Inmet Mining Corporation
TSX : IMN

Inmet Mining Corporation

October 28, 2008 08:45 ET

Inmet Announces Third Quarter 2008 Earnings of $1.55 Per Share

TORONTO, ONTARIO--(Marketwire - Oct. 28, 2008) - Inmet Mining Corporation
(TSX:IMN) -



Highlights

- Lower net income per share

Net income per share this quarter was lower than in the third quarter
of 2007 because zinc and copper prices were lower, costs were higher,
and we recognized foreign exchange losses on the translation of Las
Cruces' US dollar denominated credit facility.

- Higher production

This quarter, copper and gold production was higher than the same
quarter in 2007, zinc production was lower, and pyrite production was
nearly four times higher.

- Production outlook

We expect to produce 82,400 tonnes of copper, 74,000 tonnes of zinc
and 248,200 ounces of gold for the year. This is an overall reduction
from our original objectives because of the delay in the start of
production at Las Cruces, change in mine plans at Cayeli and
Pyhdsalmi, and lower throughput at Troilus and Ok Tedi. Pyrite
projections are 616,000 tonnes because of the strong demand for this
product in the third quarter.

- Lower operating cash flow per share

Operating cash flow this quarter was $98 million or $2.03 per common
share compared to $108 million or $2.24 per share in the third
quarter of 2007.

- Las Cruces awaiting regulator consent to resume mining

The temporary water treatment facilities are in place and working
effectively at Las Cruces, but we have to wait for the suspension of
the dewatering system permit to be lifted before we can resume mining
activities. Construction is essentially completed and commissioning
has commenced with turning of the mills. The commissioning will take
several months before copper production commences, which we now
expect will be in the first quarter of 2009.

- Controlling ownership in Petaquilla

On September 19, we acquired 95 percent of the outstanding common
shares of Petaquilla Copper Ltd. (PTC) for $2.20 per share. PTC has a
26 percent stake in Minera Petaquilla SA, the Panamanian company that
holds the project concession. We now control 74 percent of the
project.

- Court rules against Cerattepe operating licenses

On October 24, we learned that the Rize Administrative Court ruled to
cancel the Cerattepe operating licences. We will review the reasons
for the decision once we receive it and will discuss with the Turkish
Ministry of Energy and Natural Resources an appeal to the Supreme
Administrative Court of Turkey. We will continue to keep the project
on care and maintenance and also suspend all work on the project and
re-assess our development plans in light of the court decision.

- Dividend declaration

The board of directors has declared an eligible dividend of $0.10 per
common share payable on December 15, 2008 to shareholders of record
as at November 30, 2008.


Key financial data
-------------------------------------------------------------------------
three months ended September 30
2008 2007 change
-------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(thousands, except per share amounts)

Sales
Gross sales $247,495 $272,293 -9%

Net income
Net income $75,057 $114,836 -35%
Net income per share $1.55 $2.38 -35%

Cash flow
Cash flow provided by operating
activities $97,805 $108,315 -10%
Cash flow provided by operating
activities per share(1) $2.03 $2.24 -10%

Capital spending $94,371 $117,989 -20%
-------------------------------------------------------------------------

OPERATING HIGHLIGHTS
Production(2)
Copper (tonnes) 20,800 19,000 +9%
Zinc (tonnes) 14,600 20,400 -28%
Gold (ounces) 63,200 55,400 +14%
Cash costs
Copper (US $ per pound)(3) $0.60 $0.27 +122%
Gold (US $ per ounce)(3) $432 $367 +18%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended September 30
2008 2007 change
-------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(thousands, except per share amounts)

Sales
Gross sales $805,239 $878,925 -8%

Net income
Net income $249,436 $353,964 -30%
Net income per share $5.17 $7.33 -30%

Cash flow
Cash flow provided by operating
activities $293,513 $351,026 -16%
Cash flow provided by operating
activities per share(1) $6.08 $7.27 -16%

Capital spending $326,813 $252,003 +30%
-------------------------------------------------------------------------
OPERATING HIGHLIGHTS
Production(2)
Copper (tonnes) 59,400 57,600 +3%
Zinc (tonnes) 55,900 59,100 -5%
Gold (ounces) 179,400 166,200 +8%
Cash costs
Copper (US $ per pound)(3) $0.51 $0.19 +168%
Gold (US $ per ounce)(3) $395 $384 +3%
-------------------------------------------------------------------------

as at as at
September 30 December 31
FINANCIAL CONDITION 2008 2007
--------------------------------
Current ratio 3.1 to 1 5.6 to 1
Gross debt to total equity(4) 23% 18%
Net working capital balance (millions) $575 $855
Cash balance (millions) $636 $841
Shareholders' equity (millions) $1,714 $1,392
-------------------------------------------------------------------------
(1) Calculated as cash flow provided by operating activities divided by
average shares outstanding for the respective period.
(2) Inmet's share.
(3) Cash cost per pound of copper and cash cost per ounce of gold are
non-GAAP measures - see Supplementary financial information on pages
30, 31 and 32.
(4) Gross debt includes long-term debt and current portion of long-term
debt.

Current market environment

Since September 30, there has been a further general weakening in the
economic environment and a significant decline in base metal prices. We
believe we are in a strong financial position with a cash balance at September
30 of $636 million to sustain and grow our business. We will continue to
ensure efficiencies at our operations and to carefully manage capital budgets
during these uncertain times.


Third quarter press release

Where to find it

Our financial results................................ 4
Key changes in 2008.................................. 4
Understanding our performance........................ 5
Earnings from operations........................... 7
Corporate costs.................................... 11
Results of our operations............................ 12
Cayeli............................................. 12
Pyhasalmi.......................................... 14
Troilus............................................ 16
Ok Tedi............................................ 18
Status of our development projects................... 20
Las Cruces......................................... 20
Petaquilla......................................... 22
Managing our liquidity............................... 23
Financial condition.................................. 25
Managing risk........................................ 27
Accounting changes................................... 29
Supplementary financial information.................. 30
Quarterly review..................................... 33
Consolidated financial statements.................... 34

In this press release, Inmet means Inmet Mining Corporation and we, us
and our mean Inmet and/or its subsidiaries and joint ventures. This quarter
refers to the three months ended September 30, 2008.

Forward looking information

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

Our financial results
-------------------------------------------------------------------------
(thousands, except per share amounts) three months ended September 30
2008 2007 change
-------------------------------------------------------------------------
EARNINGS FROM OPERATIONS(1)
Cayeli $32,004 $63,578 -50%
Pyhasalmi 29,660 34,101 -13%
Troilus 6,488 2,953 +120%
Ok Tedi 33,974 48,927 -31%
Other (476) (619) -23%
-------------------------------------------------------------------------
101,650 148,940 -32%
-------------------------------------------------------------------------
DEVELOPMENT AND EXPLORATION
Corporate development and exploration (3,548) (2,475) +43%
-------------------------------------------------------------------------
CORPORATE COSTS
General and administration (3,411) (2,674)
Investment and other income (5,467) 9,224
Interest expense (476) (424)
Income and capital taxes (17,504) (37,922)
Non-controlling interest 3,813 167
-------------------------------------------------------------------------
(23,045) (31,629) -27%
-------------------------------------------------------------------------
Net income before other items $75,057 $114,836 -35%
Gain on sale of Wolfden - - -
-------------------------------------------------------------------------
Net income $75,057 $114,836 -35%
-------------------------------------------------------------------------
Basic net income per share $1.55 $2.38 -35%
-------------------------------------------------------------------------
Diluted net income per share $1.55 $2.37 -35%
-------------------------------------------------------------------------
Weighted average shares outstanding 48,282 48,278 -
-------------------------------------------------------------------------

Our financial results
-------------------------------------------------------------------------
(thousands, except per share amounts) nine months ended September 30
2008 2007 change
-------------------------------------------------------------------------
EARNINGS FROM OPERATIONS(1)
Cayeli $130,921 $187,754 -30%
Pyhasalmi 84,886 110,433 -23%
Troilus 22,633 9,483 +139%
Ok Tedi 137,548 154,333 -11%
Other (1,464) (1,462) -
-------------------------------------------------------------------------
374,524 460,541 -19%
-------------------------------------------------------------------------
DEVELOPMENT AND EXPLORATION
Corporate development and exploration (8,649) (5,573) +55%
-------------------------------------------------------------------------
CORPORATE COSTS
General and administration (9,849) (7,676)
Investment and other income (2,071) 18,756
Interest expense (1,394) (1,286)
Income and capital taxes (106,831) (122,355)
Non-controlling interest 3,706 (173)
-------------------------------------------------------------------------
(116,439) (112,734) +3%
-------------------------------------------------------------------------
Net income before other items $249,436 $342,234 -27%
Gain on sale of Wolfden - 11,730 -100%
-------------------------------------------------------------------------
Net income $249,436 $353,964 -30%
-------------------------------------------------------------------------
Basic net income per share $5.17 $7.33 -29%
-------------------------------------------------------------------------
Diluted net income per share $5.16 $7.32 -30%
-------------------------------------------------------------------------
Weighted average shares outstanding 48,282 48,278 -
-------------------------------------------------------------------------
(1) Gross sales less smelter processing charges and freight, cost of
sales, depreciation and provisions for mine rehabilitation.



Key changes this year
-------------------------------------------------------------------------
three nine
months months
ended ended see
(millions) September 30 September 30 page
-------------------------------------------------------------------------
EARNINGS FROM OPERATIONS
Sales
Lower metal prices denominated
in Canadian dollars $(37) $(56) 5
Higher (lower) sales volumes 15 (16) 8
Costs
Lower smelter processing charges 4 30 9
Higher freight costs (8) (12) 9
Higher operating costs, including
costs that vary with income and
cash flows (19) (28) 10
Other (2) (4)
-------------------------------------------------------------------------
Decrease in earnings from
operations, compared to 2007 (47) (86)

CORPORATE COSTS
Change in taxes from change in
income 20 13 11
Decrease in tax rates 1 3 11
Foreign exchange losses (12) (14) 11
Gain on sale of Wolfden in 2007 - (12) 11
Lower interest income (5) (4) 11
Other 3 (5)
-------------------------------------------------------------------------
Decrease in net income, compared
to 2007 $(40) $(105)
-------------------------------------------------------------------------

Understanding our performance

Metal prices

The table below shows the average metal prices we realized in US dollars
and Canadian dollars (the prices we realize include finalization adjustments -
see Gross sales on page 7).

-------------------------------------------------------------------------
three months ended September 30 nine months ended September 30
2008 2007 Change 2008 2007 Change
US dollar
metal prices
-------------------------------------------------------------------------
Copper (per
pound) US $2.66 US $3.62 -27% US $3.52 US $3.37 +4%
Zinc (per
pound) US $0.73 US $1.37 -47% US $0.93 US $1.50 -38%
Gold (per
ounce) US $715 US $580 +23% US $736 US $571 +29%
-------------------------------------------------------------------------
Canadian
dollar metal
prices
Copper (per
pound) C$ 2.77 C$ 3.76 -26% C$ 3.59 C$ 3.74 -4%
Zinc (per
pound) C$ 0.76 C$ 1.42 -46% C$ 0.95 C$ 1.67 -43%
Gold (per
ounce) C$ 744 C$ 603 +23% C$ 751 C$ 634 +18%
-------------------------------------------------------------------------

Commodity prices have declined substantially in the third quarter. Copper
prices were steady for the first half of the year and then in the third
quarter, it had the largest drop among base metals coming down from US $3.90
per pound on July 1 to US $2.91 per pound on September 30. September saw the
largest decline where the price dropped US $0.50 per pound. Zinc prices came
down about US $0.14 per pound in the quarter, but they had already been
declining gradually from January 1. Conversely gold was viewed as a safe haven
amid the financial crisis with the price increasing 20 percent during the
quarter. The price of sulphur, which is closely linked to pyrite prices, was
also strong during the quarter. Sulphur prices have tapered off dramatically
in October.

Exchange rates

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

-------------------------------------------------------------------------
three months ended September 30 nine months ended September 30
2008 2007 Change 2008 2007 Change
-------------------------------------------------------------------------
Exchange
rates
1 US$ to C$ $1.04 $1.04 - $1.02 $1.11 -8%
1 euro to C$ $1.56 $1.44 +8% $1.55 $1.48 +5%
1 euro to US$ $1.51 $1.37 +10% $1.52 $1.34 +13%
-------------------------------------------------------------------------

Sales are affected by the conversion of US dollar revenue to Canadian
dollars. Foreign exchange was not a factor when looking at variances in sales
between the third quarter of 2007 and 2008 because the US to Canadian exchange
rate was consistent between these periods. On average for the nine months, the
US dollar was weaker in 2008 than 2007, which reduced sales by $67 million.
Net income was $80 million less for the year and $17 million less for the
quarter because of fluctuations in the value of the US dollar relative to the
Canadian dollar and euro.

Changes to the US to Canadian dollar exchange rate and US dollar to euro
exchange rate affect our net income in three ways:
- US dollar sales translated to Canadian dollar
- Cayeli and Ok Tedi record all costs in US dollars which we translate
to Canadian dollars
- we recognize deferred foreign exchange gains or losses when we
repatriate cash from Cayeli and Ok Tedi (we record this in Investment
and other income). Foreign exchange losses for the year to date
include a deferred foreign exchange loss of $26 million when we
repatriated cash from Cayeli and Ok Tedi. No cash was repatriated
this quarter.
- we revaluate foreign currency balances such as the US dollar debt in
Las Cruces (recorded in Investment and other income). Pre-tax net
income this quarter and year to September was down $17 million
because we recognized a foreign exchange loss on the translation of
the Las Cruces' US dollar credit facility.

Net income was slightly lower between periods because costs we incurred
in euros were higher when we converted them to Canadian dollars.
We recorded foreign exchange gains of $3 million year to date when we
revalued euro denominated cash and short-term intergroup receivables. This was
the result of a large change in the value of the euro relative to the Canadian
dollar during the nine month period. We also recognized deferred foreign
exchange gains of $6 million when we repatriated cash from Pyhasalmi. We
recorded both of these in Investment and other income. Foreign exchange gains
in the third quarter were minimal.

Treatment charges down for copper and up for zinc

Treatment charges are one component of smelter processing charges. We
also pay smelters for content losses and price participation.
The table below shows the average charges we realized this quarter and
year to date.

-------------------------------------------------------------------------
three months ended September 30 nine months ended September 30
2008 2007 Change 2008 2007 Change
-------------------------------------------------------------------------
Treatment charges
Copper (per
dry metric
tonne of
concentrate) $41 $51 -20% $44 $63 -30%
Zinc (per dry
metric tonne
of
concentrate) $341 $315 +8% $304 $268 +13%
-------------------------------------------------------------------------
Price
participation
Copper (per
pound) $0.06 $(0.02) +400% $0.04 $0.12 -66%
Zinc (per
pound) (1) $0.04 $(0.09) +144% $(0.01) $0.04 -125%
-------------------------------------------------------------------------
Freight charges
Copper (per
dry metric
tonne of
concentrate) $58 $33 +76% $53 $48 +10%
Zinc (per dry
metric tonne
of
concentrate) $31 $25 +24% $38 $31 +23%
-------------------------------------------------------------------------
(1) Zinc price participation is based on a zinc price of US $2,000 per
tonne in 2008 and US $3,500 per tonne in 2007.

Copper treatment charges were lower this quarter and year to date than
they were in 2007 because we have better contract terms with smelters. While
zinc treatment charges were higher than 2007, zinc price participation was
down significantly. The quarterly price participation figures for zinc include
adjustments from the first half of the year because of the timing of when
annual zinc terms are finalized. Excluding the adjustments, price
participation for zinc would have been nil for the third quarter of 2008 and
the third quarter of 2007.

Statutory tax rates down slightly

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

-------------------------------------------------------------------------
2008 2007 change
-------------------------------------------------------------------------
Statutory tax rates
Cayeli 24% 27% -3%
Pyhasalmi 26% 26% -
Ok Tedi 37% 37% -
Las Cruces 30% 30% -
-------------------------------------------------------------------------

Cayeli's tax rate is lower because the withholding tax rate was reduced
from 8 percent to 5 percent.

EARNINGS FROM OPERATIONS

Earnings from operations include the following:

-------------------------------------------------------------------------
three months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Gross sales $247,495 $272,293 -9%
Smelter processing charges (49,502) (42,557) +16%
Cost of sales:
Direct production costs (84,628) (67,520) +26%
Inventory changes 2,179 (1,293) +269%
Provisions for mine rehabilitation
and other non-cash charges (2,499) (3,244) -23%
Depreciation (11,395) (8,739) +30%
-------------------------------------------------------------------------
Earnings from operations $101,650 $148,940 -32%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Gross sales $805,239 $878,925 -8%
Smelter processing charges (146,868) (162,576) -10%
Cost of sales:
Direct production costs (244,238) (213,934) +14%
Inventory changes 3,375 (5,429) -162%
Provisions for mine rehabilitation
and other non-cash charges (13,224) (10,252) +29%
Depreciation (29,760) (26,193) +14%
-------------------------------------------------------------------------
Earnings from operations $374,524 $460,541 -19%
-------------------------------------------------------------------------

Gross sales were lower this year mainly because the price of copper and
zinc was down

-------------------------------------------------------------------------
three months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Gross sales by operation
Cayeli $78,780 $107,664 -27%
Pyhasalmi 67,694 60,427 +12%
Troilus 35,438 24,970 +42%
Ok Tedi (1) 65,583 79,232 -17%
-------------------------------------------------------------------------
$247,495 $272,293 -9%
-------------------------------------------------------------------------
Gross sales by metal
Copper $134,972 $174,338 -23%
Zinc 29,115 54,983 -47%
Gold 46,326 33,826 +37%
Other 37,082 9,146 +305%
-------------------------------------------------------------------------
$247,495 $272,293 -9%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Gross sales by operation
Cayeli $277,709 $337,606 -18%
Pyhasalmi 183,851 201,574 -9%
Troilus 104,860 81,061 +29%
Ok Tedi(1) 238,819 258,684 -8%
-------------------------------------------------------------------------
$805,239 $878,925 -8%
-------------------------------------------------------------------------
Gross sales by metal
Copper $464,670 $506,718 -8%
Zinc 130,106 227,467 -43%
Gold 134,659 111,700 +21%
Other 75,804 33,040 +129%
-------------------------------------------------------------------------
$805,239 $878,925 -8%
-------------------------------------------------------------------------
(1) Our 18 percent share of Ok Tedi's sales.

Key components of the change in sales: copper and zinc prices down, gold
prices up, pyrite sales up

-------------------------------------------------------------------------
(millions) three months nine months
ended ended
September 30 September 30
-------------------------------------------------------------------------
Lower copper prices, denominated in C$ $(47) $(20)
Lower zinc prices, denominated in C$ (23) (96)
Higher gold prices, denominated in C$ 9 22
Higher pyrite prices, denominated in C$ 20 30
Changes in other metal prices 4 8
Higher (lower) sales volumes 12 (18)
-------------------------------------------------------------------------
Decrease in gross sales, compared to 2007 $(25) $(74)
-------------------------------------------------------------------------

We record sales using the metal price we receive for sales that settle
during the reporting period. For sales that have not been settled, we use an
estimate based on the month we expect the sale to settle and the forward price
of the metal at the end of the reporting period. We recognize the difference
between our estimate and the final price we receive by adjusting our gross
sales in the period we settle the sale (finalization adjustment).
We recorded $17 million in negative finalization adjustments in the third
quarter.

At the end of this quarter, the following sales had not been settled:
- 47 million pounds of copper provisionally priced at US $2.89 per
pound
- 32 million pounds of zinc provisionally priced at US $0.76 per pound.

The finalization adjustment we record for these sales will depend on the
actual price when the sale settles, which can be from one to five months after
we initially record it.

Overall, sales volumes were higher for the quarter

-------------------------------------------------------------------------
three months nine months
ended September 30 ended September 30
2008 2007 change 2008 2007 change
-------------------------------------------------------------------------
Sales volumes
Copper (tonnes) 22,000 21,000 +5% 59,200 61,900 -4%
Zinc (tonnes) 17,000 17,900 -5% 62,500 62,800 -
Gold (ounces) 61,100 55,500 +10% 178,100 176,400 +1%
Pyrite (tonnes) 225,000 118,100 +91% 491,700 376,400 +31%
-------------------------------------------------------------------------

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

Production
-------------------------------------------------------------------------
three months ended nine months ended revised
Inmet's September 30 September 30 objective
share(1) 2008 2007 change 2008 2007 change 2008
-------------------------------------------------------------------------
Copper (tonnes)
Ok Tedi 7,300 6,900 +6% 21,400 21,700 -1% 29,800
Cayeli 8,600 7,900 +9% 24,400 23,500 +4% 33,600
Pyhasalmi 3,300 3,400 -3% 9,900 10,300 -4% 13,000
Las Cruces - - - - - - -
Troilus 1,600 800 +100% 3,700 2,100 +76% 6,000
-------------------------------------------------------------------------
20,800 19,000 +9% 59,400 57,600 +3% 82,400
-------------------------------------------------------------------------
Zinc (tonnes)
Cayeli 8,900 12,300 -28% 34,900 32,500 +7% 46,100
Pyhasalmi 5,700 8,100 -30% 21,000 26,600 -21% 27,900
-------------------------------------------------------------------------
14,600 20,400 -28% 55,900 59,100 -5% 74,000
-------------------------------------------------------------------------
Gold (ounces)
Troilus 38,000 36,400 +4% 110,800 104,700 +6% 152,000
Ok Tedi 25,200 19,000 +33% 68,600 61,500 +12% 96,200
-------------------------------------------------------------------------
63,200 55,400 +14% 179,400 166,200 +8% 248,200
-------------------------------------------------------------------------
Pyrite (tonnes)
Pyhasalmi 177,800 45,100 +294% 483,500 304,000 +59% 616,000
-------------------------------------------------------------------------
(1) Inmet's share represents 100 percent for Cayeli, Pyhasalmi and
Troilus, 18 percent for Ok Tedi and 70 percent for Las Cruces.

This quarter compared to the third quarter of 2007:
- copper production was higher because of higher grades at Cayeli,
Troilus and Ok Tedi.
- zinc production was lower mainly because of low zinc grade areas
being mined at Cayeli and Pyhasalmi.
- gold production was higher due to higher grades.

For the nine months zinc production was lower than the prior year because
of lower grades and gold production was higher because of higher grades.

2008 outlook for sales

We expect sales of all metals for the year to be consistent with our 2008
production estimates in the chart above.
The total amount we receive in Canadian dollars will be affected by US
dollar denominated metal prices and the exchange rate between the US dollar
and the Canadian dollar.

Higher freight costs in the quarter

-------------------------------------------------------------------------
three months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Smelter processing charges and freight
by operation
Cayeli $17,543 $19,474 -10%
Pyhasalmi 21,958 12,983 +69%
Troilus 2,541 1,478 +72%
Ok Tedi(1) 7,460 8,622 -13%
-------------------------------------------------------------------------
$49,502 $42,557 +16%
-------------------------------------------------------------------------
Smelter processing charges and freight
by metal
Copper $19,728 $22,479 -12%
Zinc 17,551 17,673 -1%
Other 12,223 2,405 +408%
-------------------------------------------------------------------------
$49,502 $42,557 +16%
-------------------------------------------------------------------------
Smelter processing charges by type and
freight
Copper treatment and refining charges $5,473 $6,462 -15%
Zinc treatment charges 10,662 10,969 -3%
Copper price participation 1,551 2,763 -44%
Zinc price participation 1,445 (3,469) +142%
Content losses 11,392 16,532 -31%
Other 693 2,512 -72%
Freight 18,286 6,788 +169%
-------------------------------------------------------------------------
$49,502 $42,557 +16%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Smelter processing charges and freight
by operation
Cayeli $65,121 $74,944 -13%
Pyhasalmi 47,339 46,697 +1%
Troilus 7,149 6,191 +15%
Ok Tedi(1) 27,259 34,744 -22%
-------------------------------------------------------------------------
$146,868 $162,576 -10%
-------------------------------------------------------------------------
Smelter processing charges and freight
by metal
Copper $62,138 $77,156 -19%
Zinc 62,002 76,459 -19%
Other 22,728 8,961 +154%
-------------------------------------------------------------------------
$146,868 $162,576 -10%
-------------------------------------------------------------------------
Smelter processing charges by type and
freight
Copper treatment and refining charges $16,101 $24,322 -34%
Zinc treatment charges 36,802 32,615 +13%
Copper price participation 5,796 11,846 -51%
Zinc price participation (816) 5,064 -116%
Content losses 43,752 59,324 -26%
Other 5,651 5,253 +8%
Freight 39,582 24,152 +64%
-------------------------------------------------------------------------
$146,868 $162,576 -10%
-------------------------------------------------------------------------
(1) Our 18 percent share of Ok Tedi's smelter processing charges and
freight.

Copper treatment and refining charges were lower in 2008 compared to 2007
because of more favourable contract terms with smelters. Zinc treatment
charges were higher, but lower prices significantly reduced zinc price
participation charges. For the quarter, zinc treatment charges expensed were
similar with last year's third quarter because of lower volumes sold. Freight
charges were higher because Pyhasalmi increased their shipments of pyrite and
freight rates increased as a result of rising demand and fuel prices.

2008 outlook for smelter processing charges and freight

Contract terms for long-term copper sales at our operating mines, and
treatment charges are averaging about US $50 per dry metric tonne with little
to no price participation.
Contract terms for long-term zinc treatment charges have been finalized
averaging about US $300 per dry metric tonne. Price participation of zinc
concentrate is averaging US $0.10 per dry metric tonne for zinc priced at
higher than US $2,000 per tonne ($1.36 per pound), and (US $0.10) per dry
metric tonne for zinc priced at less than US $2,000 per tonne.

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

-------------------------------------------------------------------------
three months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Direct production costs by operation
Cayeli $22,622 $21,299 +6%
Pyhasalmi 14,090 11,078 +27%
Troilus 23,787 18,614 +28%
Ok Tedi(1) 24,129 16,529 +46%
-------------------------------------------------------------------------
Total direct production costs 84,628 67,520 +23%
Inventory changes (2,179) 1,293 -269%
Reclamation, accretion and other
non-cash expenses 2,499 3,244 -23%
-------------------------------------------------------------------------
Total cost of sales $84,948 $72,057 +18%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Direct production costs by operation
Cayeli $68,600 $63,065 +9%
Pyhasalmi 44,045 36,528 +21%
Troilus 66,079 56,520 +17%
Ok Tedi(1) 65,514 57,821 +13%
-------------------------------------------------------------------------
Total direct production costs 244,238 213,934 +14%
Inventory changes (3,375) 5,429 -162%
Reclamation, accretion and other
non-cash expenses 13,224 10,252 +29%
-------------------------------------------------------------------------
Total cost of sales $254,087 $229,615 +11%
-------------------------------------------------------------------------
(1) Our 18 percent share of Ok Tedi's direct production costs.

Key reasons for the increase in direct production costs

-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Volume $(2) $(5)
Labour costs 4 10
Consumables 7 15
Energy 5 8
Costs that vary with income and cash flow - 2
Other 3 -
-------------------------------------------------------------------------
Increase in direct production costs, compared to 2007 $17 $30
-------------------------------------------------------------------------

Depreciation was higher than last year

-------------------------------------------------------------------------
three months nine months
ended September 30 ended September 30
(thousands) 2008 2007 change 2008 2007 change
-------------------------------------------------------------------------
Depreciation by operation
Cayeli $3,369 $1,654 +104% $8,298 $6,222 +33%
Pyhasalmi 2,343 1,764 +33% 6,725 6,558 +3%
Troilus 2,149 2,784 -23% 6,285 7,500 -16%
Ok Tedi 3,534 2,537 +39% 8,452 5,913 +43%
-------------------------------------------------------------------------
$11,395 $8,739 +30% $29,760 $26,193 +14%
-------------------------------------------------------------------------

At Cayeli, depreciation is higher because of the shaft extension that was
finished in the last quarter of 2007. Ok Tedi has higher depreciation because
it has been spending on new mine equipment and other sustaining capital over
the last few years.

2008 outlook for depreciation

We estimate depreciation will be about $40 million for 2008.

CORPORATE COSTS

Corporate costs include 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.

Investment and other income was lower because of foreign exchange losses

-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(thousands) 2008 2007 2008 2007
-------------------------------------------------------------------------
Interest income $6,308 $11,490 $21,994 $25,884
Dividend income and royalty 1,650 1,821 3,154 3,821
Foreign exchange gain (loss) (16,553) (4,695) (28,268) (14,240)
Sale of Wolfden - - - 11,730
Other 3,128 1,028 1,049 3,291
-------------------------------------------------------------------------
$(5,467) $9,644 $(2,071) $30,486
-------------------------------------------------------------------------

We recorded a net foreign exchange loss of $17 million this quarter
mostly from the effects of revaluing the Las Cruces US $215 million credit
facility. For the year, we recognized $20 million in foreign exchange losses
from dividends received. The decrease in interest income is mainly due to
lower interest rates on cash and short-term investments we are holding. In
2007, we sold our shares in Wolfden for cash proceeds of $51 million and
recorded a gain of $11.7 million.

2008 outlook for investment and other income

Investment and other income is affected by cash balances, interest rates
and exchange rates. For the rest of the year, we expect to repatriate funds
only from Ok Tedi. This operation distributes its earnings more frequently, so
the foreign exchange effect of repatriation is normally not significant.

Income tax expense was lower in the quarter because of lower earnings

-------------------------------------------------------------------------
three months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Cayeli $6,428 $13,055 -51%
Pyhasalmi 6,418 7,425 -14%
Ok Tedi 7,174 17,015 -58%
Las Cruces (5,167) (232) +2,127%
Corporate 2,526 659 +283%
-------------------------------------------------------------------------
$17,379 $37,922 -54%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended September 30
(thousands) 2008 2007 change
-------------------------------------------------------------------------
Cayeli $34,207 $40,489 -16%
Pyhasalmi 18,866 24,711 -24%
Ok Tedi 50,324 54,923 -8%
Las Cruces (5,001) 254 -2,069%
Corporate 8,060 1,978 +307%
-------------------------------------------------------------------------
$106,456 $122,355 -13%
-------------------------------------------------------------------------

Our tax expense changes as our earnings change. Cayeli's effective tax
rate was 21 percent this quarter. This is lower than its statutory rate of 24
percent because taxable foreign exchange losses in its Turkish lira tax
accounts generated a lower tax expense. For the year to date, Cayeli's
effective tax rate was 26 percent, the result of foreign exchanges gains in
its tax accounts. At Las Cruces, we have recorded a tax recovery in relation
to the foreign exchange losses recorded from the translation of its US dollar
denominated debt. The tax expense at Corporate reflects a provision for Quebec
mining duties. We expect 2008 to be the first year we have to pay this tax
because we have fully drawn down our tax deductible assets in regard to this
mining tax return.

2008 outlook for income tax expense

We are not expecting any further changes in statutory tax rates at our
operations in 2008. We estimate approximately $11 million for Quebec mining
duties will be expensed for the year, but this will depend on Troilus' 2008
net income.

Results of our operations

CAYELI

-------------------------------------------------------------------------
three months ended
September 30
2008 2007 change
-------------------------------------------------------------------------
Tonnes of ore milled (000's) 259 262 -1%
Tonnes of ore milled per day 2,800 2,85 -2%
-------------------------------------------------------------------------
Grades (percent) copper 4.0 3.7 +8%
zinc 5.2 6.4 -19%
-------------------------------------------------------------------------
Mill recoveries (percent) copper 82 81 +1%
zinc 66 73 -10%
-------------------------------------------------------------------------
Production (tonnes) copper 8,600 7,900 +9%
zinc 8,900 12,300 -28%
-------------------------------------------------------------------------
Cost per tonne of ore milled
(C$) $87 $81 +7%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended revised
September 30 objective
2008 2007 change 2008
-------------------------------------------------------------------------
Tonnes of ore milled (000's) 817 770 +6% 1,100
Tonnes of ore milled per day 3,000 2,800 +7% 3,000
-------------------------------------------------------------------------
Grades (percent) copper 3.7 3.7 - 3.8
zinc 6.0 6.0 - 6.0
-------------------------------------------------------------------------
Mill recoveries (percent) copper 80 82 -2% 81
zinc 71 71 - 71
-------------------------------------------------------------------------
Production (tonnes) copper 24,400 23,500 +4% 33,600
zinc 34,900 32,500 +7% 46,100
-------------------------------------------------------------------------
Cost per tonne of ore milled
(C$) $84 $82 +2% $81
-------------------------------------------------------------------------

On target to achieve production goal of 1.1 million tonnes

Ore milled this quarter was less than the annualized rate and less than
what Cayeli had been producing in the first half of the year, mainly because
mine production was down. In addition, we lowered throughput rates to improve
metal recovery while mining high grade clastic ore. Throughput rates are
expected to return to the previous quarter rate for the remainder of the year.
Year to date, Cayeli produced ore at its expected annualized rate of 1.1
million tonnes, which is consistent with our annual objective and higher than
last year.
Lower zinc grades and recoveries in this quarter resulted in a 28 percent
drop in zinc production compared to the third quarter of last year. Copper
production this quarter was higher than last year because grades were higher.
Both copper and zinc production improved year to date compared to last year
because throughput was higher.
Operating costs are higher than in previous years. This is mainly because
of inflation in Turkey (which has increased labour costs), rising electricity
rates in Turkey, and increasing commodity prices worldwide.

2008 outlook for production and costs

As we originally anticipated, we expect to process 1.1 million tonnes of
ore this year and produce 33,600 tonnes of copper. We revised our zinc
recovery estimate to 71 percent and now we expect to produce about 1,700
tonnes less zinc. Development in 2008 is focusing on access and level
development of the lower mine ore blocks. Mine development rates are higher
than 2007 and development of the lower mine is proceeding as planned.
Costs could change, depending on the value of the Turkish lira relative
to the US dollar. If the Turkish lira decreases in value, costs denominated in
Turkish lira such as labour will go down, lowering our costs.
Royalties also have a significant effect on costs and are variable
depending on earnings. Cost per tonne of ore milled includes $7 per tonne in
royalties in the third quarter and $10 per tonne in royalties year to date. We
have estimated $11 per tonne in our $81 per tonne of ore milled objective,
which can change based on metal price assumptions for the rest of the year.

Financial review

Lower earnings this quarter because of a significant decline in copper
and zinc prices

-------------------------------------------------------------------------
(millions of Canadian three months ended nine months ended
dollars unless September 30 September 30
otherwise stated) 2008 2007 2008 2007
-------------------------------------------------------------------------
Sales analysis
Copper sales (tonnes) 9,900 8,800 23,300 24,200
Zinc sales (tonnes) 10,400 10,400 41,600 36,700
------------------------------------------
Gross copper sales $59 $74 $180 $199
Gross zinc sales 17 32 87 132
Other metal sales 3 2 11 7
------------------------------------------
Gross sales 79 108 278 338
Smelter processing charges and
freight (18) (19) (65) (75)
-------------------------------------------------------------------------
Net sales $61 $89 $213 $263
-------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled (thousands) 259 262 817 770
Direct production costs ($ per
tonne) $87 $81 $84 $82
-------------------------------------------------------------------------
Direct production costs $23 $21 $69 $63
Change in inventory 2 1 2 3
Depreciation and other non-cash
costs 4 3 11 9
-------------------------------------------------------------------------
Operating costs $29 $25 $82 $75
-------------------------------------------------------------------------
Operating earnings $32 $64 $131 $188
-------------------------------------------------------------------------
Operating cash flow $40 $42 $90 $164
-------------------------------------------------------------------------

The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Change in metal prices, denominated in
Canadian dollars $(38) $(70)
Higher (lower) sales volumes 5 -
Lower smelter processing charges 4 17
Higher operating costs and depreciation (3) (4)
-------------------------------------------------------------------------
Decrease in operating earnings, compared to 2007 (32) (57)
Lower tax expense 3 1
Lower tax rate 1 3
Changes in working capital 27 (19)
Other (1) (2)
-------------------------------------------------------------------------
Decrease in operating cash flow, compared to 2007 $(2) $(74)
-------------------------------------------------------------------------

The change in working capital this quarter is from higher accounts
payable. Year to date, the increase in working capital is because more taxes
were paid.

Capital spending behind schedule this quarter, but on track for the year

-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30 objective
2008 2007 change 2008 2007 change 2008
-------------------------------------------------------------------------
Capital
spending $4,600 $6,100 -25% $16,700 $15,600 +7% $23,000
-------------------------------------------------------------------------

Capital spending this quarter and year to date was mainly to repair a
ventilation raise, replace mine equipment and develop the lower mine.

2008 outlook for capital spending

Cayeli expects to spend $23 million in 2008 to repair a ventilation raise,
buy mine equipment and replace other equipment.

PYHASALMI

-------------------------------------------------------------------------
three months ended
September 30
2008 2007 change
-------------------------------------------------------------------------
Tonnes of ore milled (000's) 359 348 +3%
Tonnes of ore milled per day 3,900 3,780 +3%
-------------------------------------------------------------------------
Grades (percent) copper 1.0 1.0 -
zinc 1.8 2.6 -31%
sulphur 43.0 40.7 +6%
-------------------------------------------------------------------------
Mill recoveries (percent) copper 94 95 -1%
zinc 88 89 -1%
-------------------------------------------------------------------------
Production (tonnes) copper 3,300 3,400 -3%
zinc 5,700 8,100 -30%
pyrite 177,800 45,100 +294%
-------------------------------------------------------------------------
Cost per tonne of ore milled
(C$) $39 $32 +22%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended revised
September 30 objective
2008 2007 change 2008
-------------------------------------------------------------------------
Tonnes of ore milled (000's) 1,050 1,019 +3% 1,370
Tonnes of ore milled per day 3,850 3,730 +3% 3,750
-------------------------------------------------------------------------
Grades (percent) copper 1.0 1.1 -9% 1.0
zinc 2.2 2.9 -24% 2.2
sulphur 41.4 40.3 +3% 41
-------------------------------------------------------------------------
Mill recoveries (percent) copper 95 95 - 94
zinc 91 91 - 90
-------------------------------------------------------------------------
Production (tonnes) copper 9,900 10,300 -4% 13,000
zinc 21,000 26,600 -21% 27,900
pyrite 483,500 304,000 +59% 616,000
-------------------------------------------------------------------------
Cost per tonne of ore milled
(C$) $42 $36 +17% $41
-------------------------------------------------------------------------

Record pyrite production and sales

Mill throughput this quarter has improved because of the high pyrite
content ore being more easily processed and because of the mill improvements
made during the second quarter. Pyrite production was at a record high in
August to take advantage of increased demand and increased sales prices for
the product. Zinc production continues to be lower than last year because the
areas being mined contain lower grade zinc.
Costs this year increased partly because of the exchange rate between the
euro and Canadian dollar and partly due to increased prices for steel and mill
processing reagents.

2008 outlook for production and costs

We have reduced our zinc production objective because areas with lower
grade zinc are being mined this year. We do expect to meet our original copper
production estimate for the year and we expect pyrite production to increase.
We do not expect to produce as much pyrite in the fourth quarter as we did in
the third quarter because we are expecting a lower demand for pyrite and
sulphur from China.

Financial review

Higher pyrite sales help offset lower copper and zinc sales

-------------------------------------------------------------------------
(millions of Canadian three months ended nine months ended
dollars unless September 30 September 30
otherwise stated) 2008 2007 2008 2007
-------------------------------------------------------------------------
Sales analysis
Copper sales (tonnes) 3,200 3,900 9,900 10,700
Zinc sales (tonnes) 6,600 7,500 20,900 26,100
Pyrite sales (tonnes) 225,000 118,100 491,700 376,400
------------------------------------------
Gross copper sales $24 $31 $80 $85
Gross zinc sales 12 24 43 95
Other metal sales 32 5 61 22
------------------------------------------
Gross sales 68 60 184 202
Smelter processing charges and
freight (22) (13) (47) (47)
-------------------------------------------------------------------------
Net sales $46 $47 $137 $155
-------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled (thousands) 359 348 1,050 1,019
Direct production costs ($ per
tonne) $39 $32 $42 $36
-------------------------------------------------------------------------
Direct production costs $14 $11 $44 $37
Change in inventory - - - -
Depreciation and other non-cash
costs 2 2 8 8
-------------------------------------------------------------------------
Operating costs $16 $13 $52 $45
-------------------------------------------------------------------------
Operating earnings $30 $34 $85 $110
-------------------------------------------------------------------------
Operating cash flow $28 $53 $79 $104
-------------------------------------------------------------------------

The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Change in metal prices, denominated in
Canadian dollars $12 $2
Lower sales volumes (3) (16)
Lower smelter processing charges and freight (1) 6
Higher freight costs for pyrite sales (8) (11)
Higher operating costs (4) (6)
-------------------------------------------------------------------------
Decrease in operating earnings, compared to
2007 (4) (25)
Lower tax expense because of lower earnings 1 6
Changes in working capital (23) (7)
Other 1 1
----------------------------
Decrease in operating cash flow, compared to
2007 $(25) $(25)
-------------------------------------------------------------------------

The change in working capital this quarter and year to date is mainly
because the accounts receivable was lower and more income taxes were paid.

Capital spending in 2008 will mainly be used to improve mill efficiencies

-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30 objective
(thousands) 2008 2007 change 2008 2007 change 2008
-------------------------------------------------------------------------
Capital
spending $2,500 $1,300 +92% $5,900 $2,100 +181% $12,000
-------------------------------------------------------------------------

Spending this quarter was mainly for asset replacements.

2008 outlook for capital spending

We expect to spend $12 million in 2008, mainly for mine and mill
equipment.

TROILUS

-------------------------------------------------------------------------
three months ended
September 30
2008 2007 change
-------------------------------------------------------------------------
Tonnes of ore milled (000's) 1,444 1,475 -2%
Tonnes of ore milled per day 15,900 16,000 -2%
-------------------------------------------------------------------------
Strip ratio 1.6 1.1 +45%
-------------------------------------------------------------------------
Grades gold (grams/tonne) 0.95 0.93 +2%
copper (percent) 0.12 0.06 +100%
-------------------------------------------------------------------------
Mill recoveries (percent) gold 85 83 +2%
copper 94 89 +6%
-------------------------------------------------------------------------
Production gold (ounces) 38,000 36,400 +4%
copper (tonnes) 1,600 800 +100%
-------------------------------------------------------------------------
Cost per tonne of ore milled (C$) $16 $13 +23%
-------------------------------------------------------------------------

-------------------------------------------------------------------------
nine months ended revised
September 30 objective
2008 2007 change 2008
-------------------------------------------------------------------------
Tonnes of ore milled (000's) 4,295 4,600 -7% 5,800
Tonnes of ore milled per day 15,700 16,800 -7% 15,900
------------------------------------------------------------------------
Strip ratio 1.4 1.0 +40% 1.2
------------------------------------------------------------------------
Grades gold (grams/tonne) 0.95 0.87 +9% 0.97
copper (percent) 0.09 0.05 +80% 0.11
-------------------------------------------------------------------------
Mill recoveries (percent) gold 84 82 +2% 84
copper 94 87 +8% 93
-------------------------------------------------------------------------
Production gold (ounces) 110,800 104,700 +6% 152,000
copper (tonnes) 3,700 2,100 +76% 6,000
-------------------------------------------------------------------------
Cost per tonne of ore milled (C$) $15 $12 +25% $14
-------------------------------------------------------------------------

Higher gold production

Troilus mined the hard, lower grade ore of the upper benches of the 87 pit
through most of the third quarter, and by September began to mine the main 87
pit. Congestion in the pit bottom has resulted in ore sequencing challenges
and when not enough feed can be brought to the mill, ore from the low grade
stockpile is processed.
Gold production this quarter and year to date was higher than the same
periods last year, mainly because grades from the 87 pit were higher. Gold
recoveries also continue to be higher than expected. Copper grades peaked in
the third quarter, doubling copper production compared to last year, and
increasing it by 76 percent year to date.
Higher fuel and steel grinding media costs resulted in a higher cost per
tonne compared to previous years.

2008 outlook for production and costs

Both grades and mill throughput will improve as Troilus moves deeper and
towards the north of the 87 pit. Troilus may need to supplement mill feed with
lower grade stockpiled ore if production scheduling difficulties continue
because of congestion in the pit bottom. The production objectives have been
adjusted to reflect the results to September. We expect to remain on track to
complete the pit in early 2009 and then we will complete stockpile recovery in
2010.

Financial review

Higher gold prices and higher sales volumes improved earnings

-------------------------------------------------------------------------
(millions of Canadian three months ended nine months ended
dollars unless September 30 September 30
otherwise stated) 2008 2007 2008 2007
-------------------------------------------------------------------------
Sales analysis
Gold sales (ounces) 38,000 33,900 109,400 106,100
Copper sales (tonnes) 1,500 700 3,500 2,100
------------------------------------------
Gross gold sales $26 $19 $77 $63
Gross copper sales 8 5 26 17
Other metal sales 1 1 2 1
------------------------------------------
Gross sales 35 25 105 81
Smelter processing charges
and freight (2) (1) (7) (6)
-------------------------------------------------------------------------
Net sales $33 $24 $98 $75
-------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled
(thousands) 1,444 1,475 4,295 4,600
Direct production costs
($ per tonne) $16 $13 $15 $12
-------------------------------------------------------------------------
Direct production costs $24 $19 $66 $57
Change in inventory - (1) (1) -
Depreciation and other
non-cash costs 3 3 10 9
-------------------------------------------------------------------------
Operating costs $27 $21 $75 $66
-------------------------------------------------------------------------
Operating earnings $6 $3 $23 $9
-------------------------------------------------------------------------
Operating cash flow $7 $5 $21 $10
-------------------------------------------------------------------------

The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Change in metal prices denominated in
Canadian dollars $3 $11
Higher sales volumes 7 11
Lower smelter processing charges - 2
Higher operating costs (7) (10)
-------------------------------------------------------------------------
Increase in operating earnings, compared to
2007 3 14
Changes in working capital 5 3
Settlement of gold forward sales, less
amounts amortized to sales
(7) (7)
Other 1 1
-------------------------------------------------------------------------
Increase in operating cash flow, compared
to 2007 $2 $11
-------------------------------------------------------------------------

In August, we paid $12 million to settle the remainder of Troilus' gold
forward sales (4,850 ounces per month for a five month period). We will
recognize this settlement loss equally over the period from August to December
as a reduction to our gold sales.

OK TEDI

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

three months ended nine months ended revised
September 30 September 30 objective
(100 percent) 2008 2007 change 2008 2007 change 2008
-------------------------------------------------------------------------
Tonnes of
ore milled
(000's) 5,600 6,500 -14% 16,100 19,500 -17% 22,400
Tonnes of
ore milled
per day 61,500 70,700 -14% 58,800 71,500 -17% 61,400
-------------------------------------------------------------------------
Strip ratio 1.6 1.1 +45% 1.6 1.2 +33% 1.5
-------------------------------------------------------------------------
Grades
copper
(percent) 0.8 0.7 +14% 0.9 0.7 +29% 0.9
gold
(grams/tonne) 1.0 0.8 +25% 1.0 0.8 +25% 1.0
-------------------------------------------------------------------------
Mill recoveries
(percent)
copper 88 86 +2% 87 86 +1% 86
gold 71 64 +11% 73 71 +3% 73
-------------------------------------------------------------------------
Production
copper
(tonnes) 40,700 38,200 +7% 119,100 120,800 -1% 165,600
gold
(ounces) 140,100 105,400 +33% 381,300 341,400 +12% 534,500
-------------------------------------------------------------------------
Cost per
tonne of ore
milled (C$) $24 $14 +71% $23 $17 +35% $23
-------------------------------------------------------------------------

Lower throughput at Ok Tedi

Ok Tedi made considerable progress this quarter in resolving problems
with the in-pit crushing system, including replacing the main conveyor belt.
Mill throughput this quarter and year to date was lower than the same periods
last year because of harder skarn ore, and because of the problems with the
in- pit crusher conveyor system. We saw improvements in September when Ok Tedi
met mill throughput plans.
Copper and gold grades exceeded grades in 2007, increasing copper
production this quarter and gold production this quarter and year to date.
The cost per tonne of ore milled is higher in 2008 because mill
throughput is lower and labour and fuel costs have increased.

2008 outlook for production and costs

We have adjusted our objective for 2008 to compensate for the shortfall
in production in the first nine months of the year.

Financial review

Higher operating cash flow

-------------------------------------------------------------------------
three months ended nine months ended
(millions of Canadian dollars September 30 September 30
unless otherwise stated) 2008 2007 2008 2007
-------------------------------------------------------------------------
Sales analysis at 18%
Copper sales (tonnes) 7,500 7,600 22,400 24,900
Gold sales (ounces) 23,100 21,600 68,600 70,300
-----------------------------------------
Gross copper sales $44 $64 $178 $207
Gross gold sales 20 15 58 49
Other metal sales 1 1 3 3
-----------------------------------------
Gross sales 65 79 239 259
Smelter processing charges and
freight (7) (8) (27) (35)
-------------------------------------------------------------------------
Net sales $58 $71 $212 $224
-------------------------------------------------------------------------
Cost analysis at 18%
Tonnes of ore milled (thousands) 1,000 1,170 2,900 3,500
Direct production costs
($ per tonne) $24 $14 $23 $17
-------------------------------------------------------------------------
Direct production costs $24 $17 $66 $58
Change in inventory (4) 2 (4) 3
Depreciation and other non-cash
costs 4 3 12 9
-------------------------------------------------------------------------
Operating costs $24 $22 $74 $70
-------------------------------------------------------------------------
Operating earnings $34 $49 $138 $154
-------------------------------------------------------------------------
Operating cash flow $25 $6 $106 $76
-------------------------------------------------------------------------

The table below shows what contributed to the change in operating earnings
and operating cash flow between 2008 and 2007.

-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Change in metal prices, denominated in
Canadian dollars $(14) $2
Higher (lower) sales volumes 6 (11)
Lower smelter processing charges 1 4
Higher operating costs (7) (9)
Higher depreciation (1) (2)
-------------------------------------------------------------------------
Decrease in operating earnings, compared
to 2007 (15) (16)
Lower tax expense 10 8
Changes in net working capital 27 35
Other (3) 3
-------------------------------------------------------------------------
Increase in operating cash flow, compared
to 2007 $19 $30
-------------------------------------------------------------------------

The mine waste management program was commissioned in September

Ok Tedi's capital spending this quarter was mainly for the mine waste
management program.

-------------------------------------------------------------------------
(18 percent) three months ended nine months ended
September 30 September 30 objective
2008 2007 change 2008 2007 change 2008
-------------------------------------------------------------------------
Capital
spending $7,800 $8,500 -8% $26,700 $21,300 +25% $32,000
-------------------------------------------------------------------------

2008 outlook for capital spending

Ok Tedi plans to spend $180 million in 2008 (Inmet's 18 percent share is
$32 million). Of the $180 million, about $90 million will be for the mine
waste management program, $27 million for the pit drainage tunnel, and the
rest for mine equipment and other sustaining capital.

Status of our development projects

Las Cruces

Quarterly development update

Dewatering and re-injection system (DRS)

In May the Confederacion Hidrografica del Guadalquivir (CHG) notified Las
Cruces that the authorization for its DRS had been suspended. In June, Las
Cruces responded to the concerns with a "Global Plan" that included two
primary action items:

- purification of water extracted from the aquifer through a highly
efficient reverse osmosis treatment process prior to reinjection into
the aquifer
- the relocation of certain DRS extraction wells currently located
above the mineralized zone to locations outside of the mineralized
zones and to add additional wells to increase dewatering capacity.

By the end of July, Las Cruces was successfully treating water with the
use of three portable water treatment facilities to ensure that all water
extracted from the aquifer met drinking water standards. In October, we
installed additional water treatment units to increase the treatment capacity
and have provisional treatment capacity in place for all water extracted from
the aquifer. CHG has not yet approved the start of re-injection as it is
reviewing a technical report from the Spanish Geological Survey. We are now
awaiting a decision from CHG to approve the reinjection of the treated water
into the aquifer and, the lifting of the suspension of the DRS permit. Until
the suspension is lifted, we cannot begin to mine the ore. In September, the
Public Prosecutor's office in Seville announced that, after acting on a
complaint by local anti-mining ecologists, a local Court would commence a
criminal investigation regarding the events of May 2008 that led to the
suspension of the water authorization. We understand that the judge presiding
over the investigation will have to provide her consent to the reinjection of
treated water into the aquifer and the lifting of the suspension. We would
expect the judge to concur with the technical recommendations provided by the
Geological Survey, CHG and other third parties that have been asked to opine
on the measures proposed and implemented by Las Cruces.
We believe that our proposed and implemented measures fully address the
concerns raised by CHG and provide sufficient grounds for the suspension to be
lifted. Although we cannot predict the outcome and timing of the final
decision, we remain confident that the suspension will be lifted in the coming
months.

Repair of dumps

At the beginning of July over 5 million cubic metres of material from the
North dump collapsed. We have fully repaired the dump walls and re-designed
both the north and south dump to make sure they will be able to support the
mine until the end of its life. The total cost to rehabilitate and improve was
about $3.5 million.

Preparation for first copper

Construction is essentially completed and commissioning has commenced
with the turning of mills. The Las Cruces plant operations team will also work
directly with Outotec to ensure a smooth and rapid commissioning period of the
leach reactors. Commissioning will take several months before first copper
cathode is produced in the first quarter of 2009.

Direct ore shipping

We have suspended direct ore shipping until the DRS authorization
suspension has been lifted and mining activity in the bottom of the pit can
recommence. In light of changing market conditions, including the price of
copper and smelting charges, we will be re-examining the economic benefit of
shipping and selling this material.

2008 outlook for development spending

By September 30, 2008, we had spent (euro) 445 million on the project and
committed another (euro) 38 million. We expect to spend the balance of the
estimated project costs ( (euro) 495 million) by the fourth quarter of 2008.
We estimate capital expenditures for 2008 to be $360 million. This includes
the cost to complete the project including $7 million on the remediation of
the dumps, $7 million for the temporary water treatment plants and $14 million
on further pushback of the mine to prepare for phase two mining.

PETAQUILLA

Quarterly development update

All-cash offer for Petaquilla Copper

On September 19, 2008, we acquired 95 percent of the outstanding common
shares of PTC at a price of $2.20 per share. Our intention is to acquire the
remaining 5 percent in November through a second step acquisition and then de-
list PTC from the Toronto Stock Exchange.
PTC holds 26 percent of Minera Petaquilla SA, while Inmet holds 48
percent and Teck holds the remaining 26 percent. Petaquilla is an important
source of long term growth for Inmet. Gaining control over the project allows
us to protect our interests in the Petaquilla Concession and to advance the
development of the copper project.
Under an agreement with Teck we have been acting as operator for the
project and have provided 100 percent project funding since April 1, 2008. By
October 28, we had funded US $28 million to Petaquilla, and expect to have
funded US $50 million by November.
At that point, Teck must decide to either begin funding its own share or
to allow us to acquire its 26 percent interest in Petaquilla for US
$26 million.

Drilling

Drilling is continuing to expand the resource, to confirm prospective
locations for plant and other facilities and to provide geotechnical
information for engineering work.

Social and environmental impact assessment

Following the completion of the baseline studies, the work is now moving
to the impact assessment stage. We expect to submit our impact assessment to
the Panamanian environmental authorities by September 2009.

Engineering

Engineering work is advancing, and our goal is to complete the front end
engineering and design (FEED) by mid 2009.

Petaquilla team

We continue to build a strong and dedicated team to lead all development,
engineering, technical, environmental and permitting activities in Panama. We
have also begun to consider engineering firms with a view to rewarding the
contract once the FEED study is complete.

2008 outlook for development

We expect to fund approximately $65 million in 2008, to continue the
current field program and the engineering study, and on capital equipment with
long lead times. We have placed the order for the equipment to maintain the
project schedule.
We believe it is appropriate to advance the Petaquilla copper project in
the current market, but we will remain prudent and disciplined in our approach
and find the right balance between advancing the project and preserving our
cash reserves.

Managing our liquidity

We plan our financing strategy by assessing our long-term financial
requirements, reviewing our future capital needs and determining the optimal
mix of several alternatives, including our significant cash position, future
operating cash flow, credit facilities and project financing. In planning our
capital structure, we include a liquidity cushion that allows us to address
operational disruptions or general market downturns, such as the current
weakening of the global economy.

-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(millions) 2008 2007 2008 2007
-------------------------------------------------------------------------
CASH FROM OPERATING ACTIVITIES
Cayeli $40 $42 $90 $164
Pyhasalmi 28 53 79 104
Troilus 7 5 21 10
Ok Tedi 25 6 106 76
Corporate development and
exploration not included in
operations' cash flow (4) (1) (8) (3)
General and administration (3) (3) (10) (8)
Other 5 6 16 8
-------------------------------------------------------------------------
98 108 294 351
-------------------------------------------------------------------------
CASH FROM INVESTING AND FINANCING
Capital spending (94) (118) (327) (252)
Long-term - borrowing - 36 106 74
- repayment (14) (9) (14) (9)
Funding from non-controlling
shareholder 1 13 36 40
Acquisition of Petaquilla Copper (337) - (337) -
Funding for Petaquilla (8) - (12) -
Settlement of foreign exchange
forward contract - - 52 -
Financial assurance deposits (1) 5 (15) (13)
Dividends paid on common shares - - (5) (5)
Disposition of portfolio
investments - - 2 50
Foreign exchange on cash held in
foreign currency - (23) 24 (57)
Other (8) - (9) (4)
-------------------------------------------------------------------------
(461) (96) (499) (176)
-------------------------------------------------------------------------
Increase (decrease) in cash (363) 12 (205) 175
Cash and short-term investments
Beginning of period 999 803 841 640
-------------------------------------------------------------------------
End of period $636 $815 $636 $815
-------------------------------------------------------------------------



OPERATING ACTIVITIES

Key components of the change in operating cash flows
-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Lower earnings from operations (see page 4) $(47) $(86)
Non-cash changes in operating earnings:
Lower tax expense 15 10
Changes in working capital 33 17
Settlement of gold forward contracts, less
amounts amortized to sales (7) (7)
Other (5) 8
-------------------------------------------------------------------------
Decrease in operating cash flow, compared
to 2007 $(11) $(58)
-------------------------------------------------------------------------

Operating cash flows are lower than they were in 2007 mainly because of
lower operating earnings and higher taxes paid offset by reduced accounts
receivable from lower metal prices. During the third quarter, we settled
Troilus' remaining gold forward sales contracts for 24,250 ounces at a
settlement price of US $819 per ounce. This resulted in a cash payment of
$12.4 million.

2008 outlook for operating activities

In the current volatile markets it is even more difficult than usual to
develop reliable estimates for commodity prices and foreign exchange rates.
Our estimates of the sensitivity of our earnings and cash flow to key
operating parameters are shown on page 28.

INVESTING AND FINANCING

Capital spending and investing
-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
(millions) 2008 2007 2008 2007 2008
-------------------------------------------------------------------------
Cayeli $5 $6 $17 $16 $23
Pyhasalmi 3 1 6 2 12
Troilus 1 1 1 2 1
Ok Tedi 8 9 27 21 32
Las Cruces 72 100 262 207 387
Cerattepe 6 1 14 4 15
Petaquilla(1) 8 - 12 - 65
-------------------------------------------------------------------------
$103 $118 $339 $252 $535
-------------------------------------------------------------------------
(1) Includes our 48 percent share of funding provided to Petaquilla prior
to acquisition of PTC

Please see Results of our operations and Status of our development
projects for a discussion of actual results and our 2008 objective.
On October 24, we learned that the Rize Administrative Court ruled to
cancel the Cerattepe operating licences. We will review the reasons for the
decision once we receive it and will discuss with the Turkish Ministry of
Energy and Natural Resources an appeal to the Supreme Administrative Court of
Turkey. We will continue to keep the project on care and maintenance and also
suspend all work on the project and re-assess our development plans in light
of the court decision. See page 27 for further details on the legal
proceedings. Spending year to date was on ramp development and receipt of the
aerial tramway.

Long term borrowings and settlement of hedge

By June 30, 2008 Las Cruces had fully drawn down its credit facility and
on June 30, this euro denominated debt was converted to a US dollar facility
and the related foreign exchange forward contract was settled. Las Cruces
received (euro) 36 million in cash from the settlement of this contract. Since
June 30, Las Cruces has held a US $215 million debt at interest rates of US
Libor plus 2 percent. The funds received from the settlement of the forward
contract will be amortized as a reduction to interest expense over the term of
the loan.
During the third quarter, Las Cruces repaid (euro) 9 million under
Tranche B of its credit facility which is equal to the amount of VAT refunds
received. It had (euro) 14 million of undrawn capacity remaining under Tranche
B at September 30, 2008.

Acquisition of PTC

On September 19, 2008, we acquired 95 percent of the outstanding common
shares of Petaquilla Copper Ltd. (PTC) for $337 million in cash, net of cash
acquired of $23 million. We intend to acquire the remaining 5 percent by the
end of the year at a price per common share of $2.20 and then de-list PTC from
the Toronto Stock Exchange. Turn to note 4 on page 44 in the consolidated
financial statements for more details about this transaction.

2008 outlook for investing and financing

We expect capital spending to be $515 million in 2008:
- $365 million for the continuing development of the Las Cruces mine
and $19 million for its sustaining capital and phase two mining
- $19 million for development at Cerattepe for capital already incurred
and committed items
- $17 million for the mine waste management program and $5 million for
drainage tunnel underground work at Ok Tedi.

To fund the costs at Las Cruces for the rest of the year, we expect to
use sponsor contributions, government subsidies and the undrawn amount of
Tranche B of the credit facility. We are expecting (euro) 45 million in
subsidies, but we must meet certain conditions before we receive the funds
(mainly reaching specific levels of employment and completing construction of
the plant).
We also expect to invest $46 million (including our share of funding
provided to MPSA prior to the acquisition of PTC) for drilling programs,
engineering studies and the deposits required for equipment at Petaquilla that
has long lead times. We will fund this from our current cash balances.
Our current cash balance puts us in a good position to finance the next
stages of Petaquilla's pre-development. We will review our spending for the
coming year and make our development decisions in a manner that finds the
right balance between advancing the project and preserving cash balances. We
will continue with our normal dividend distribution until this project is
fully financed.

Financial condition

CASH

Our cash and equivalents balance at September 30, 2008 was $636 million.
This included cash and money market instruments that mature in 90 days or less
from the date of acquisition, and short-term investments that mature in 91
days to a year. Our policy is to invest excess cash in highly liquid
investments of the highest credit quality and to limit our exposure to
individual counterparties in order to minimize risks associated with these
investments. Decisions regarding the length of maturities are based on our
cash flow requirements, rates of returns and various other factors.

At September 30, 2008, cash and short-term investments were mainly held
in:
- Canada and provincial T-Bills
- short-term debt instruments issued by Canadian Crown Corporations
- highest rated asset backed commercial paper programs sponsored by
leading Canadian financial institutions backed by global style
liquidity lines
- AAA rated money market funds managed by leading international fund
managers investing in money market and short-term debt securities and
fixed income securities issued by leading international financial
institutions and their sponsored securitization vehicles
- cash, term and overnight deposits with leading Canadian and
international financial institutions.

Since the end of the third quarter, general worldwide economic conditions
have weakened dramatically. In response, we adjusted our investment positions
and are now mainly invested in treasury funds to minimize liquidity risk until
normal market conditions return. Turn to note 7 on page 46 in the consolidated
financial statements for more details on where our cash is invested.

Our restricted cash balance of $59 million included:
- $14 million in trust for future reclamation at Ok Tedi
- $17 million of cash collateralized letters of credit for Inmet
- $23 million related to issuing letters of credit to suppliers at
Las Cruces
- $2 million for future reclamation at Pyhasalmi
- $3 million supporting a guarantee by PTC of capital leases of one of
its former related parties.

COMMON SHARES

-------------------------------------------------------------------------
Common shares outstanding as of September 30, 2008
and October 28, 2008 48,281,950
-------------------------------------------------------------------------
Deferred share units outstanding as of September 30, 2008
(redeemable on a one-for-one basis for common shares) 78,596
-------------------------------------------------------------------------

FINANCIAL INSTRUMENTS

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

-------------------------------------------------------------------------
C$ marked-to-
market
Type of loss at
contract Expiry Quantity Price September 30, 2008
-------------------------------------------------------------------------
Copper
forward
sales
Ok Tedi 2008 0.8 million lbs US $2.78 per lb
2009 3.2 million lbs US $2.41 per lb
-----------------------------------------
4.0 million lbs US $2.49 per lb $1.8 million(1)
Gold
forward
sales
Ok Tedi 2010 3,600 ounces US $748 per oz.
2011 3,600 ounces US $775 per oz.
2012 3,600 ounces US $803 per oz.
2013 1,800 ounces US $825 per oz.
-----------------------------------------
12,600 ounces US $783 per oz. $2.5 million(2)

Interest
rate
swaps
Las Cruces 2009
to
2014 US $179 million 5.2 percent $9.1 million
(reducing in
conjunction with
debt repayment
schedule)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) At a copper price of US $2.88 per pound.
(2) At a gold price of US $901 per ounce.

Managing risk

The following is an update to the discussion, only where required, of the
key risks associated with our business and how we manage them. You can find
the full discussion in our 2007 annual review.

Development at Las Cruces

Las Cruces is a development project, and while we are confident that the
project will add value as planned, there are still significant risks to
completing the project as planned, particularly in the ability to meet
critical construction milestones and to demonstrate to the regulators the
effectiveness of the Global Plan with respect to the DRS.
Not meeting construction milestones or requirements for operating permits
could delay the date Las Cruces starts production, and affect whether it
receives government subsidies.
A local non-governmental group has initiated several legal proceedings
claiming that various government 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. Two other proceedings are still outstanding.

Cerattepe legal proceedings

After the Turkish Administrative Supreme Court reinstated the project
operating licences on procedural grounds in April 2007, the plaintiffs in
prior proceedings re-filed applications to have the licences cancelled with
the newly created Rize Administrative Court to stop work on the property and
to cancel a lease of the land where the ropeway terminus will be located.
We joined the various application proceedings as an intervener and,
together with the Turkish Ministry of Energy and Natural Resources, filed
defences in the various proceedings.
On March 26, 2008 we received notice from the Rize Administrative Court
of its decision to grant an injunction against the Cerattepe project. The main
defendant in the legal proceedings is the Turkish Ministry of Energy and
Natural Resources (ABMI is a co-defendant). The Ministry appealed the
injunction decision to the Trabzon District Administrative Court, and on April
29, 2008 that appeal was rejected.
On October 24, 2008 we learned that the Rize Administrative Court ruled
to cancel the Cerattepe operating licences. We will review the reasons for the
decision once we receive it and will discuss with the Turkish Ministry of
Energy and Natural Resources an appeal to the Supreme Administrative Court of
Turkey. We will continue to keep the project on care and maintenance and also
suspend all work on the project and re-assess our development plans in light
of the court decision.
We continue to believe that the applications to cancel the operating
licences are without merit. Nonetheless, in light of the Rize Administrative
Court's decision, our ability to move the Cerattepe project ahead remains
subject to legal uncertainty at this time.

Sensitivity analysis

The table below shows you the effect of key variables on our net income
for the last three months of 2008, based on our 2008 revised objectives.

-------------------------------------------------------------------------
Would change
Would change our 2008 net
our 2008 net income per
A change of: income by: share by:
-------------------------------------------------------------------------
Metal prices
Copper (per pound) US $0.30 $10 million $0.21
Zinc (per pound) US $0.10 $2 million $0.04
Gold (per ounce)(1) US $100 $5 million $0.10
-------------------------------------------------------------------------
Exchange rates
Canadian dollar per US dollar C$0.10 $ 9 million $0.19

Less than
Canadian dollar per euro C$0.10 $1 million $0.01
-------------------------------------------------------------------------
Treatment and refining charges
Copper treatment charge per tonne US $10
and copper refining charge per
pound US $0.01 $1 million $0.02

Less than Less than
Zinc treatment charge per tonne US $10 $1 million $0.01
-------------------------------------------------------------------------
Freight and energy costs Less than Less than
Concentrate freight per tonne 10% $1 million $0.01
Fuel price per litre $0.10 $1 million $0.02
Electricity per kilowatt hour $0.01 $1 million $0.02
-------------------------------------------------------------------------
(1) Calculations include hedging in place at September 30, 2008.

Accounting changes

We adopted a new section of the CICA Handbook:

Section 3031 - Inventories

Effective January 1, 2008, we adopted CICA Handbook section 3031 -
Inventory on a prospective basis. This Section requires inventory to be
measured at cost or net realizable value - whichever is lower.
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, requires insurance and capital spares be accounted for as
property, plant and equipment 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.
As a result, certain administrative and other costs that were previously
included in the cost of inventory are now expensed as incurred. Metal
inventory and materials and supplies are measured at weighted average cost or
net realizable value - whichever is lower.

This change in policy had the following impact on our 2008 interim
financial statements:
- decreased opening 2008 inventory by $5.2 million
- increased opening 2008 property, plant and equipment by $2.4 million
- decreased opening 2008 future income tax liability by $0.6 million
- decreased opening 2008 retained earnings by $2.2 million.

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

As of January 1, 2011 Inmet will report under IFRS, the accounting
standards used in most of the European Union, Australia, South Africa and many
other countries around the world. Changing from Canadian GAAP to IFRS could
materially affect our reported financial position and results of operations.
We have analyzed the major accounting differences and over the next year we
will refine our transitional plan, consult with our operating units and assess
the impact on our internal controls over financial reporting, disclosure
controls and information systems. Our goal is to make policy changes
(including transition elections) that are compliant but also provide the most
meaningful and transparent information to our stakeholders.

Recently issued accounting pronouncement:

Section 3064 - Goodwill and intangible assets

This section establishes standards for recognizing, measuring, presenting
and disclosing goodwill (after its initial recognition) and intangible assets.
It replaces Section 3062, Goodwill and Other Intangible Assets and Section
3450, Research and Development Costs. Changes have been made to other sections
of the CICA Handbook for consistency.
The section explains how to recognize internally developed intangible
assets, and how to ensure that all intangible assets (both separately acquired
and internally developed) are treated consistently. Standards related to
goodwill have not been changed. This section will become effective for us
beginning on January 1, 2009. We are currently assessing the impact this
change in accounting policy will have on our consolidated financial
statements.

Supplementary financial information

Page 31 includes supplementary financial information on cash costs. These
measures do not fall into the category of generally accepted accounting
principles.
We use unit cash cost information as a key performance indicator, both on
a segmented and consolidated basis. We have included cash costs as
supplementary information because we believe our key stakeholders use these
measures as a financial indicator of our profitability and cash flows before
the effects of capital investment and financing costs, such as interest.
Since cash costs are not recognized measures under Canadian generally
accepted accounting principles they should not be considered in isolation of
earnings or cash flows. There is also no standard way to calculate cash costs,
so they are not a reliable way to compare us to other companies.

About Inmet

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

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

Third quarter conference call

Will be held on
- Wednesday, October 29, 2008
- 8:30 a.m. Eastern Time
- webcast available at
www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2426160 or
www.inmetmining.com.

You can also dial in by calling
- Local or international: +1.416.644.3417
- Toll-free within North America: +1.800.732.9307

Starting 10:30 a.m. (ET) Wednesday October 29, 2008, conference call
replay will be available
- Local or international: +1.416.640.1917 passcode 21284506 followed by
the number sign.
- Toll-free within North America: +1.877.289.8525 passcode 21284506
followed by the number sign.



INMET MINING CORPORATION
Supplementary financial information

Cash costs
2008 For the nine months ended September 30
per ounce
per pound of copper of gold
--------------------------------------- ---------
TOTAL
CAYELI PYHASALMI OK TEDI COPPER TROILUS
--------------------------------------------------------------- ---------
(US dollars)

Direct production costs $1.10 $1.98 $1.30 $1.33 $585
Royalties and variable
compensation 0.15 - 0.09 0.10 -
Smelter processing
charges and freight 1.23 1.23 0.54 0.96 64
Metal credits (1.68) (3.68) (1.27) (1.88) (254)
--------------------------------------- ---------
Cash cost $0.80 ($0.47) $0.66 $0.51 $395
--------------------------------------- ---------
--------------------------------------- ---------

2007 For the nine months ended September 30
per ounce
per pound of copper of gold
--------------------------------------- ---------
TOTAL
CAYELI PYHASALMI OK TEDI COPPER TROILUS
--------------------------------------------------------------- ---------
(US dollars)

Direct production costs $0.97 $1.47 $1.08 $1.11 $488
Royalties and variable
compensation 0.15 - 0.06 0.09 -
Smelter processing
charges and freight 1.22 1.59 0.58 1.04 53
Metal credits (2.09) (4.48) (0.86) (2.05) (157)
--------------------------------------- ---------
Cash cost $0.25 ($1.42) $0.86 $0.19 $384
--------------------------------------- ---------
--------------------------------------- ---------

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

Reconciliation of cash costs to statements of earnings
2008 For the nine months ended September 30
per ounce
per pound of copper of gold
--------------------------------------- ---------
(millions of Canadian
dollars, except where TOTAL
otherwise noted) CAYELI PYHASALMI OK TEDI COPPER TROILUS
--------------------------------------------------------------- ---------
GAAP reference page 13 page 15 page 19 page 17

Direct production costs $69 $44 $66 $179 $66
Smelter processing
charges and freight 65 47 27 139 7
By product sales (98) (103) (61) (262) (28)
Adjust smelter
processing and freight,
and sales to production
basis 8 1 - 9 -
--------------------------------------- ---------
Operating costs net of
metal credits $44 ($11) $32 $65 $45
US $ to C$ exchange rate $1.02 $1.02 $1.02 $1.02 $1.02
Inmet's share of
production (000's) 53,700 21,900 47,300 122,900 110,800
--------------------------------------- ---------
Cash cost $0.80 ($0.47) $0.66 $0.51 $395
--------------------------------------- ---------
--------------------------------------- ---------

2007 For the nine months ended September 30
per ounce
per pound of copper of gold
--------------------------------------- ---------
(millions of Canadian
dollars, except where TOTAL
otherwise noted) CAYELI PYHASALMI OK TEDI COPPER TROILUS
--------------------------------------------------------------- ---------
GAAP reference page 13 page 15 page 19 page 17

Direct production costs $63 $37 $58 $155 $57
Smelter processing
charges and freight 75 47 35 157 6
By product sales (139) (117) (52) (308) (18)
Adjust smelter
processing and freight,
and sales to production
basis 15 (3) 4 16 (1)
--------------------------------------- ---------
Operating costs net of
metal credits $14 ($36) $45 $20 $44
US $ to C$ exchange rate $1.11 $1.11 $1.11 $1.11 $1.11
Inmet's share of
production (000's) 51,800 22,700 48,000 122,500 104,700
--------------------------------------- ---------
Cash cost $0.25 ($1.42) $0.86 $0.19 $384
--------------------------------------- ---------
--------------------------------------- ---------

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

Direct production costs $1.01 $1.84 $1.40 $1.30 $601
Royalties and variable
compensation 0.10 - 0.05 0.06 -
Smelter processing
charges and freight 0.86 1.31 0.48 0.79 64
Metal credits (0.98) (3.57) (1.29) (1.55) (233)
--------------------------------------- ---------
Cash cost $0.99 ($0.42) $0.64 $0.60 $432
--------------------------------------- ---------
--------------------------------------- ---------

2007 For the three months ended September 30
per ounce
per pound of copper of gold
--------------------------------------- ---------

CAYELI PYHASALMI OK TEDI TOTAL TROILUS
--------------------------------------------------------------- ---------
(US dollars per pound)

Direct production costs $1.01 $1.38 $1.23 $1.16 $489
Royalties and variable
compensation 0.16 - - 0.07 -
Smelter processing
charges and freight 1.29 1.46 0.57 1.05 43
Metal credits (2.26) (3.71) (0.86) (2.01) (165)
--------------------------------------- ---------
Cash cost $0.20 ($0.87) $0.94 $0.27 $367
--------------------------------------- ---------
--------------------------------------- ---------

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

Reconciliation of cash costs to statements of earnings
2008 For the three months ended September 30
per ounce
per pound of copper of gold
--------------------------------------- ---------
(millions of Canadian
dollars, except where TOTAL
otherwise noted) CAYELI PYHASALMI OK TEDI COPPER TROILUS
--------------------------------------------------------------- ---------
GAAP reference page 13 page 15 page 19 page 17

Direct production costs $26 $14 $21 $61 $24
Smelter processing
charges and freight 18 22 7 47 3
By product sales (20) (44) (21) (85) (9)
Adjust smelter
processing and freight,
and sales to production
basis (4) 5 3 4 (1)
--------------------------------------- ---------
Operating costs net of
metal credits $20 ($3) $10 $27 $17
US $ to C$ exchange rate $1.04 $1.04 $1.04 $1.04 $1.04
Inmet's share of
production (000's) 18,900 7,300 16,300 42,500 37,800
--------------------------------------- ---------
Cash cost $0.99 ($0.42) $0.64 $0.60 $432
--------------------------------------- ---------
--------------------------------------- ---------

2007 For the three months ended September 30
per ounce
per pound of copper of gold
--------------------------------------- ---------
(millions of Canadian
dollars, except where TOTAL
otherwise noted) CAYELI PYHASALMI OK TEDI COPPER TROILUS
--------------------------------------------------------------- ---------
GAAP reference page 13 page 15 page 19 page 17

Direct production costs $23 $11 $18 $52 $19
Smelter processing
charges and freight 19 13 9 41 1
By product sales (33) (29) (16) (78) (6)
Adjust smelter
processing and freight,
and sales to production
basis (5) (2) 4 (3) -
--------------------------------------- ---------
Operating costs net of
metal credits $4 ($7) $15 $12 $14
US $ to C$ exchange rate $1.04 $1.04 $1.04 $1.04 $1.04
Inmet's share of
production (000's) 17,400 7,600 15,200 40,200 36,400
--------------------------------------- ---------
Cash cost $0.20 ($0.87) $0.94 $0.27 $367
--------------------------------------- ---------
--------------------------------------- ---------



INMET MINING CORPORATION
Quarterly review
(unaudited)

Latest Four Quarters
-------------------------------------------------------------------------
2008 2008 2008 2007
(thousands of Canadian dollars, Third Second First Fourth
except per share amounts) quarter quarter quarter quarter
-------------------------------------------------------------------------
STATEMENTS OF EARNINGS
Gross sales $ 247,495 $ 281,463 $ 276,281 $ 224,773
Smelter processing charges
and freight (49,502) (53,209) (44,157) (43,902)
Cost of sales (84,948) (89,893) (79,246) (78,809)
Depreciation (11,395) (9,195) (9,170) (9,480)
-------------------------------------------
101,650 129,166 143,708 92,582
Corporate development and
exploration (3,548) (2,483) (2,618) (3,510)
General and administration (3,411) (2,790) (3,648) (12,622)
Investment and other income
(expense) (5,467) (11,358) 14,754 5,968
Interest expense (476) (471) (447) (407)
Capital tax expense (125) (124) (126) 212
Income tax expense (17,379) (44,333) (44,744) (18,551)
Non-controlling interest 3,813 98 (205) (27)
-------------------------------------------
Net income $ 75,057 $ 67,705 $ 106,674 $ 63,645
-------------------------------------------
Net income per common share $ 1.55 $ 1.40 $ 2.21 $ 1.32
-------------------------------------------
Diluted net income per
common share $ 1.55 $ 1.40 $ 2.21 $ 1.32
-------------------------------------------



Previous Four Quarters
-------------------------------------------------------------------------
2007 2007 2007 2006
(thousands of Canadian dollars, Third Second First Fourth
except per share amounts) quarter quarter quarter quarter
-------------------------------------------------------------------------
STATEMENTS OF EARNINGS
Gross sales $ 272,293 $ 320,018 $ 286,614 $ 258,911
Smelter processing charges
and freight (42,557) (55,413) (64,606) (65,005)
Cost of sales (72,057) (78,181) (79,377) (67,868)
Depreciation (8,739) (8,039) (9,415) (9,057)
-------------------------------------------
148,940 178,385 133,216 116,981
Corporate development and
exploration (2,475) (2,086) (1,012) (4,136)
General and administration (2,674) (2,162) (2,840) (6,128)
Investment and other income 9,224 13,665 7,597 17,972
Interest expense (424) (424) (438) (425)
Capital tax (expense)
recovery (273) (274) (274) -
Income tax expense (37,649) (48,509) (35,376) (26,679)
Non-controlling interest 167 (545) 205 (165)
-------------------------------------------
Net income $ 114,836 $ 138,050 $ 101,078 $ 97,420
-------------------------------------------
Net income per common share $ 2.38 $ 2.86 $ 2.09 $ 2.02
-------------------------------------------
Diluted net income per
common share $ 2.37 $ 2.86 $ 2.09 $ 2.02
-------------------------------------------



INMET MINING CORPORATION
Consolidated balance sheets

September 30 December 31
(thousands of Canadian dollars) 2008 2007
-------------------------------------------------------------------------
(unaudited)
Assets

Current assets:
Cash and short-term investments (note 7) $636,283 $840,823
Restricted cash (note 8) 7,294 1,569
Accounts receivable 125,707 131,197
Inventories (note 2) 64,851 52,725
Future income tax asset 13,950 14,515
-------------------------
848,085 1,040,829

Restricted cash (note 8) 52,093 37,205
Property, plant and equipment 1,605,204 870,965
Investments (note 9) 32,945 32,266
Future income tax asset 11,274 7,884
Derivatives (note 10) - 33,565
Other assets 20,019 25,751
-------------------------
$2,569,620 $2,048,465
-------------------------------------------------------------------------

Liabilities

Current liabilities:
Accounts payable and accrued liabilities $186,247 $149,197
Taxes payable 44,715 23,603
Current portion of long-term debt 42,130 12,971
-------------------------
273,092 185,771

Long-term debt (note 11) 353,421 234,317
Reclamation liabilities (note 12) 97,021 84,017
Derivatives (note 10) 13,355 43,960
Other liabilities 24,365 19,249
Future income tax liabilities 24,656 37,084
Non-controlling interest (note 16) 70,172 51,574
-------------------------
856,082 655,972
-------------------------

Commitments (note 13)

Shareholders' equity

Share capital 337,464 337,464
Contributed surplus 62,087 60,722
Stock based compensation 1,301 1,085
Retained earnings 1,319,370 1,076,958
Accumulated other comprehensive income (loss)
(note 14) (6,684) (83,736)
-------------------------

1,713,538 1,392,493
-------------------------

$2,569,620 $2,048,465
-------------------------------------------------------------------------
(see accompanying notes)



INMET MINING CORPORATION
Segmented balance sheets


2008 As at September 30

(unaudited) CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Assets
Cash and short-term
investments $294,862 $187,574 $77,105 $ -
Other current assets 13,551 45,545 50,011 23,921
Restricted cash 20,093 - 1,798 -
Property, plant and
equipment 408,510 152,024 65,392 23,546
Investments 32,945 - - -
Derivatives - - - -
Other assets 17,558 441 - 6,289
----------------------------------------------
$787,519 $385,584 $194,306 $53,756
----------------------------------------------

Liabilities
Current liabilities $45,065 $53,931 $15,943 $9,924
Long-term debt 17,266 - - -
Reclamation liabilities 24,121 8,321 14,181 7,708
Derivatives - - - -
Other liabilities 4,954 5,585 - 872
Future income tax
liabilities - 3,879 7,597 -
Non-controlling interest 15,355 - - -
----------------------------------------------
$106,761 $71,716 $37,721 $18,504
----------------------------------------------


2008 As at September 30

(unaudited) OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain)

Assets
Cash and short-term
investments $53,504 $23,238 $636,283
Other current assets 33,304 45,470 211,802
Restricted cash 14,422 15,780 52,093
Property, plant and
equipment 86,783 868,949 1,605,204
Investments - - 32,945
Derivatives - - -
Other assets 3,620 3,385 31,293
---------------------- -----------
$191,633 $956,822 $2,569,620
---------------------- -----------

Liabilities
Current liabilities $28,906 $119,323 $273,092
Long-term debt - 336,155 353,421
Reclamation liabilities 21,682 21,008 97,021
Derivatives 4,274 9,081 13,355
Other liabilities 1,768 11,186 24,365
Future income tax
liabilities 780 12,400 24,656
Non-controlling interest - 54,817 70,172
---------------------- -----------
$57,410 $563,970 $856,082
---------------------- -----------



2007 As at December 31
CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Assets
Cash and short-term
investments $359,359 $333,671 $111,492 $ -
Other current assets 23,455 29,384 55,069 23,644
Restricted cash 14,444 - - -
Property, plant and
equipment 629 115,064 63,147 28,413
Investments 32,266 - - -
Derivatives - - - -
Other assets 22,343 441 - 6,289
----------------------------------------------
$452,496 $478,560 $229,708 $58,346
----------------------------------------------

Liabilities
Current liabilities $16,948 $39,161 $14,560 $11,972
Long-term debt 16,267 - - -
Reclamation liabilities 24,393 3,169 13,104 7,662
Derivatives - - - 26,889
Other liabilities 5,057 4,787 - -
Future income tax
liabilities - 17,723 7,393 -
Non-controlling interest - - - -
----------------------------------------------
$62,665 $64,840 $35,057 $46,523
----------------------------------------------


2007 As at December 31
OK TEDI LAS CRUCES TOTAL
------------------------------------------------- ----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain)

Assets
Cash and short-term
investments $13,473 $22,828 $840,823
Other current assets 38,162 30,292 200,006
Restricted cash 11,836 10,925 37,205
Property, plant and
equipment 63,655 600,057 870,965
Investments - - 32,266
Derivatives - 33,565 33,565
Other assets 2,101 2,461 33,635
---------------------- -----------
$129,227 $700,128 $2,048,465
---------------------- -----------

Liabilities
Current liabilities $21,487 $81,643 $185,771
Long-term debt - 218,050 234,317
Reclamation liabilities 19,708 15,981 84,017
Derivatives 9,034 8,037 43,960
Other liabilities 1,412 7,993 19,249
Future income tax
liabilities - 11,968 37,084
Non-controlling interest - 51,574 51,574
---------------------- -----------
$51,641 $395,246 $655,972
---------------------- -----------



INMET MINING CORPORATION
Consolidated statements of earnings
(unaudited)

(thousands of Canadian Three Months Ended Nine Months Ended
dollars except per September 30 September 30
share amounts) 2008 2007 2008 2007
--------------------------------------------------- ---------------------

Gross sales $247,495 $272,293 $805,239 $878,925

Smelter processing charges
and freight (49,502) (42,557) (146,868) (162,576)

Cost of sales (84,948) (72,057) (254,087) (229,615)

Depreciation (11,395) (8,739) (29,760) (26,193)

--------------------------------------------------- ---------------------
101,650 148,940 374,524 460,541
Corporate development and
exploration (3,548) (2,475) (8,649) (5,573)

General and administration (3,411) (2,674) (9,849) (7,676)

Investment and other income
(loss) (note 15) (5,467) 9,224 (2,071) 30,486

Interest expense (476) (424) (1,394) (1,286)

Capital tax expense (125) (273) (375) (821)

Income tax expense (note 17) (17,379) (37,649) (106,456) (121,534)

Non-controlling interest 3,813 167 3,706 (173)

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

Net income $75,057 $114,836 $249,436 $353,964
--------------------------------------------------- ---------------------

Basic net income per common
share (note 18) $1.55 $2.38 $5.17 $7.33
--------------------------------------------------- ---------------------

Diluted net income per common
share (note 18) $1.55 $2.37 $5.16 $7.32
--------------------------------------------------- ---------------------

Weighted average shares
outstanding (000's) 48,282 48,278 48,282 48,278
--------------------------------------------------- ---------------------
(see accompanying notes)



INMET MINING CORPORATION
Segmented statements of earnings
(unaudited)

2008 For the nine months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Gross sales $ - $277,709 $183,851 $104,860
Smelter processing
charges and freight - (65,121) (47,339) (7,149)
Cost of sales (1,464) (73,369) (44,901) (68,793)
Depreciation - (8,298) (6,725) (6,285)
-----------------------------------------------
(1,464) 130,921 84,886 22,633

Corporate development
and exploration (6,507) (278) (1,801) (63)
General and administration (9,849) - - -
Investment and other
income (expense) 8,483 2,140 (228) 4,083
Interest expense (1,394) - - -
Capital tax expense (375) - - -
Income tax (expense)
recovery (8,060) (34,207) (18,866) -
Non-controlling interest - - - -
-----------------------------------------------

Net income (loss) ($19,166) $98,576 $63,991 $26,653
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Gross sales $238,819 $ - $805,239
Smelter processing
charges and freight (27,259) - (146,868)
Cost of sales (65,560) - (254,087)
Depreciation (8,452) - (29,760)
------------------------------------------------- -----------
137,548 - 374,524
Corporate development
and exploration - - (8,649)
General and administration - - (9,849)
Investment and other
income (expense) 241 (16,790) (2,071)
Interest expense - - (1,394)
Capital tax expense - - (375)
Income tax (expense)
recovery (50,324) 5,001 (106,456)
Non-controlling interest - 3,706 3,706
------------------------------------------------- -----------
Net income (loss) $87,465 ($8,083) $249,436
------------------------------------------------- -----------


2007 For the nine months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Gross sales $ - $337,606 $201,574 $81,061
Smelter processing
charges and freight - (74,944) (46,697) (6,191)
Cost of sales (1,462) (68,686) (37,886) (57,887)
Depreciation - (6,222) (6,558) (7,500)
-----------------------------------------------
(1,462) 187,754 110,433 9,483

Corporate development
and exploration (3,152) (1,160) (1,571) 310
General and
administration (7,676) - - -
Investment and other
income (expense) 28,360 (1,417) - 4,188
Interest expense (1,286) - - -
Capital tax expense (821) - - -
Income tax expense (1,157) (40,489) (24,711) -
Non-controlling interest - - - -
-----------------------------------------------
Net income $12,806 $144,688 $84,151 $13,981
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Gross sales $258,684 $ - $878,925
Smelter processing
charges and freight (34,744) - (162,576)
Cost of sales (63,694) - (229,615)
Depreciation (5,913) - (26,193)
----------------------- -----------
154,333 - 460,541

Corporate development
and exploration - - (5,573)
General and
administration - - (7,676)
Investment and other
income (expense) (1,492) 847 30,486
Interest expense - - (1,286)
Capital tax expense - - (821)
Income tax expense (54,923) (254) (121,534)
Non-controlling interest - (173) (173)
----------------------- -----------

Net income $97,918 $420 $353,964
----------------------- -----------


INMET MINING CORPORATION
Segmented statements of earnings
(unaudited)

2008 For the three months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Gross sales $ - $78,780 $67,694 $35,438
Smelter processing charges
and freight - (17,543) (21,958) (2,541)
Cost of sales (476) (25,864) (13,733) (24,260)
Depreciation - (3,369) (2,343) (2,149)
-----------------------------------------------
(476) 32,004 29,660 6,488

Corporate development and
exploration (2,695) (182) (620) (51)
General and administration (3,411) - - -
Investment and other
income (expense) 8,284 (1,798) (228) 1,361
Interest expense (476) - - -
Capital tax expense (125) - - -
Income tax (expense)
recovery (2,526) (6,428) (6,418) -
Non-controlling interest - - - -
-----------------------------------------------
Net income (loss) ($1,425) $23,596 $22,394 $7,798
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Gross sales $65,583 $ - $247,495
Smelter processing charges
and freight (7,460) - (49,502)
Cost of sales (20,615) - (84,948)
Depreciation (3,534) - (11,395)
----------------------- -----------
33,974 - 101,650

Corporate development and
exploration - - (3,548)
General and administration - - (3,411)
Investment and other
income (expense) 4,027 (17,113) (5,467)
Interest expense - - (476)
Capital tax expense - - (125)
Income tax (expense)
recovery (7,174) 5,167 (17,379)
Non-controlling interest - 3,813 3,813
----------------------- -----------

Net income (loss) $30,827 ($8,133) $75,057
----------------------- -----------


2007 For the three months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Gross sales $ - $107,664 $60,427 $24,970
Smelter processing
charges and freight - (19,474) (12,983) (1,478)
Cost of sales (619) (22,958) (11,579) (17,755)
Depreciation - (1,654) (1,764) (2,784)
-----------------------------------------------
(619) 63,578 34,101 2,953

Corporate development
and exploration (1,464) (300) (552) (159)
General and
administration (2,674) - - -
Investment and other
income (expense) 7,927 164 - 3,397
Interest expense (424) - - -
Capital tax expense (273) - - -
Income tax (expense)
recovery (386) (13,055) (7,425) -
Non-controlling interest - - - -
-----------------------------------------------

Net income $2,087 $50,387 $26,124 $6,191
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Gross sales $79,232 $ - $272,293
Smelter processing
charges and freight (8,622) - (42,557)
Cost of sales (19,146) - (72,057)
Depreciation (2,537) - (8,739)
----------------------- -----------
48,927 - 148,940

Corporate development
and exploration - - (2,475)
General and
administration - - (2,674)
Investment and other
income (expense) (1,492) (772) 9,224
Interest expense - - (424)
Capital tax expense - - (273)
Income tax (expense)
recovery (17,015) 232 (37,649)
Non-controlling interest - 167 167
----------------------- -----------

Net income $30,420 ($373) $114,836
----------------------- -----------



INMET MINING CORPORATION
Consolidated statements of cash flows
(unaudited)
Three Months Ended Nine Months Ended
(thousands of Canadian September 30 September 30
dollars) 2008 2007 2008 2007
-------------------------------------------------------------------------

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

Net income $75,057 $114,836 $249,436 $353,964
Add (deduct) items not
affecting cash:
Gain on disposition of
investments - - (256) (11,730)
Depreciation 11,395 8,739 29,760 26,193
Future income tax 2,126 2,873 (1,930) (1,507)
Accretion expense on
reclamation liabilities 1,085 907 3,229 2,710
Non-controlling interest (3,813) (167) (3,706) 173
Foreign exchange loss 11,257 2,397 30,147 5,834
Other 1,704 897 5,169 (814)
Settlement of gold forward
contracts (note 10) (12,399) - (12,399) -
Reclamation costs (638) (946) (1,462) (1,950)
Net change in non-cash
working capital (note 6) 12,031 (21,221) (4,475) (21,847)
--------------------------------------------
97,805 108,315 293,513 351,026
--------------------------------------------

Cash provided by (used in)
investing activities

Acquisition of Petaquilla
Copper, net of cash
acquired (note 4) (336,911) - (336,911) -
Capital spending (94,371) (117,989) (326,813) (252,003)
Loans to other Petaquilla
shareholders (9,143) - (13,234) -
Investment in Petaquilla
prior to consolidation (8,412) - (12,167) -
Disposition of investments - - 1,521 50,170
Sale (purchase) of short-term
investments 29,254 (173,117) 204,239 (35,586)
Other - (553) - (43)
--------------------------------------------
(419,583) (291,659) (483,365) (237,462)
--------------------------------------------

Cash provided by (used in)
financing activities

Long-term debt:
Borrowings (note 11) - 35,929 106,240 73,938
Repayment (note 11) (13,871) (8,604) (13,871) (8,604)
Funding by non-controlling
shareholder 1,432 13,418 36,188 39,528
Settlement of foreign
currency forward
contract (note 10) - - 52,256 -
Financial assurance deposits (1,344) 4,764 (15,316) (12,651)
Dividends paid on common
shares - - (4,828) (4,827)
Subsidies received - - 3,233 -
Other (46) (1,514) (138) (4,085)
--------------------------------------------
(13,829) 43,993 163,764 83,299
--------------------------------------------

Cash assumed on consolidation
of Petaquilla 2,201 - 2,201 -
--------------------------------------------

Foreign exchange change on
cash held in foreign currency 18 (22,541) 23,586 (56,590)
--------------------------------------------

Increase (decrease) in cash (333,388) (161,892) (301) 140,273

Cash:
Beginning of period 855,592 686,775 522,505 384,610
--------------------------------------------
End of period 522,204 524,883 522,204 524,883

Short-term investments 114,079 289,701 114,079 289,701
--------------------------------------------
Cash and short-term
investments $636,283 $814,584 $636,283 $814,584
-------------------------------------------------------------------------
(see accompanying notes)

(1)Supplementary cash
flow information:

Cash interest paid $1,657 $3,187 $9,779 $5,568
Cash taxes paid $44,163 $50,830 $124,412 $115,569
--------------------------------------------



INMET MINING CORPORATION
Segmented statements of cash flows
(unaudited)

2008 For the nine months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Cash provided by (used in)
operating activities
Before net change in
non-cash working capital ($559) $103,176 $72,532 $25,282
Net change in non-cash
working capital (1,421) (13,531) 6,061 (4,123)
-----------------------------------------------
(1,980) 89,645 78,593 21,159
-----------------------------------------------
Cash provided by (used in)
investing activities
Acquisition of Petaquilla
Copper, net of cash
acquired (336,911) - - -
Capital spending (368) (30,945) (5,848) (1,357)
Disposition of
investments 1,521 - - -
Sale of short-term
investments 204,239 - - -
Loans to Petaquilla
shareholders (13,234) - - -
Investment in Petaquilla
prior to consolidation (12,167) - - -
-----------------------------------------------
(156,920) (30,945) (5,848) (1,357)
-----------------------------------------------

Cash provided by (used in)
financing activities (6,696) - (1,858) -
-----------------------------------------------

Cash assumed on
consolidation of MPSA 2,201 - - -
-----------------------------------------------

Foreign exchange change
on cash held in foreign
currency - 16,745 3,586 -
-----------------------------------------------

Intergroup funding
(distributions) 303,137 (221,542) (108,860) (19,802)
-----------------------------------------------

Increase (decrease) in
cash 139,742 (146,097) (34,387) -
Cash:
Beginning of period 41,041 333,671 111,492 -
-----------------------------------------------
End of period 180,783 187,574 77,105 -
Short-term investments 114,079 - - -
-----------------------------------------------
Cash and short-term
investments $294,862 $187,574 $77,105 $ -
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Cash provided by (used in)
operating activities
Before net change in
non-cash working capital $97,557 $ - $297,988
Net change in non-cash
working capital 8,539 - (4,475)
----------------------- -----------
106,096 - 293,513
----------------------- -----------
Cash provided by (used in)
investing activities
Acquisition of Petaquilla
Copper, net of cash
acquired - - (336,911)
Capital spending (26,653) (261,642) (326,813)
Disposition of
investments - - 1,521
Sale of short-term
investments - - 204,239
Loans to Petaquilla
shareholders - - (13,234)
Investment in Petaquilla
prior to consolidation - - (12,167)
----------------------- -----------
(26,653) (261,642) (483,365)
----------------------- -----------

Cash provided by (used in)
financing activities (1,258) 173,576 163,764
----------------------- -----------

Cash assumed on
consolidation of MPSA - - 2,201
----------------------- -----------

Foreign exchange change
on cash held in foreign
currency 2,476 779 23,586
----------------------- -----------

Intergroup funding
(distributions) (40,630) 87,697 -
----------------------- -----------

Increase (decrease) in
cash 40,031 410 (301)
Cash:
Beginning of period 13,473 22,828 522,505
----------------------- -----------
End of period 53,504 23,238 522,204
Short-term investments - - 114,079
----------------------- -----------
Cash and short-term
investments $53,504 $23,238 $636,283
----------------------- -----------


2007 For the nine months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Cash provided by (used in)
operating activities
Before net change in
non-cash working
capital $5,584 $158,070 $91,006 $16,324
Net change in non-cash
working capital (7,444) 5,863 12,673 (6,801)
-----------------------------------------------
(1,860) 163,933 103,679 9,523
-----------------------------------------------
Cash provided by (used in)
investing activities
Capital spending (145) (20,259) (2,071) (1,457)
Disposition of
investments 50,170 - - -
Sale (purchase) of
short-term investments (62,323) 16,575 - -
Other - - - (43)
-----------------------------------------------
(12,298) (3,684) (2,071) (1,500)
-----------------------------------------------
Cash provided by (used in)
financing activities (6,472) - - (3,000)
-----------------------------------------------

Foreign exchange change
on cash held in foreign
currency - (39,914) (7,268) -
------------------------ ----------------------
Intergroup funding
(distributions) 63,056 6,203 (104,649) (5,023)
-----------------------------------------------

Increase (decrease)
in cash 42,426 126,538 (10,309) -
Cash:
Beginning of period 39,899 159,195 119,260 -
-----------------------------------------------
End of period 82,325 285,733 108,951 -
Short-term investments 289,701 - - -
-----------------------------------------------

Cash and short-term
investments $372,026 $285,733 $108,951 $ -
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Cash provided by (used in)
operating activities
Before net change in
non-cash working
capital $101,889 $ - $372,873
Net change in non-cash
working capital (26,138) $ - (21,847)
----------------------- -----------
75,751 - 351,026
----------------------- -----------
Cash provided by (used in)
investing activities
Capital spending (21,414) (206,657) (252,003)
Disposition of
investments - - 50,170
Sale (purchase) of
short-term investments 10,162 - (35,586)
Other - - (43)
----------------------- -----------
(11,252) (206,657) (237,462)
----------------------- -----------
Cash provided by (used in)
financing activities (1,659) 94,430 83,299
----------------------- -----------

Foreign exchange change
on cash held in foreign
currency (8,348) (1,060) (56,590)
----------------------- -----------

Intergroup funding
(distributions) (52,281) 92,694 -
----------------------- -----------

Increase (decrease)
in cash 2,211 (20,593) 140,273
Cash:
Beginning of period 33,972 32,284 384,610
----------------------- -----------
End of period 36,183 11,691 524,883
Short-term investments - - 289,701
----------------------- -----------
Cash and short-term
investments $36,183 $11,691 $814,584
----------------------- -----------


INMET MINING CORPORATION
Segmented statements of cash flows
(unaudited)

2008 For the three months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Cash provided by (used in)
operating activities
Before net change in
non-cash working capital $1,414 $25,060 $26,226 $2,389
Net change in non-cash
working capital (3,173) 14,633 1,763 4,198
-----------------------------------------------
(1,759) 39,693 27,989 6,587
-----------------------------------------------
Cash provided by (used in)
investing activities
Acquisition of Petaquilla
Copper, net of cash
acquired (336,911) - - -
Capital spending (318) (10,690) (2,490) (1,078)
Purchase of short-term
investments 29,254 - - -
Loans to Petaquilla
shareholders (9,143) - - -
Investment in Petaquilla
prior to consolidation (8,412) - - -
-----------------------------------------------
(325,530) (10,690) (2,490) (1,078)
-----------------------------------------------

Cash provided by (used in)
financing activities (179) - (8) -
-----------------------------------------------

Cash assumed on
consolidation of Petaquilla 2,201 - - -
-----------------------------------------------

Foreign exchange change
on cash held in foreign
currency - 7,228 (4,945) -
-----------------------------------------------

Intergroup funding
(distributions) (319) 3,490 (5,495) (5,509)
-----------------------------------------------

Increase (decrease)
in cash (325,586) 39,721 15,051 -
Cash:
Beginning of period 506,369 147,853 62,054 -
-----------------------------------------------
End of period 180,783 187,574 77,105 -
Short-term investments 114,079 - - -
-----------------------------------------------

Cash and short-term
investments $294,862 $187,574 $77,105 $ -
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Cash provided by (used in)
operating activities
Before net change in
non-cash working capital $30,685 $ - $85,774
Net change in non-cash
working capital (5,390) - 12,031
----------------------- -----------
25,295 - 97,805
----------------------- -----------
Cash provided by (used in)
investing activities
Acquisition of Petaquilla
Copper, net of cash
acquired - - (336,911)
Capital spending (7,802) (71,993) (94,371)
Purchase of short-term
investments - - 29,254
Loans to Petaquilla
shareholders - - (9,143)
Investment in Petaquilla
prior to consolidation - - (8,412)
----------------------- -----------
(7,802) (71,993) (419,583)
----------------------- -----------

Cash provided by (used in)
financing activities (642) (13,000) (13,829)
----------------------- -----------

Cash assumed on
consolidation of Petaquilla - - 2,201
----------------------- -----------

Foreign exchange change
on cash held in foreign
currency 1,498 (3,763) 18
----------------------- -----------

Intergroup funding
(distributions) 350 7,483 -
----------------------- -----------

Increase (decrease)
in cash 18,699 (81,273) (333,388)
Cash:
Beginning of period 34,805 104,511 855,592
----------------------- -----------
End of period 53,504 23,238 522,204
Short-term investments - - 114,079
----------------------- -----------

Cash and short-term
investments $53,504 $23,238 $636,283
----------------------- -----------


2007 For the three months ended September 30

CORPORATE CAYELI PYHASALMI TROILUS
-------------------------------------------------------------------------
(thousands of Canadian
dollars) (Turkey) (Finland) (Canada)

Cash provided by (used in)
operating activities
Before net change in
non-cash working
capital $4,192 $53,713 $28,053 $5,775
Net change in non-cash
working capital (748) (12,111) 24,633 (967)
-----------------------------------------------
3,444 41,602 52,686 4,808
-----------------------------------------------
Cash provided by (used in)
investing activities
Capital spending (14) (7,109) (1,347) (1,050)
Sale (purchase) of
short-term investments (190,024) (452) - -
Other (553) - - -
-----------------------------------------------
(190,591) (7,561) (1,347) (1,050)
-----------------------------------------------
Cash provided by (used in)
financing activities (673) - - (1,000)
-----------------------------------------------

-----------------------------------------------
Foreign exchange change
on cash held in foreign
currency - (18,399) (2,338) -
-----------------------------------------------

Intergroup funding
(distributions) (1,946) 4,560 (5,077) (2,758)
-----------------------------------------------

Increase (decrease)
in cash (189,766) 20,202 43,924 -
Cash:
Beginning of period 272,091 265,531 65,027 -
-----------------------------------------------
End of period 82,325 285,733 108,951 -
Short-term investments 289,701 - - -
-----------------------------------------------

Cash and short-term
investments $372,026 $285,733 $108,951 $ -
-----------------------------------------------


OK TEDI LAS CRUCES TOTAL
------------------------------------------------- -----------
(thousands of Canadian (Papua New
dollars) Guinea) (Spain)

Cash provided by (used in)
operating activities
Before net change in
non-cash working
capital $37,803 $ - $129,536
Net change in non-cash
working capital (32,028) - (21,221)
----------------------- -----------
5,775 - 108,315
----------------------- -----------
Cash provided by (used in)
investing activities
Capital spending (8,603) (99,866) (117,989)
Sale (purchase) of
short-term investments 17,359 - (173,117)
Other - - (553)
----------------------- -----------
8,756 (99,866) (291,659)
----------------------- -----------
Cash provided by (used in)
financing activities (809) 46,475 43,993
----------------------- -----------

----------------------- -----------
Foreign exchange change
on cash held in foreign
currency (2,212) 408 (22,541)
----------------------- -----------

Intergroup funding
(distributions) (26,107) 31,328 -
----------------------- -----------

Increase (decrease)
in cash (14,597) (21,655) (161,892)
Cash:
Beginning of period 50,780 33,346 686,775
----------------------- -----------
End of period 36,183 11,691 524,883
Short-term investments - - 289,701
----------------------- -----------

Cash and short-term
investments $36,183 $11,691 $814,584
----------------------- -----------



INMET MINING CORPORATION
Consolidated statements of retained earnings
(unaudited)

Three Months Ended Nine Months Ended
(thousands of Canadian September 30 September 30
dollars) 2008 2007 2008 2007
--------------------------------------------------- ---------------------

Retained earnings, beginning
of period, as previously
reported $1,244,313 $903,305 $1,076,958 $669,004
Adjustment for inventory
(note 2) - - (2,196) -
---------------------- ---------------------
Retained earnings,
restated 1,244,313 903,305 1,074,762 669,004

Net income 75,057 114,836 249,436 353,964

Dividends on common shares - - (4,828) (4,827)
--------------------------------------------------- ---------------------
Retained earnings, end
of period $1,319,370 $1,018,141 $1,319,370 $1,018,141
--------------------------------------------------- ---------------------
(see accompanying notes)



Consolidated statements of comprehensive income
(unaudited)

Three Months Ended Nine Months Ended
(thousands of Canadian September 30 September 30
dollars) 2008 2007 2008 2007
--------------------------------------------------- ---------------------

Net income $75,057 $114,836 $249,436 $353,964
---------------------- ---------------------

Other comprehensive income
(loss) for the period(1):
Changes in fair value of
gold forward sales
contracts 3,593 (3,411) (3,690) (2,559)
Changes in fair value of
interest rate swap contracts (445) (1,417) (327) (1,537)
Changes in fair value of
foreign exchange forward
contracts - 5,780 7,054 6,071
Changes in fair value of
investments (2,930) 1,074 (4,676) 20,382
Currency translation
adjustments (24,030) (39,269) 40,456 (99,203)

Reclassification to net
income of gains/losses
realized:
Gain on sale of investment - - (256) (11,730)
Troilus gold hedge loss 7,932 4,963 24,372 15,005
Amortization of deferred
Troilus gold hedges (1,361) (4,188) (4,083) (4,188)
Amortization of Las Cruces
foreign exchange forward
contract (3,195) - (3,195) -
Ok Tedi gold hedge loss - - 1,013 -
Foreign exchange loss on
reduction of net investment
in self-sustaining foreign
operations (note 14) - 1,580 20,384 3,311
---------------------- ---------------------
(20,436) (34,888) 77,052 (74,448)
---------------------- ---------------------

Comprehensive income $54,621 $79,948 $326,488 $279,516
-------------------------------------------------------------------------
(see accompanying notes)
(1) net of applicable income taxes 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 2007 Annual Review.

2. Changes in accounting policies

Effective January 1, 2008, we adopted CICA Handbook section 3031 -
Inventories on a prospective basis. This Section requires inventory
to be recorded at the lower of cost or net realizable value. 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, requires insurance and capital
spares be accounted for as property, plant and equipment 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.

As a result, certain administrative and other costs that were
previously included in the cost of inventory are now expensed as
incurred. Metal inventory and materials and supplies are measured at
the lower of weighted average cost and net realizable value.

This change in policy had the following impact on our 2008 interim
financial statements:

- decreased opening 2008 inventory by $5.2 million
- increased opening 2008 property, plant and equipment by
$2.4 million
- decreased opening 2008 future income tax liability by $0.6 million
- decreased opening 2008 retained earnings by $2.2 million.

3. Recently issued accounting pronouncement

Section 3064 - Goodwill and intangible assets

This section establishes standards for the recognition, measurement,
presentation and disclosure of goodwill subsequent to its initial
recognition and of intangible assets. This section replaces
Section 3062, Goodwill and Other Intangible Assets and Section 3450,
Research and Development Costs. Various changes have been made to
other sections of the CICA Handbook for consistency purposes. It
provides guidance for the recognition of internally developed
intangible assets and ensuring consistent treatment of all
intangible assets, whether separately acquired or internally
developed. Standards concerning goodwill are unchanged from the
standards included in the previous section. This section will become
effective for us beginning on January 1, 2009. We are currently
assessing the impact this change in accounting policy will have on
our consolidated financial statements.

4. Acquisition

On September 19, 2008, we acquired, through a wholly-owned
subsidiary, 95 percent of the outstanding common shares Petaquilla
Copper Ltd ("PTC"), a Canadian junior mining company listed on the
Toronto Stock Exchange. PTC's principal asset is a 26 percent
interest in the Petaquilla copper project for which we already
owned 48 percent.

For our interest, we paid $359 million in cash or $2.20 per PTC
common share.

We fully consolidated PTC's balance sheet effective September 19,
2008 with the five percent of PTC that we do not own represented as
non-controlling interest.

We have not yet finalized the allocation of purchase consideration
for this acquisition. The table below shows the preliminary fair
value of the assets we acquired and liabilities we assumed at the
date of acquisition, based on the consideration paid.

---------------------------------------------------------------------
(thousands of Canadian dollars)
---------------------------------------------------------------------
Consideration:
Cash paid $359,000
Transaction costs(1) 23,348
---------------------------------------------------------------------
Cost of acquisition $382,348
---------------------------------------------------------------------

---------------------------------------------------------------------
Assets acquired:
Cash $22,981
Other current assets $1,160
Property, plant and equipment and other assets 383,417
---------------------------------------------------------------------
407,558
Liabilities assumed:
Current liabilities (14,611)
Other liabilities (6,619)
Non-controlling interest (3,980)
---------------------------------------------------------------------
Net assets acquired $382,348
---------------------------------------------------------------------
(1) Includes Panamanian withholding taxes of $18 million as a
result of transfer of ownership of the shares

5. Consolidation of Petaquilla

As a result of our acquisition of PTC (note 4), we hold a 74 percent
interest in Petaquilla and have determined that we control this
entity. We fully consolidated Petaquilla's balance sheet effective
September 19, 2008. Prior to September 19, 2008, we equity accounted
for our investment in Petaquilla. 26 percent of the fair value of
Petaquilla has been recognized in the purchase accounting for PTC.
The remaining amount has been recognized at historical book values.

6. Statement of cash flows

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

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

(thousands) Corporate Cayeli Pyhasalmi Troilus
---------------------------------------------------------------------

Accounts receivable $10,753 $(1,188) $11,987 $533
Inventories - (992) (91) (1,194)
Accounts payable and
accrued liabilities (10,530) 1,335 891 (3,462)
Taxes (1,752) (12,718) (6,726) -
Other 108 32 - -
---------------------------------------------------------------------
$(1,421) $(13,531) $6,061 $(4,123)
---------------------------------------------------------------------

For the nine months ended September 30, 2008
----------------------------------------------------------
Las
(thousands) Ok Tedi Cruces Total
----------------------------------------------------------

Accounts receivable $18,254 $ - $40,339
Inventories (8,587) - (10,864)
Accounts payable and
accrued liabilities (1,408) - (13,174)
Taxes 375 - (20,821)
Other (95) - 45
----------------------------------------------------------
$8,539 $ - $(4,475)
----------------------------------------------------------

For the nine months ended September 30, 2007
---------------------------------------------------------------------

(thousands) Corporate Cayeli Pyhasalmi Troilus
---------------------------------------------------------------------

Accounts receivable $(2,753) $255 $17,819 $(5,072)
Inventories - 1,247 (704) (1,805)
Accounts payable and
accrued liabilities (1,125) (6,324) (186) 76
Taxes (3,548) 10,703 (4,256) -
Other (18) (18) - -
---------------------------------------------------------------------
$(7,444) $5,863 $12,673 $(6,801)
---------------------------------------------------------------------

For the nine months ended September 30, 2007
----------------------------------------------------------
Las
(thousands) Ok Tedi Cruces Total
----------------------------------------------------------

Accounts receivable $(22,800) - $(12,551)
Inventories 483 - (779)
Accounts payable and
accrued liabilities (2,789) - (10,288)
Taxes 421 - 3,320
Other (1,453) - (1,549)
----------------------------------------------------------
$(26,138) - $(21,847)
----------------------------------------------------------

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

(thousands) Corporate Cayeli Pyhasalmi Troilus
---------------------------------------------------------------------

Accounts receivable $1,921 $12,617 $2,625 $5,646
Inventories - 2,188 623 1,126
Accounts payable and
accrued liabilities (259) (631) 971 (2,995)
Taxes (4,890) 537 (2,456) -
Other 60 (78) - 421
---------------------------------------------------------------------
$(3,168) $14,633 $1,763 $4,198
---------------------------------------------------------------------

For the three months ended September 30, 2008
----------------------------------------------------------
Las
(thousands) Ok Tedi Cruces Total
----------------------------------------------------------

Accounts receivable $16,778 $ - $39,587
Inventories (7,085) - (3,148)
Accounts payable and
accrued liabilities 2,824 - (90)
Taxes (18,011) - (24,820)
Other 99 - 502
----------------------------------------------------------
$(5,395) $ - $12,031
----------------------------------------------------------

For the three months ended September 30, 2007
---------------------------------------------------------------------

(thousands) Corporate Cayeli Pyhasalmi Troilus
---------------------------------------------------------------------

Accounts receivable $(1,040) $(18,705) $23,421 $301
Inventories - 362 (445) (2,045)
Accounts payable and
accrued liabilities 771 3,881 (2,531) 777
Taxes (458) 2,346 4,188 -
Other (21) 5 - -
---------------------------------------------------------------------
$(748) $(12,111) $24,633 $(967)
---------------------------------------------------------------------

For the three months ended September 30, 2007
----------------------------------------------------------
Las
(thousands) Ok Tedi Cruces Total
----------------------------------------------------------

Accounts receivable $(7,884) $ - $(3,907)
Inventories (1,128) - (3,256)
Accounts payable and
accrued liabilities 2,896 - 5,854
Taxes (24,983) - (18,907)
Other (929) - (1,005)
----------------------------------------------------------
$(32,028) $ - $(21,221)
----------------------------------------------------------

7. Cash and short-term investments

At September 30, our cash and short-term investments are held in:

---------------------------------------------------------------------
September 30 December 31
(thousands) 2008 2007
---------------------------------------------------------------------
Cash:
Liquidity funds $224,190 $424,390
Term deposits 134,424 22,186
Corporate 16,000 -
Overnight deposits 17,778 50,822
Bankers' acceptances 10,475 -
Money market funds 75,538 18,531
Other 43,799 7,018
------------- ------------
522,204 522,947
Short-term investments:
Federal and crown corporation investments 22,031 317,876
Provincial short-term notes 15,624 -
Corporate 31,454 -
Bankers' acceptances 44,970 -
---------------------------------------------------------------------
114,079 317,876
---------------------------------------------------------------------
Total cash and short-term investments $636,283 $840,823
---------------------------------------------------------------------

8. Restricted cash

The table below shows our restricted cash balances.

---------------------------------------------------------------------
September 30 December 31
(thousands) 2008 2007
---------------------------------------------------------------------
Collateralized cash for letter of credit
facility - Corporate $17,580 $14,444
In trust for Ok Tedi reclamation 14,422 11,836
Collateralized cash for letters of
credit - Las Cruces 23,074 12,494
Collateralized cash for Pyhasalmi
reclamation 1,798 -
Collateralized cash for guarantee - PTC 2,513 -
---------------------------------------------------------------------
59,387 38,774
Less current portion:
Collateralized cash for letters of
credit - Las Cruces (7,294) (1,569)
---------------------------------------------------------------------
$52,093 $37,205
---------------------------------------------------------------------

Cash collateralized letters of credit for Las Cruces are for the
following:
- (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)5 million for a labour bond previously issued under Tranche
A of its credit facility. During the second quarter, Las Cruces
closed this portion of the credit facility and has secured the
labour bond with cash. The labour bond is fixed at (euro)5 million
for the life of the mine.
- (euro)4.8 million for dewatering and other purposes.

We acquired $2.5 million of restricted cash as part of PTC which
supports a guarantee of capital leases of one of its former related
parties.

9. Investments

The table below shows our investments.
-------------------------------------------------------------------------
September 30 December 31
(thousands) 2008 2007
-------------------------------------------------------------------------
Available-for-sale equity securities:
Premier Gold Mines Ltd. $20,696 $22,680
Asset-backed commercial paper - PTC 7,913 -
Other 4,336 9,586
-------------------------------------------------------------------------
$32,945 $32,266
-------------------------------------------------------------------------

As part of our acquisition of PTC (note 4), we acquired an investment
in asset-backed commercial paper (ABCP) issued by a number of trusts
with an original cost of $12.8 million. This investment matured in
early 2008 but as a result of liquidity issues in the ABCP market,
did not settle on maturity. This investment is included in the
ongoing Canadian ABCP restructuring that is expected to be finalized
in the fourth quarter of 2008. We have recognized this asset at an
estimated fair value of $7.9 million and have designated this
financial instrument as available-for-sale.

10. Derivatives

The table below shows the fair value of our derivatives.
-------------------------------------------------------------------------
September 30 December 31
2008 2007
(thousands) (fair value) (fair value)
-------------------------------------------------------------------------
Derivative asset:
Las Cruces currency forward sale $ - $33,565
-------------------------------------------------------------------------
Derivative liabilities:
Troilus gold forward sales $ - $26,889
Ok Tedi gold and copper forward sales 4,274 9,034
Las Cruces interest rate swaps 9,081 8,037
-------------------------------------------------------------------------
$13,355 $43,960
-------------------------------------------------------------------------

During the second quarter, Las Cruces' currency forward sale settled
and Las Cruces received (euro)32.6 million. As this hedge was highly
effective from inception to the date of settlement, we continue to
apply hedge accounting for this contract. The gain on settlement
continues to be deferred in Accumulated other comprehensive income
(note 14) and will be recognized in income as a reduction of interest
expense over the life of Las Cruces' credit facility - Tranche A.

During the third quarter, we settled Troilus' remaining gold forward
sales contracts for 24,250 ounces relating to gold shipments taking
place during the remainder of 2008. These contracts were settled at a
market price of US $819 per ounce, resulting in a cash payment of
$12.4 million. We applied hedge accounting up to the point of
settlement of these contracts therefore the settlement loss will be
recognized against gross sales at the same time as the originally
hedged gold shipments.

11. Long-term debt

-------------------------------------------------------------------------
September 30 December 31
(thousands) 2008 2007
-------------------------------------------------------------------------
Credit facility - Tranche A $222,900 $125,776
- Tranche B 49,434 34,656
Promissory note 17,266 16,267
Loans from non-controlling shareholder 105,951 70,589
-------------------------------------------------------------------------
395,551 247,288
Less current portion:
Credit facility - Tranche B (42,130) (12,971)
-------------------------------------------------------------------------
$353,421 $234,317
-------------------------------------------------------------------------

Credit facility

In the first half of 2008, Las Cruces borrowed an additional (euro)52
million under Tranche A, the US $215 million senior secured facility.
On June 30, 2008, Tranche A was fully drawn and was converted from a
euro-denominated loan to a US $215 million loan. Beginning July 1, we
revalued the loan to euros (the functional currency of Las Cruces).
Foreign exchange gains and losses on revaluations are reflected in
Investment and other income (note 15).

This quarter, there were no additional borrowings (2008 year to date
- (euro)18 million) under Tranche B, the (euro)69 million senior
secured bridge financing facility. During this quarter, Las Cruces
repaid (euro)9 million under Tranche B equal to value-added tax
refunds received.

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)3 million (2008 year to date
- (euro)73 million) of intercompany loan advances. These loans bear
interest at EURIBOR plus 6.1 percent and are due to be repaid on
February 25, 2020. The non-controlling portion of these loans, (euro)
71 million, is reflected in long-term debt at September 30, 2008.
Loans from non-controlling shareholders approximate fair value
because the loans accrue interest at prevailing market rates.

12. Reclamation liabilities

During the current year to date, we have recognized additional
liabilities of $4.6 million at Las Cruces as a result of development
activities that have taken place.

During the second quarter, we recognized additional liabilities of
$4.3 million at Cayeli primarily as a result of cost escalation.

13. Commitments

Our operations have the following capital commitments as at September
30, 2008:

- Ok Tedi has committed approximately $50.9 million (our
proportionate share is $9.2 million) to capital expenditures for
the mine waste management project and pit drainage project.
- Las Cruces has committed $57.3 million to engineering, procurement
and construction management and additional construction work
related to the development of the mine and process plant.
- Cayeli has committed $2.9 million for mine and mill equipment.
- Cerattepe has committed approximately $4.4 million for mine and
mill equipment.

14. Accumulated other comprehensive income (loss) (AOCI)

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

-------------------------------------------------------------------------
(thousands)
-------------------------------------------------------------------------
Unrealized losses on gold forward sales contracts (net of
tax of $2,169) $(31,951)
Deferred Troilus gold hedges 5,444
Unrealized gains on foreign exchange forward contract(1) 17,067
Unrealized losses on interest rate swap contracts(2) (4,097)
Unrealized gains on investments (net of tax of $2,951) 14,506
Currency translation adjustment (84,705)
-------------------------------------------------------------------------
AOCI, December 31, 2007 $(83,736)
Other comprehensive income for the nine months ending
September 30, 2008 77,052
-------------------------------------------------------------------------
AOCI, September 30, 2008 $(6,684)
-------------------------------------------------------------------------

AOCI September 30, 2008 comprises:
Unrealized losses on gold forward sales contracts (net of
tax of $1,207) $(10,256)
Deferred Troilus gold hedges 1,361
Unrealized gains on foreign exchange forward contract(3) 20,926
Unrealized losses on interest rate swap contract(4) (4,424)
Unrealized gains on investments (net of tax of $1,926) 9,574
Currency translation adjustment (23,865)
-------------------------------------------------------------------------
AOCI, September 30, 2008 $(6,684)
-------------------------------------------------------------------------

1. Net of tax of $10,448 and non-controlling interest of $7,315.
2. Net of tax of $2,510 and non-controlling interest of $1,756.
3. Net of tax of $14,786 and non-controlling interest of $10,350.
4. Net of tax of $2,710 and non-controlling interest of $1,895.

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

-------------------------------------------------------------------------
September 30 December 31
(thousands) 2008 2007
-------------------------------------------------------------------------
Pyhasalmi (euro functional currency) $(6,295) $(1,466)
Las Cruces (euro functional currency) 8,533 (1,919)
Cayeli (US dollar functional currency) (16,079) (65,822)
Ok Tedi (US dollar functional currency) (7,925) (15,498)
Petaquilla (US dollar functional currency) (2,099) -
-------------------------------------------------------------------------
$(23,865) $(84,705)
-------------------------------------------------------------------------

The US dollar to Canadian dollar exchange rate was $1.06 at September
30, 2008 and $0.99 at December 31, 2007. The euro to Canadian dollar
exchange rate was $1.50 at September 30, 2008 and $1.45 at December
31, 2007.

15. Investment and other income

Investment and other income are summarized as follows:

-------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
(thousands) 2008 2007 2008 2007
-------------------------------------------------------------------------
Interest income $6,308 $11,490 $21,994 $25,884
Foreign exchange gain
(loss) (16,553) (4,695) (28,268) (14,240)
Dividend and royalty
income 1,650 1,821 3,154 3,821
Gain on sale of Wolfden - - - 11,730
Other 3,128 1,028 1,049 3,291
-------------------------------------------------------------------------
$(5,467) $9,644 $(2,071) $30,486
-------------------------------------------------------------------------

Foreign exchange

A net foreign exchange loss of $16.6 million was recognized this
quarter due to revaluation of Las Cruces' US dollar-denominated debt
(note 11).

For the year, we also recognized $20.4 million in foreign exchange
losses from dividends received.

Gain on sale of Wolfden

In 2007, we sold our shares in Wolfden for cash proceeds of $51.4
million and recorded a gain of $11.7 million.

16. Non-controlling interest

The table below provides a breakdown of our non-controlling interest:

-----------------------------------------------
September 30 December 31
(thousands) 2008 2007
-----------------------------------------------
Las Cruces (30%) $54,817 $51,574
PTC (5%) 3,980 -
Petaquilla (26%) 11,375 -
-----------------------------------------------
$70,172 $51,574
-----------------------------------------------

17. Income tax expense (recovery)

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

For the nine months ended September 30, 2008
-------------------------------------------------------------------------
Las
(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Cruces Total
-------------------------------------------------------------------------
Current income
taxes $8,060 $36,565 $18,597 $49,447 $(4,283) $108,386
Future income
taxes - (2,358) 269 877 (718) (1,930)
-------------------------------------------------------------------------
$8,060 $34,207 $18,866 $50,324 $(5,001) $106,456
-------------------------------------------------------------------------

For the nine months ended September 30, 2007
-------------------------------------------------------------------------
Las
(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Cruces Total
-------------------------------------------------------------------------
Current income
taxes $1,157 $40,131 $24,548 $57,205 $- $123,041
Future income
taxes - 358 163 (2,282) 254 (1,507)
-------------------------------------------------------------------------
$1,157 $40,489 $24,711 $54,923 $254 $121,534
-------------------------------------------------------------------------

For the three months ended September 30, 2008
-------------------------------------------------------------------------
Las
(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Cruces Total
-------------------------------------------------------------------------
Current income
taxes $2,526 $8,093 $6,061 $2,856 $(4,283) $15,253
Future income
taxes - (1,665) 357 4,318 (884) 2,126
-------------------------------------------------------------------------
$2,526 $6,428 $6,418 $7,174 $(5,167) $17,379
-------------------------------------------------------------------------

For the three months ended September 30, 2007
-------------------------------------------------------------------------
Las
(thousands) Corporate Cayeli Pyhasalmi Ok Tedi Cruces Total
-------------------------------------------------------------------------
Current income
taxes $386 $14,059 $7,302 $13,029 $- $34,776
Future income
taxes - (1,004) 123 3,986 (232) 2,873
-------------------------------------------------------------------------
$386 $13,055 $7,425 $17,015 $(232) $37,649
-------------------------------------------------------------------------


18. Net income per share

The following tables show our calculation of basic and diluted net
income per share.

-------------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
(thousands) 2008 2007 2008 2007
-------------------------------------------------------------------------
Net income available to
common shareholders $75,057 $114,836 $249,436 $353,964
-------------------------------------------------------------------------

(thousands)
-------------------------------------------------------------------------
Weighted average common
shares outstanding 48,282 48,278 48,282 48,278
Plus incremental shares
from assumed conversions
deferred share units 78 74 78 74
-------------------------------------------------------------------------
Diluted weighted average
common shares outstanding 48,360 48,352 48,360 48,352
-------------------------------------------------------------------------

(Canadian dollars per share)
-------------------------------------------------------------------------
Basic net income per
common share $1.55 $2.38 $5.17 $7.33
Dilutive effect from assumed
conversions of deferred
share units per common
share - (0.01) (0.01) (0.01)
-------------------------------------------------------------------------
Diluted net income per
common share $1.55 $2.37 $5.16 $7.32
-------------------------------------------------------------------------

19. Subsequent event

On October 24, 2008 we learned that the Rize Administrative Court ruled
to cancel the Cerattepe operating licences. We will review the reasons
for the decision once we receive it and will discuss with the Turkish
Ministry of Energy and Natural Resources an appeal to the Supreme
Administrative Court of Turkey. We will continue to keep the project on
care and maintenance and also suspend all work on the project and re-
assess our development plans in light of the court decision.

Contact Information

  • Inmet Mining Corporation
    Richard Ross
    Chairman and Chief Executive Officer
    (416) 860-3974

    Inmet Mining Corporation
    Jochen Tilk
    President and Chief Operating Officer
    (416) 860-3972