936 466 - 6,290

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

$455,029 $411,030 $201,239 $58,495

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

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

Liabilities

Current liabilities $6,298 $32,714 $26,679 $12,334

Long-term debt 15,979 - - -

Reclamation liabilities 25,610 3,267 12,729 4,374

Derivatives - - - 30,360

Other liabilities 7,087 3,815 - -

Future income tax

liabilities - 18,835 6,630 -

Non-controlling interest - - - -

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

$54,974 $58,631 $46,038 $47,068

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

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



2007 As at June 30

(unaudited) OK TEDI LAS CRUCES TOTAL

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

(thousands of Canadian (Papua (Spain)

dollars) New Guinea)

Assets

Cash and short-term

investments $67,332 $33,346 $803,004

Other current assets 41,067 34,040 209,391

Restricted cash 11,071 10,642 36,213

Property, plant and

equipment 47,254 398,969 657,415

Investments - - 26,799

Derivatives - 17,700 17,700

Other assets 3,537 4,783 45,012

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

$170,261 $499,480 $1,795,534

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

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

Liabilities

Current liabilities $50,748 $43,029 $171,802

Long-term debt - 149,595 165,574

Reclamation liabilities 16,302 7,059 69,341

Derivatives 9,012 - 39,372

Other liabilities 1,520 7,943 20,365

Future income tax

liabilities - 11,937 37,402

Non-controlling interest - 49,873 49,873

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

$77,582 $269,436 $553,729

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

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



2006 As at December 31

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Assets

Cash and short-term

investments $267,277 $176,676 $119,260 $ -

Other current assets 9,690 55,776 68,897 18,104

Restricted cash 14,300 - - -

Property, plant and

equipment 570 117,464 74,873 33,277

Investments 53,002 - - -

Deferred charges - - - 2,408

Other assets 32,052 486 - 6,245

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

$376,891 $350,402 $263,030 $60,034

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

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

Liabilities

Current liabilities $11,698 $37,879 $35,130 $19,780

Long-term debt 16,786 - - -

Reclamation liabilities 25,507 3,467 13,175 4,268

Other liabilities 8,035 3,891 - 8,657

Future income tax

liabilities - 20,433 7,025 -

Non-controlling interest - - - -

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

$62,026 $65,670 $55,330 $32,705

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

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



2006 As at December 31

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Assets

Cash and short-term $44,689 $32,284 $640,186

investments 26,157 9,911 188,535

Other current assets 10,982 10,477 35,759

Restricted cash

Property, plant and 42,489 279,964 548,637

equipment - - 53,002

Investments - - 2,408

Deferred charges 805 24,825 64,413

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

Other assets $125,122 $357,461 $1,532,940

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

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

Liabilities $37,391 $21,228 $163,106

Current liabilities - 92,294 109,080

Long-term debt 17,568 1,827 65,812

Reclamation liabilities 1,572 8,462 30,617

Other liabilities

Future income tax 2,186 12,722 42,366

liabilities - 49,125 49,125

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

Non-controlling interest $58,717 $185,658 $460,106

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

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

INMET MINING CORPORATION

Consolidated statements of earnings

(unaudited)

(thousands of Canadian three months ended six months ended

dollars except per June 30 June 30

share amounts) 2007 2006 2007 2006

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

Gross sales $320,018 $317,624 $606,632 $527,858

Smelter processing charges

and freight (55,413) (63,668) (120,019) (115,330)

Cost of sales (78,068) (78,425) (157,308) (144,213)

Depreciation (8,039) (8,225) (17,454) (15,490)

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

178,498 167,306 311,851 252,825

Corporate development

and exploration (1,836) (1,456) (2,678) (2,910)

General and administration (2,162) (2,624) (5,002) (4,994)

Investment and other income

(note 11) 13,302 2,587 20,592 28,285

Interest expense (424) (391) (862) (782)

Capital tax expense (274) (246) (548) (491)

Income tax expense (note 12) (48,509) (33,240) (83,885) (60,436)

Non-controlling interest (545) 154 (340) 154

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

Net income $138,050 $132,090 $239,128 $211,651

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

Basic net income per

common share (note 13) $2.86 $2.74 $4.95 $4.40

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

Diluted net income per

common share (note 13) $2.86 $2.74 $4.95 $4.39

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

Weighted average shares

outstanding (000's) 48,278 48,197 48,278 48,148

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

(see accompanying notes)

INMET MINING CORPORATION

Segmented statements of earnings

(unaudited)

2007 For the six months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Gross sales $ - $229,942 $141,147 $56,091

Smelter processing

charges and freight - (55,470) (33,714) (4,713)

Cost of sales (843) (45,478) (26,307) (40,132)

Depreciation - (4,568) (4,794) (4,716)

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

(843) 124,426 76,332 6,530

Corporate development

and exploration (1,268) (860) (1,019) 469

General and

administration (5,002) - - -

Investment and other

income (expense) 20,013 (1,831) - 791

Interest expense (862) - - -

Capital tax expense (548) - - -

Income tax expense (771) (27,434) (17,286) -

Non-controlling interest - - - -

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

Net income $10,719 $94,301 $58,027 $7,790

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

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

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Gross sales $179,452 $ - $606,632

Smelter processing

charges and freight (26,122) - (120,019)

Cost of sales (44,548) - (157,308)

Depreciation (3,376) - (17,454)

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

105,406 - 311,851

Corporate development

and exploration - - (2,678)

General and

administration - - (5,002)

Investment and other

income (expense) - 1,619 20,592

Interest expense - - (862)

Capital tax expense - - (548)

Income tax expense (37,908) (486) (83,885)

Non-controlling interest - (340) (340)

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

Net income $67,498 $793 $239,128

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

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

2006 For the six months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Gross sales $ - $176,778 $121,242 $48,241

Smelter processing

charges and freight - (46,790) (34,196) (5,087)

Cost of sales (954) (37,058) (24,864) (35,513)

Depreciation - (3,724) (3,948) (4,951)

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

(954) 89,206 58,234 2,690

Corporate development

and exploration (857) (372) (1,000) (169)

General and

administration (4,994) - - -

Investment and

other income 25,179 3,106 - -

Interest expense (782) - - -

Capital tax expense (491) - - -

Income tax expense - (9,302) (13,029) -

Non-controlling interest - - - -

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

Net income (loss) $17,101 $82,638 $44,205 $2,521

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

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



OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Gross sales $181,597 $ - $527,858

Smelter processing

charges and freight (29,257) - (115,330)

Cost of sales (45,824) - (144,213)

Depreciation (2,867) - (15,490)

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

103,649 - 252,825

Corporate development

and exploration - (512) (2,910)

General and

administration - - (4,994)

Investment and

other income - - 28,285

Interest expense - - (782)

Capital tax expense - - (491)

Income tax expense (38,105) - (60,436)

Non-controlling interest - 154 154

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

Net income (loss) $65,544 ($358) $211,651

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

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

INMET MINING CORPORATION

Segmented statements of earnings

(unaudited)

2007 For the three months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Gross sales $ - $112,208 $75,807 $25,849

Smelter processing

charges and freight - (24,302) (15,100) (2,020)

Cost of sales (355) (21,181) (13,384) (18,104)

Depreciation - (1,871) (2,433) (2,007)

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

(355) 64,854 44,890 3,718

Corporate development

and exploration (521) (651) (558) (106)

General and

administration (2,162) - - -

Investment and other

income (expense) 11,878 (1,379) - 499

Interest expense (424) - - -

Capital tax expense (274) - - -

Income tax expense (385) (13,763) (10,379) -

Non-controlling interest - - - -

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

Net income $7,757 $49,061 $33,953 $4,111

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

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

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Gross sales $106,154 $ - $320,018

Smelter processing

charges and freight (13,991) - (55,413)

Cost of sales (25,044) - (78,068)

Depreciation (1,728) - (8,039)

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

65,391 - 178,498

Corporate development

and exploration - - (1,836)

General and

administration - - (2,162)

Investment and other

income (expense) - 2,304 13,302

Interest expense - - (424)

Capital tax expense - - (274)

Income tax expense (23,291) (691) (48,509)

Non-controlling interest - (545) (545)

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

Net income $42,100 $1,068 $138,050

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

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

2006 For the three months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Gross sales $ - $105,563 $72,133 $29,558

Smelter processing

charges and freight - (25,214) (18,853) (2,929)

Cost of sales (468) (19,308) (12,253) (20,212)

Depreciation - (2,054) (1,959) (2,790)

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

(468) 58,987 39,068 3,627

Corporate development

and exploration (275) (59) (487) (123)

General and

administration (2,624) - - -

Investment and other

income (expense) (519) 3,106 - -

Interest expense (391) - - -

Capital tax expense (246) - - -

Income tax (expense)

recovery 47 97 (9,012) -

Non-controlling interest - - - -

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

Net income (loss) ($4,476) $62,131 $29,569 $3,504

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

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

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Gross sales $110,370 $ - $317,624

Smelter processing

charges and freight (16,672) - (63,668)

Cost of sales (26,184) - (78,425)

Depreciation (1,422) - (8,225)

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

66,092 - 167,306

Corporate development

and exploration - (512) (1,456)

General and

administration - - (2,624)

Investment and other

income (expense) - - 2,587

Interest expense - - (391)

Capital tax expense - - (246)

Income tax (expense)

recovery (24,372) - (33,240)

Non-controlling interest - 154 154

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

Net income (loss) $41,720 ($358) $132,090

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

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

INMET MINING CORPORATION

Consolidated statements of cash flows

(unaudited)

three months ended six months ended

(thousands of June 30 June 30

Canadian dollars) 2007 2006 2007 2006

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

Cash provided by (used in)

operating activities (1)

Net income $138,050 $132,090 $239,128 $211,651

Add (deduct) items not

affecting cash:

Gain on disposition of

investments (note 11) (11,730) - (11,730) (24,291)

Depreciation 8,039 8,225 17,454 15,490

Future income tax (2,645) (15,762) (4,380) (14,271)

Accretion expense on

reclamation liabilities 879 866 1,803 1,751

Deferred charge (revenue) - 782 - 1018

Non-controlling interest 545 (154) 340 (154)

Other 829 (49) 1,726 825

Reclamation costs (524) (546) (1,004) (1,042)

Net change in non-cash

working capital (note 4) 4,288 5,872 (626) 14,907

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

137,731 131,324 242,711 205,884

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

Cash provided by (used in)

investing activities

Capital spending (82,079) (12,215) (134,014) (37,104)

Acquisition and disposition

of investments, net 50,726 - 50,726 1,629

Sale (purchase) of

short-term investments 17,355 (31,392) 137,531 (81,195)

Other - (155) (46) (195)

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

(13,998) (43,762) 54,197 (116,865)

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

Cash provided by (used in)

financing activities

Long-term debt borrowings 24,169 27,124 38,009 27,124

Financial assurance

deposits (note 5) (7,485) 27,530 (17,415) (2,167)

Funding by

non-controlling shareholder 21,462 7,196 26,110 9,246

Loan repayment (1,000) - (2,000) -

Dividends on common shares (4,827) (4,827) (4,827) (4,827)

Subsidies received 62 - 199 4,850

Debt issue costs - (4,980) - (5,425)

Other (435) 542 (770) 542

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

31,946 52,585 39,306 29,343

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

Foreign exchange change

on cash held in

foreign currency (31,540) (4,889) (34,049) (1,851)

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

Increase in cash 124,139 135,258 302,165 116,511

Cash:

Beginning of period 562,636 233,148 384,610 251,895

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

End of period 686,775 368,406 686,775 368,406

Short-term investments 116,229 81,195 116,229 81,195

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

Cash and short-term

investments $803,004 $449,601 $803,004 $449,601

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

(see accompanying notes)

(1) Cash used in operations

includes the following

payments:

Interest $1,100 - $2,381 $579

Taxes $52,368 $25,253 $64,739 $36,517

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

INMET MINING CORPORATION

Segmented statements of cash flows

(unaudited)

2007 For the six months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital $4,676 $104,357 $62,953 $10,549

Net change in non-cash

working capital (6,696) 17,974 (11,960) (5,834)

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

(2,020) 122,331 50,993 4,715

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

Cash provided by (used

in) investing activities

Capital spending (131) (13,150) (724) (407)

Acquisition and

disposition of

investments, net 50,726 - - -

Sale (purchase) of

short-term investments 127,701 17,027 - -

Other - - - (46)

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

178,296 3,877 (724) (453)

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

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

Cash provided by (used

in) financing

activities (5,799) - - (2,000)

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

Foreign exchange

change on cash held

in foreign currency - (21,515) (4,930) -

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

Intergroup funding

(distributions) 64,999 1,643 (99,572) (2,262)

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

Increase (decrease)

in cash 235,476 106,336 (54,233) -

Cash:

Beginning of period 39,899 159,195 119,260 -

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

End of period 275,375 265,531 65,027 -

Short-term investments 99,677 - - -

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

Cash and short-term

investments $375,052 $265,531 $65,027 $ -

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

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

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital $64,086 - $246,621

Net change in non-cash

working capital 5,890 - (626)

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

69,976 - 245,995

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

Cash provided by (used

in) investing activities

Capital spending (12,811) (106,791) (134,014)

Acquisition and

disposition of

investments, net - - 50,726

Sale (purchase) of

short-term investments (7,197) - 137,531

Other - - (46)

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

(20,008) (106,791) 54,197

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

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

Cash provided by (used

in) financing

activities (850) 47,955 39,306

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

Foreign exchange

change on cash held

in foreign currency (6,136) (1,468) (34,049)

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

Intergroup funding

(distributions) (26,174) 61,366 -

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

Increase (decrease)

in cash 16,808 1,062 305,449

Cash:

Beginning of period 33,972 32,284 384,610

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

End of period 50,780 33,346 690,059

Short-term investments 16,552 - 116,229

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

Cash and short-term

investments $67,332 $33,346 $806,288

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

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

2006 For the six months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital ($5,694) $74,054 $49,546 $8,562

Net change in non-cash

working capital (5,375) 11,109 (8,243) (9,907)

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

(11,069) 85,163 41,303 (1,345)

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

Cash provided by (used

in) investing activities

Capital spending (73) (9,024) (1,869) (1,126)

Purchase of short-term

investments (81,195) - - -

Acquisition and

disposition of

investments, net 1,629 - - -

Other - - - (195)

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

(79,639) (9,024) (1,869) (1,321)

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

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

Cash provided by (used

in) financing activities (4,494) - - -

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

Foreign exchange

change on cash held

in foreign currency - (2,990) 2,879 -

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

Intergroup funding

(distributions) 30,310 717 (3,583) 2,666

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

Increase (decrease)

in cash (64,892) 73,866 38,730 -

Cash:

Beginning of period 123,843 36,578 58,138 -

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

End of period 58,951 110,444 96,868 -

Short-term investments 81,195 - - -

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

Cash and short-term

investments $140,146 $110,444 $96,868 $ -

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

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

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital $65,021 ($512) $190,977

Net change in non-cash

working capital 26,811 512 14,907

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

91,832 - 205,884

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

Cash provided by (used

in) investing activities

Capital spending (3,438) (21,574) (37,104)

Purchase of short-term

investments - - (81,195)

Acquisition and

disposition of

investments, net - - 1,629

Other - - (195)

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

(3,438) (21,574) (116,865)

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

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

Cash provided by (used

in) financing activities (861) 34,698 29,343

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

Foreign exchange

change on cash held

in foreign currency (2,555) 815 (1,851)

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

Intergroup funding

(distributions) (54,057) 23,947 -

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

Increase (decrease)

in cash 30,921 37,886 116,511

Cash:

Beginning of period 16,031 17,305 251,895

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

End of period 46,952 55,191 368,406

Short-term investments - - 81,195

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

Cash and short-term

investments $46,952 $55,191 $449,601

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

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

INMET MINING CORPORATION

Segmented statements of cash flows

(unaudited)

2007 For the three months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital $707 $53,115 $36,430 $5,924

Net change in

non-cash working

capital 872 9,626 (25,933) (1,694)

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

1,579 62,741 10,497 4,230

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

Cash provided by (used

in) investing activities

Capital spending (107) (5,818) (440) (241)

Acquisition and

disposition of

investments, net 50,726 - - -

Sale (purchase) of

short-term

investments 35,876 (549) - -

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

86,495 (6,367) (440) (241)

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

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

Cash provided by (used

in) financing activities (5,464) - - (1,000)

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

Foreign exchange

change on cash held in

foreign currency - (19,024) (5,519) -

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

Intergroup funding

(distributions) 71,419 2,312 (94,874) (2,989)

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

Increase (decrease)

in cash 154,029 39,662 (90,336) -

Cash:

Beginning of period 121,346 225,869 155,363 -

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

End of period 275,375 265,531 65,027 -

Short-term investments 99,677 - - -

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

Cash and short-term

investments $375,052 $265,531 $65,027 $ -

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

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

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital $40,551 - $136,727

Net change in

non-cash working

capital 21,417 - 4,288

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

61,968 - 141,015

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

Cash provided by (used

in) investing activities

Capital spending (6,348) (69,125) (82,079)

Acquisition and

disposition of

investments, net - - 50,726

Sale (purchase) of

short-term

investments (17,972) - 17,355

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

(24,320) (69,125) (13,998)

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

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

Cash provided by (used

in) financing activities 27 38,383 31,946

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

Foreign exchange

change on cash held in

foreign currency (5,653) (1,344) (31,540)

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

Intergroup funding

(distributions) (26,174) 50,306 -

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

Increase (decrease)

in cash 5,848 18,220 127,423

Cash:

Beginning of period 44,932 15,126 562,636

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

End of period 50,780 33,346 690,059

Short-term investments 16,552 116,229

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

Cash and short-term

investments $67,332 $33,346 $806,288

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

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

2006 For the three months ended June 30

CORPORATE Cayeli PYHASALMI TROILUS

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

(thousands of Canadian (Turkey) (Finland) (Canada)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital ($2,463) $49,174 $32,287 $7,095

Net change in non-cash

working capital (1,614) 9,005 (14,467) (5,052)

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

(4,077) 58,179 17,820 2,043

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

Cash provided by (used

in) investing activities

Capital spending (5) (2,251) (1,324) (226)

Purchase of short-term

investments (31,392) - - -

Other - - - (155)

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

(31,397) (2,251) (1,324) (381)

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

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

Cash used in financing

activities 15,452 - - -

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

Foreign exchange

change on cash held

in foreign currency - (3,367) 836 -

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

Intergroup funding

(distributions) 20,487 489 (1,791) (1,662)

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

Increase in cash 465 53,050 15,541 -

Cash:

Beginning of period 58,486 57,394 81,327 -

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

End of period 58,951 110,444 96,868 -

Short-term investments 81,195 - - -

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

Cash and short-term

investments $140,146 $110,444 $96,868 $ -

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

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

OK TEDI LAS CRUCES TOTAL

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

(Papua (Spain)

(thousands of Canadian New Guinea)

dollars)

Cash provided by (used

in) operating activities

Before net change in

non-cash working

capital $39,871 ($512) $125,452

Net change in non-cash

working capital 17,488 512 5,872

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

57,359 - 131,324

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

Cash provided by (used

in) investing activities

Capital spending (888) (7,521) (12,215)

Purchase of short-term

investments - - (31,392)

Other - - (155)

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

(888) (7,521) (43,762)

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

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

Cash used in financing

activities - 37,133 52,585

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

Foreign exchange

change on cash held

in foreign currency (2,775) 417 (4,889)

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

Intergroup funding

(distributions) (35,719) 18,196 -

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

Increase in cash 17,977 48,225 135,258

Cash:

Beginning of period 28,975 6,966 233,148

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

End of period 46,952 55,191 368,406

Short-term investments - - 81,195

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

Cash and short-term

investments $46,952 $55,191 $449,601

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

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

INMET MINING CORPORATION

Consolidated statements of retained earnings

(unaudited)

three months ended six months ended

(thousands of Canadian June 30 June 30

dollars) 2007 2006 2007 2006

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

Retained earnings, beginning

of period, as previously

reported $770,082 $337,947 $669,385 $258,386

Adjustment for financial

instruments (note 2) - - (381) -

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

Retained earnings, restated 770,082 337,947 669,004 258,386

Net income 138,050 132,090 239,128 211,651

Dividends on common

shares (4,827) (4,827) (4,827) (4,827)

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

Retained earnings, end

of period $903,305 $465,210 $903,305 $465,210

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

(see accompanying notes)

Consolidated statements of comprehensive income

(unaudited)

three months ended six months ended

(thousands of Canadian June 30 June 30

dollars) 2007 2006 2007 2006

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

Net income $138,050 $132,090 $239,128 $211,651

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

Other comprehensive income

(loss) for the period(1):

Changes in fair value of

gold and copper forward

sales contracts 7,745 - 10,894 -

Changes in fair value of

interest rate swap

contracts 14 - (120) -

Changes in fair value of

foreign exchange forward

contracts (530) - 291 -

Changes in fair value of

investments 2,408 - 19,308 -

Gain realized on sale of

investment (note 11) (11,730) - (11,730) -

Currency translation

adjustment (54,960) (5,004) (58,203) 3,349

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

(57,053) (5,004) (39,560) 3,349

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

Comprehensive income $80,997 $127,086 $199,568 $215,000

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

(see accompanying notes)

(1) Net of applicable income tax and non-controlling interest.

INMET MINING CORPORATION

Notes to the consolidated financial statements

1. Significant accounting policies

Our interim consolidated financial statements do not include all of

the disclosure required for annual financial statements under

generally accepted accounting principles (GAAP), and they have not

been reviewed by our external auditors. These statements do, however,

follow the same accounting policies and methods of application used

in our most recent annual consolidated financial statements, except

for the differences explained in note 2. You should read our interim

statements in conjunction with our annual statements, which you can

find in our 2006 annual report.

2. Changes in accounting policies

Effective January 1, 2007, we adopted the following new CICA Handbook

sections:

Section 1506 - Accounting changes

This section specifies that a voluntary change in accounting

principles:

(a) can only be made if the change results in more reliable and

relevant information

(b) must be accompanied by restated amounts for prior periods and

the reasons for the change

(c) must describe the nature and amount of the change, if it is a

change to an estimate.

We have not made any voluntary change in accounting principles since

we adopted these standards.

The following three sections do not permit us to restate prior

periods.

Section 3855 - Financial instruments - recognition and measurement

This section establishes standards for recognizing and measuring

financial assets, financial liabilities and non-financial

derivatives. It requires companies to recognize financial assets and

liabilities, including derivatives, on the balance sheet when we

become a party to the contractual provisions of a financial

instrument or a non-financial derivative contract. All financial

instruments should be measured at fair value on initial recognition

except for certain related party transactions. Fair value is the

amount at which an item could be exchanged between willing parties.

Measurement in subsequent periods depends on whether the financial

instruments have been classified as held-for-trading, available-for-

sale, held-to-maturity, loans and receivables, or other liabilities.

We have classified our financial instruments as follows, and applied

the following accounting principles:

Cash and short-term investments, accounts receivable, restricted cash

and accounts payable and accrued liabilities

These are classified as held-for-trading and recorded at fair value.

We record any changes in their fair value in net income. We calculate

fair value using published price quotations in an active market,

where there is one. Our December 31, 2006 carrying values for these

assets and liabilities already approximated fair value, because of

their short terms to maturity, and we did not make any adjustments to

the opening values.

Most of our sales contracts set prices on a specified future date

based upon market commodity prices. Variations between the prices

recorded on the date of revenue recognition and the actual final

price due to changes in market prices result in the existence of an

embedded derivative in accounts receivable. We adjust accounts

receivable every period to reflect the change in the value of the

contract based on the market price in the period, and then record the

change in fair value in revenue once the contract has settled.

Investments

These are classified as available-for-sale and recorded at fair

value. We record changes in their fair value net of tax in other

comprehensive income. The change in fair value of an investment

appears in net income only when it is sold or impaired. We calculate

fair value using the bid price of the investment as quoted in an

active market. We capitalize transaction costs related to purchasing

investments and include these costs in the initial carrying value. We

have made adjustments to the opening values of our investments (note

6).

Long-term debt

All of our long-term debt is classified as other than held-for-

trading. At December 31, 2006 our long-term debt approximated fair

value, and we did not make any adjustments to the opening values

(note 8).

We previously capitalized any costs spent to issue debt to Other

assets. Effective January 1, 2007, we will record transaction costs

related to issuing debt in net income or, for development properties,

capitalize them to Property, plant and equipment.

Derivative and other contracts

Non-financial derivative contracts are recorded at fair value on the

balance sheet. We include marked-to-market adjustments on these

instruments in net income, unless the instruments are designated as

part of a cash flow hedge relationship. We identify and separately

account for embedded derivatives in contracts that were entered into

or substantively modified on or after January 1, 2003. We use

settlement date accounting for all contracts to buy or sell financial

assets.

3865 - Hedges

This section specifies when and how we can use hedge accounting for

the following hedging strategies: fair value hedges, cash flow hedges

and hedges of a foreign currency exposure of a net investment in a

self-sustaining foreign operation.

We only have cash flow hedging relationships. We recognize the

effective portion of a change in fair value in Other comprehensive

income, and then classify the accumulated amount to net income as the

gains or losses are realized. We recognize the ineffective portion of

a change in fair value in net income.

On January 1, 2007, we designated our existing derivative contracts

related to gold forward sales contracts at Troilus and Ok Tedi, the

foreign exchange forward contract and the interest rate swap contract

at Las Cruces, as part of a cash flow hedge relationship. The fair

values of these contracts are recorded on the balance sheet (note 7).

1530 - Comprehensive income

This section calls for a statement of comprehensive income and its

components. Other comprehensive income (AOCI) includes unrealized

gains and losses on our investments, unrealized foreign currency

translation arising from self-sustaining foreign operations, and

changes in the fair value of the effective portion of cash flow

hedging instruments.

The table below shows you the effect of adopting these standards on

our balance sheet as at January 1. We have not restated prior

periods.

(thousands of December 31 January 1 January 1

Canadian dollars) 2006 2007 2007

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

Adjustments

on adoption Restated

of new opening

As reported standards Ref balances

Assets

Current assets:

Cash and short-term

investments $640,186 $ - $640,186

Accounts receivable 122,645 - 122,645

Inventories 58,323 - 58,323

Future income tax asset 7,567 - 7,567

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

828,721 - 828,721

Restricted cash 35,759 - 35,759

Property, plant and equipment 548,637 13,795 a 562,432

Investments (note 6) 53,002 3,677 b 56,679

Future income tax asset 21,750 (5,696) d 16,054

Deferred charges 2,408 (2,408) c -

Derivatives (note 7) - 17,965 c 17,965

Other assets 42,663 (13,795) a 28,868

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

$1,532,940 $ 13,538 $1,546,478

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

Liabilities

Accounts payable and

accrued liabilities $163,106 (5,444) d $157,662

Long-term debt 109,080 - 109,080

Reclamation liabilities 65,812 - 65,812

Derivatives (note 7) - 51,494 c 51,494

Other liabilities 30,617 (7,958) c 22,659

Future income tax liabilities 42,366 (2,166) d 40,200

Non-controlling interest 49,125 3,539 d 52,664

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

460,106 39,465 499,571

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

Shareholders' equity

Share capital 337,338 - 337,338

Contributed surplus 66,999 - 66,999

Stock based compensation 915 - 915

Retained earnings 669,385 (381) d 669,004

Accumulated other

comprehensive loss (note 10) - (27,349) d (27,349)

Foreign currency

translation account (1,803) 1,803 e -

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

1,072,834 (25,927) 1,046,907

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

$1,532,940 $ 13,538 $1,546,478

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

(a) We have reclassified the cost of issuing debt for the Las

Cruces credit facility to Property, plant and equipment. These

costs were previously capitalized.

(b) We have designated investments we previously accounted for at

cost as available for sale, and recorded them at fair value.

(c) We have reflected derivatives that were previously off balance

sheet at fair value. We have recorded the accumulated

ineffective portion of the hedges in opening retained earnings.

(d) All adjustments are net of tax and non-controlling interest.

The above amounts include an additional adjustment identified

in the second quarter of 2007 with respect to deferred amounts

existing on the adoption date which should have be allocated to

AOCI instead of retained earnings in the amount of $7 million.

(e) We have reclassified the foreign currency translation account

to AOCL.

3. Recently issued accounting pronouncements

(a) In December 2006, the CICA issued Handbook Section 3862, Financial

Instruments - Disclosure and Section 3863, Financial Instruments -

Presentation which will become effective for us beginning on

January 1, 2008. Section 3862 replaces the disclosure portion of

Section 3861. It places increased emphasis on disclosing the nature

and extent of risks arising from both recognized and unrecognized

financial instruments, and how these risks are managed. Section 3863

carries forward the presentation requirements from Section 3861.

(b) In June 2007, the CICA issued Handbook Section 3031, Inventories

which will become effective for us beginning on January 1, 2008. This

section requires that inventory be recorded at the lower of cost or

net realizable value, which is our current accounting policy. The

section also clarifies the allocation of fixed production overhead,

requires consistent use of either first-in, first-out or weighted

average to measure inventories, and requires that any previous write-

downs be reversed when the value of inventories increases. The amount

of the reversal is limited to the amount of the original write-down.

We are reviewing the above standards, and have not yet determined the

impact, if any, on our consolidated financial statements.

4. Statement of cash flows

The tables below show the components of our net change in non-cash

working capital by segment.

For the six months ended June 30, 2007

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

(thousands) Corporate Cayeli Pyhasalmi Troilus

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

Accounts receivable $(1,713) $18,960 $(5,602) $(5,373)

Inventories - 885 (259) 240

Accounts payable and

accrued liabilities (1,896) (10,205) 2,345 (701)

Taxes payable (3,090) 8,357 (8,444) -

Other 3 (23) - -

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

$(6,696) $17,974 $(11,960) $(5,834)

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

For the six months ended June 30, 2007

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

(thousands) Ok Tedi Las Cruces Total

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

Accounts receivable $(14,916) $ - $(8,644)

Inventories 1,611 - 2,477

Accounts payable and

accrued liabilities (5,685) - (16,142)

Taxes payable 25,404 - 22,227

Other (524) - (544)

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

$5,890 $ - $(626)

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



For the six months ended June 30, 2006

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

(thousands) Corporate Cayeli Pyhasalmi Troilus

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

Accounts receivable $14 $(2,053) $(12,058) $(4,113)

Inventories - 870 626 (4,681)

Accounts payable and

accrued liabilities (2,262) 3,368 48 (1,113)

Taxes payable (2,067) 8,912 3,141 -

Other (1,060) 12 - -

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

$(5,375) $11,109 $(8,243) $(9,907)

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

For the six months ended June 30, 2006

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

(thousands) Ok Tedi Las Cruces Total

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

Accounts receivable $(1,606) $ - $(19,816

Inventories 2,456 - (729)

Accounts payable and

accrued liabilities (259) 512 294

Taxes payable 26,048 - 36,034

Other 172 - (876)

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

$26,811 $512 $14,907

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



For the three months ended June 30, 2007

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

(thousands) Corporate Cayeli Pyhasalmi Troilus

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

Accounts receivable $(807) 4,365 (18,453) 1,236

Inventories - (1,682) 573 (1,949)

Accounts payable and

accrued liabilities 1,362 3,718 3,706 (981)

Taxes payable 316 3,254 (11,759) -

Other 1 (29) - -

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

$872 $9,626 $(25,933) $(1,694)

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

For the three months ended June 30, 2007

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

(thousands) Ok Tedi Las Cruces Total

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

Accounts receivable 5,786 $ - $(7,873)

Inventories 2,285 - (773)

Accounts payable and

accrued liabilities 6,064 - 13,869

Taxes payable 7,795 - (394)

Other (513) - (541)

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

$21,417 $ - $4,288

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



For the three months ended June 30, 2006

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

(thousands) Corporate Cayeli Pyhasalmi Troilus

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

Accounts receivable $(177) $152 $(18,585) $(5,134)

Inventories - 880 483 30

Accounts payable and

accrued liabilities 183 2,049 2,803 52

Taxes payable (617) 5,919 832 -

Other (1,003) 5 - -

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

$(1,614) $9,005 $(14,467) $(5,052)

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

For the three months ended June 30, 2006

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

(thousands) Ok Tedi Las Cruces Total

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

Accounts receivable $3,687 $ - $(20,057)

Inventories 2,941 - 4,334

Accounts payable and

accrued liabilities (3,834) 512 1,765

Taxes payable 14,500 - 20,634

Other 194 - (804)

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

$17,488 $512 $5,872

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

5. Restricted cash

The table below shows our restricted cash balances.

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

June 30 December 31

(thousands) 2007 2006

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

Cash collateralized for letters of credit

- Las Cruces - current $15,216 -

Collateralized cash for letter

of credit facility 14,500 14,300

In trust for Ok Tedi rehabilitation 11,071 10,982

Cash collateralized for letters of credit

- Las Cruces - long-term 10,642 10,477

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

$51,429 $35,759

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

The letters of credit Las Cruces issued are for the following:

- (euro) 10.2 million to secure payments that will ultimately be

used for the construction of the plant

- (euro) 3.1 million to secure payments that will ultimately be for

the use of an electrical substation

- (euro) 2.5 million to secure payments to local townships that it

will owe once certain licences are granted

- (euro) 2.1 million for dewatering and other purposes.

6. Investments

The table below shows our investments.

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

(thousands) June 30 January 1 December 31

2007 2007 2006

(fair value) (fair value (historical

- adjusted) cost - as

reported)

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

Wolfden Resources Inc. (note 11) $- $39,690 $39,705

Premier Gold Mines Ltd. 21,924 13,041 10,920

Other 4,875 3,948 2,377

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

$26,799 $56,679 $53,002

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

7. Derivatives

The table below shows the fair value of our derivatives.

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

(thousands) June 30 January 1 December 31

2007 2007 2006

(fair value) (fair value (historical

- adjusted) cost - as

reported)

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

Derivative asset:

Las Cruces currency

forward sale $17,429 $17,965 $-

Las Cruces interest rate swaps 271 - -

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

$17,700 $17,965 -

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

Derivative liabilities:

Troilus gold forward sales 30,360 43,156 -

Ok Tedi gold and copper

forward sales 9,012 7,220 -

Las Cruces interest rate swaps - 1,118 -

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

$39,372 $51,494 $-

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

8. Long-term debt

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

June 30 December 31

(thousands) 2007 2006

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

Credit facility - Tranche A $79,310 $53,792

- Tranche B 28,840 23,054

Promissory note 15,979 16,786

Loans from non-controlling shareholder 41,445 15,448

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

$165,574 $109,080

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

Credit facility

This quarter, Las Cruces borrowed an additional (euro) 13 million

(2007 year to date - (euro) 20 million) under Tranche A, the

US $240 million senior secured facility, and an additional

(euro) 3 million (2007 year to date - (euro) 5 million) under Tranche

B, the (euro) 69 million senior secured bridge financing facility.

The credit facility loans approximate fair value because the loans

accrue interest at prevailing market rates.

Loans from non-controlling shareholder

This quarter, Las Cruces received (euro) 49 million (2007 year to

date - (euro) 59 million) in intercompany loan advances. These loans

bear interest at EURIBOR plus 8.55 percent and are due to be repaid

on February 25, 2020. The non- controlling portion of these loans,

(euro) 28.7 million, is reflected in long-term debt at June 30, 2007.

Loans from non-controlling shareholders approximate fair value

because the loans accrue interest at prevailing market rates.

9. Commitments

Our operations had the following capital commitments as at June 30,

2007:

- Las Cruces has committed (euro) 167 million to engineering,

procurement and construction management and additional

construction work related to the pit and plant.

- Ok Tedi has committed approximately US $14.2 million (our

proportionate share is US $2.6 million) to capital expenditures

related to the mine waste management program.

10. Accumulated other comprehensive loss (AOCL)

The table below shows the components of the beginning and ending

balances of AOCL.

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

(thousands)

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

Unrealized losses on gold forward

sales contracts (net of tax of $2,166) $(37,215)

Unrealized gains on foreign exchange forward contract(1) 8,803

Unrealized losses on interest rate swap contracts(2) (168)

Unrealized gains on investments (net of tax of $643) 3,034

Currency translation adjustment (1,803)

----------

AOCL, January 1, 2007 $(27,349)

Other comprehensive loss for the

six months ending June 30, 2007 (39,560)

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

AOCL, June 30, 2007 $(66,909)

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

AOCL June 30, 2007 comprises:

Unrealized losses on gold and copper forward sales

contracts (net of tax of $2,641) $(26,321)

Unrealized gains on foreign exchange forward contract(3) 9,094

Unrealized losses on interest rate swap contracts(4) (288)

Unrealized gains on investments (net of tax of $2,167) 10,612

Currency translation adjustment (60,006)

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

AOCL, June 30, 2007 $(66,909)

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

1. Net of tax of $5,389 and non-controlling interest of $3,773.

2. Net of tax of $103 and non-controlling interest of $72.

3. Net of tax of $5,567 and non-controlling interest of $3,899.

4. Net of tax of $178 and non-controlling interest of $124.

The table below shows the breakdown of the currency translation

adjustment included in AOCL.

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

June 30 December 31

(thousands) 2007 2006

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

Pyhasalmi (euro functional currency) $(2,124) $5,637

Las Cruces (euro functional currency) (4,331) 8,095

Cayeli (US dollar functional currency) (39,619) (9,278)

Ok Tedi (US dollar functional currency) (13,932) (6,257)

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

$(60,006) $(1,803)

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

The Canadian dollar to US dollar exchange rate was $1.07 at June 30,

2007, and $1.17 at December 31, 2006. The Canadian dollar to euro

exchange rate was $1.44 at June 30, 2007, and $1.54 at December 31,

2006.

11. Investment and other income

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

three months ended six months ended

June 30 June 30

(thousands) 2007 2006 2007 2006

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

Gain on sale of Izok $- $- $- $23,905

Gain on sale of Wolfden 11,730 - 11,730 -

Interest and

dividend income 8,265 2,657 16,144 4,237

Foreign exchange loss (9,400) (138) (9,545) (220)

Other 2,707 68 2,263 363

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

$13,302 $2,587 $20,592 $28,285

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

Gain on sale of investments

In 2006, we sold our interest in the Izok development property to

Wolfden Resources Inc., and recorded a gain of $23.9 million. In

exchange, we received 13.5 million common shares of Wolfden and

9.5 million common shares of Premier Gold Mines Ltd. This quarter, we

sold our shares in Wolfden to Zinifex Canadian Enterprises Inc. for

cash proceeds of $51.4 million or $3.81 per share, and recorded a

gain of $11.7 million.

Interest and dividend income

Interest income was higher this quarter and for the six months ended

June 30, 2007, compared to the same periods in 2006, because of

higher cash balances.

Foreign exchange

We recorded a foreign exchange loss of $9.4 million during the

quarter because of the revaluation of certain short-term foreign

intercompany loans and foreign currency cash balances held by

Corporate, and the recognition of deferred foreign exchange losses

from dividends from Ok Tedi.

12. Income tax expense

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

For the six months ended June 30, 2007

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

(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Las Cruces Total

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

Current income

taxes $771 $26,072 $17,246 $44,176 $- $88,265

Future income

taxes - 1,362 40 (6,268) 486 $(4,380)

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

$771 $27,434 $17,286 $37,908 $486 $83,885

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



For the six months ended June 30, 2006

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

(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Las Cruces Total

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

Current income

taxes $- $19,793 $12,921 $41,993 $- $74,707

Future income

taxes - (10,491) 108 (3,888) - (14,271)

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

$- $9,302 $13,029 $38,105 $- $60,436

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



For the three months ended June 30, 2007

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

(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Las Cruces Total

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

Current income

taxes $385 $14,716 $10,381 $25,672 $- $51,154

Future income

taxes - (953) (2) (2,381) 691 (2,645)

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

$385 $13,763 $10,379 $23,291 $691 $48,509

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



For the three months ended June 30, 2006

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

(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Las Cruces Total

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

Current income

taxes $(47) $11,854 $8,950 $28,245 $- $49,002

Future income

taxes - (11,951) 62 (3,873) - (15,762)

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

$(47) $(97) $9,012 $24,372 $- $33,240

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

In June 2006, the Turkish government enacted tax legislation that

reduced Cayeli's corporate tax rate to 20 percent, effective

January 1, 2006. Cayeli recorded an income tax recovery of

$10 million for the six months ended June 30, 2006 from a reduction

in its future income tax liability.

13. Net income per share

The following tables show our calculation of basic and diluted net

income per share.

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

three months ended six months ended

June 30 June 30

(thousands) 2007 2006 2007 2006

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

Net income available to

common shareholders $138,050 $132,090 $239,128 $211,651

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

(thousands)

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

Weighted average common

shares outstanding 48,278 48,197 48,278 48,148

Plus incremental shares

from assumed conversions

deferred share units 78 78 78 78

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

Diluted weighted

average common shares

outstanding 48,356 48,275 48,356 48,226

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

(Canadian dollars per share)

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

Basic net income per

common share $2.86 $2.74 $4.95 $4.40

Dilutive effect from

assumed conversions of

deferred share units

per common share - - - (0.01)

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

Diluted net income

per common share $2.86 $2.74 $4.95 $4.39

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






Contact Information

  • Inmet Mining Corp.
    Richard Ross
    Chairman and Chief Executive Officer,
    (416) 860-3974

    or
    Inmet Mining Corp.
    Jochen Tilk
    President and Chief Operating Officer
    (416) 860-3972