Inmet Mining Corporation
TSX : IMN

Inmet Mining Corporation

October 27, 2008 08:45 ET

Inmet Announces Third Quarter Earnings of $1.10 Per Share Compared With $1.55 Per Share in the Third Quarter of 2008

TORONTO, ONTARIO--(Marketwire - Oct. 27, 2009) - Inmet Mining Corporation
(TSX:IMN) -



Third quarter highlights


- Comparable sales as lower sales volumes offset higher metal prices

Higher copper, zinc and gold prices increased sales by $35 million
this quarter compared to the same quarter in 2008. This was offset
somewhat by lower sales volumes, which reduced sales by $34 million,
of which $16 million was due to reduced pyrite sales volumes.

- Lower operating costs

Cost of sales in the third quarter of 2009 were $12 million lower
than they were last year mainly because Troilus is now only
processing stockpiles and costs are lower at Çayeli.

- Higher zinc production

Copper production this quarter was slightly lower than last year
because grades were lower. Zinc production was higher because grades
were higher. Gold production was lower because Troilus drew all of
its feed from its low grade stockpile.

- Las Cruces copper production was lower than planned

2,200 tonnes of copper cathode was produced during the third quarter.
This was significantly below our expectations, and was the result of
typical start-up issues encountered during the commissioning stage.
We do not expect any of these issues to affect the long-term
performance of the plant.

- Lower copper cash costs

Copper cash costs this quarter were US $0.46 per pound compared to
US $0.60 per pound in the third quarter of 2008. Lower unit direct
production costs and higher metal credits helped lower cash costs,
but this was partly offset by higher unit treatment charges. Cash
costs are a non-GAAP measure (see pages 30 to 33).

- Updated 2009 production outlook

We have revised our annual production objectives to reflect actual
production so far this year at Çayeli, Ok Tedi and Las Cruces. We now
expect to produce 87,000 tonnes of copper, 76,000 tonnes of zinc,
224,000 ounces of gold and 388,000 tonnes of pyrite in 2009.

- Las Cruces repaid its credit facility

On July 31, 2009, Las Cruces repaid the remaining $232 million
outstanding under its credit facility and cash collateralized
$32 million in letters of credit that had been secured under the
credit facility. This eliminated the Las Cruces project credit
facility and has significantly reduced long-term debt in our
consolidated financial statements. We recognized $21 million in net
gains from the settlement and the realization of hedge contracts
associated with the credit facility. We also realized a foreign
exchange loss of $14 million on US dollar cash we were holding in
Canada to repay the facility.

- Joint Development Agreement between Suez Energy Central America and
Cobre Panama

A joint development agreement was signed with Suez in July to develop
a coal fired power plant that will supply power to the project. The
agreement details how we will work together over the next few months
as the plant design is finalized. It also includes term sheets for a
prospective power purchase agreement.

Key financial data



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three months ended nine months ended
September 30 September 30
2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(thousands, except
per share amounts)

Sales
Gross sales $241,121 $247,495 -3% $693,315 $805,239 -14%

Net income
Net income $61,551 $75,057 -18% $179,406 $249,436 -28%
Net income per
share $1.10 $1.55 -29% $3.51 $5.17 -32%

Cash flow
Cash flow provided
by operating
activities $89,277 $97,805 -9% $196,970 $293,513 -33%
Cash flow provided
by operating
activities per
share(1) $1.59 $2.03 -22% $3.86 $6.08 -37%

Capital spending(2) $23,789 $94,371 -75% $204,911 $326,813 -37%
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OPERATING HIGHLIGHTS

Production(3)
Copper (tonnes) 19,900 20,800 -4% 59,200 59,400 -
Zinc (tonnes) 21,700 14,600 +49% 54,500 55,900 -3%
Gold (ounces) 48,200 63,200 -24% 177,600 179,400 -1%
Pyrite (tonnes) - 177,800 -100% 323,000 483,500 -33%

Cash costs(4)
Copper
(US $ per pound) $0.46 $0.60 -23% $0.54 $0.51 +6%
Gold
(US $ per ounce) $240 $432 -44% $171 $395 -57%
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----------------------------
as at as at
September 30 December 31
FINANCIAL CONDITION 2009 2008
----------------------------
Current ratio 4.8 to 1 2.4 to 1
Gross debt to total equity(5) 1% 19%
Net working capital balance (millions) $577 $475
Cash balance (millions) $497 $573
Shareholders' equity (millions) $2,196 $1,868
-------------------------------------------------------------------------
(1) Calculated as cash flow provided by operating activities divided by
average shares outstanding for the respective period.
(2) For the nine months of 2009 includes $108 million in spending at Las
Cruces and $70 million at Cobre Panama.
(3) Inmet's share.
(4) Cash cost per pound of copper and cash cost per ounce of gold are
non-GAAP measures - see Supplementary financial information on pages
30 to 33.
(5) Gross debt includes long-term debt and current portion of long-term
debt less the non-recourse note owing from Las Cruces to its non-
controlling shareholder.

Third quarter press release

Where to find it

Our financial results................................................ 4
Key changes in 2009.................................................. 4
Understanding our performance........................................ 5
Earnings from operations........................................... 7
Corporate costs.................................................... 11
Results of our operations............................................ 13
Çayeli............................................................. 14
Pyhäsalmi.......................................................... 16
Las Cruces......................................................... 18
Troilus............................................................ 20
Ok Tedi............................................................ 22
Status of our development project.................................... 24
Cobre Panama....................................................... 24
Managing our liquidity............................................... 25
Financial condition.................................................. 28
Accounting changes................................................... 30
Supplementary financial information.................................. 30
Quarterly review..................................................... 34
Consolidated financial statements.................................... 35

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, 2009.


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



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three months ended nine months ended
(thousands, except September 30 September 30
per share amounts) 2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
EARNINGS FROM
OPERATIONS(1)

Çayeli $28,789 $32,004 -10% $65,875 $130,921 -50%
Pyhäsalmi 20,800 29,660 -30% 39,126 84,886 -54%
Troilus 14,096 6,488 +117% 84,612 22,633 +274%
Ok Tedi 48,974 33,974 +44% 102,089 137,548 -26%
Other (409) (476) -14% (1,401) (1,464) -4%
-------------------------------------------------------------------------
112,250 101,650 +10% 290,301 374,524 -22%
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DEVELOPMENT AND
EXPLORATION
Corporate development
and exploration (1,963) (3,548) -45% (7,922) (8,649) -8%
-------------------------------------------------------------------------
CORPORATE COSTS
General and
administration (5,147) (3,411) +51% (14,056) (9,849) +43%
Investment and other
income 3,588 (5,467) +166% 8,851 (2,071) +527%
Asset impairment - - - (6,419) - +100%
Interest expense (496) (476) +4% (1,481) (1,394) +6%
Income and capital
taxes (39,988) (17,504) +128% (83,180) (106,831) -22%
Non-controlling
interest (6,693) 3,813 -276% (6,688) 3,706 -280%
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(48,736) (23,045) +111% (102,973) (116,439) -12%
-------------------------------------------------------------------------

Net income $61,551 $75,057 -18% $179,406 $249,436 -28%
-------------------------------------------------------------------------
Basic net income
per share $1.10 $1.55 -29% $3.51 $5.17 -32%
-------------------------------------------------------------------------
Diluted net income
per share $1.09 $1.55 -30% $3.50 $5.16 -32%
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Weighted average
shares outstanding 56,107 48,282 +16% 51,062 48,282 +6%
-------------------------------------------------------------------------
(1) Gross sales less smelter processing charges and freight, cost of
sales, depreciation and provisions for mine reclamation.

Key changes in 2009



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three nine
months ended months ended see
(millions) September 30 September 30 page
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EARNINGS FROM OPERATIONS
Sales
Higher (lower) copper and zinc prices
denominated in Canadian dollars $21 $(115) 7
Higher gold prices and other prices 15 66 7
Lower sales volumes (21) (32) 8
Lower pyrite sales, net of costs
to sell (20) (29) 8

Costs
Lower smelter processing charges and
freight 3 15 9
Lower operating costs, including costs
that vary with income and cash flows 15 24 10
Higher depreciation (3) (14) 10
Other 1 1
-------------------------------------------------------------------------
Higher (lower) earnings from
operations, compared to 2008 $11 $(84)

CORPORATE COSTS
Change in income tax expense from
change in earnings (22) 24 12
Lower interest income on cash balances (5) (18) 11
Foreign exchange loss on US dollar cash (14) (14) 11
Other foreign exchange changes 13 33 11
Settlement and realization of hedge
contracts 21 21 11
Change in non-controlling interest (11) (10)
Other (7) (22)
-------------------------------------------------------------------------
Lower net income, compared to 2008 $(14) $(70)
-------------------------------------------------------------------------

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).



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three months ended nine months ended
September 30 September 30
2009 2008 change 2009 2008 change
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US dollar metal prices
Copper (per pound) $2.83 $2.66 +6% $2.39 $3.52 -32%
Zinc (per pound) $0.83 $0.73 +14% $0.68 $0.93 -27%
Gold (per ounce) $957 $715 +34% $945 $736 +28%
-------------------------------------------------------------------------
Canadian dollar metal
prices
Copper (per pound) $3.11 $2.77 +12% $2.80 $3.59 -22%
Zinc (per pound) $0.91 $0.76 +20% $0.80 $0.95 -16%
Gold (per ounce) $1,050 $744 +41% $1,105 $751 +47%
-------------------------------------------------------------------------

There has been an overall improvement in base metal prices in 2009 so far,
and a steady increase in the price of gold.


Copper


The price of copper has increased progressively this year, doubling since
the beginning of 2009, and rising 25 percent this quarter, closing at US
$2.78 per pound.

The increase, which we believe is the combined result of economic optimism,
investment fund interest, record Chinese consumption and imports, and a
weaker US dollar, came about in spite of an increase in LME warehouse
inventories. LME copper inventories rose 30 percent this quarter, to 346,000
tonnes.


Zinc


Zinc prices increased by 23 percent this quarter, to US $0.87 per pound.


This increase, which we believe comes from expectations that output from
zinc smelters in China will be going down, is in spite of a reduction in
world demand for zinc and an increase in LME warehouse inventories. LME
zinc inventories went up by 24 percent this quarter, to 437,000 tonnes.


Gold


Gold prices continued to increase this quarter, closing September at US
$996 per ounce. This is a 7 percent increase from the June close and a
22 percent increase from the start of the year. In mid-September the
price reached US $1,018 per ounce - its highest level ever - mainly
because of the depreciating US dollar and renewed investor demand.


Pyrite


The economic downturn began to have a significant effect on demand for
sulphur and sulphuric acid near the end of 2008. Despite a slight increase
in price this quarter, the sulphur markets are still feeling the effects
of the downturn. We expect sulphur prices to continue to be lower over the
short to medium term, which will have a direct impact on pyrite prices.


Exchange rates


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



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three months ended nine months ended
September 30 September 30
2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Exchange rates
1 US$ to C$ $1.10 $1.04 +6% $1.17 $1.02 +15%
1 euro to C$ $1.57 $1.56 +1% $1.59 $1.55 +3%
1 euro to US$ $1.43 $1.51 -5% $1.37 $1.52 -10%
-------------------------------------------------------------------------

Our sales are affected by the conversion of US dollar revenue to Canadian
dollars. The Canadian dollar dropped 6 percent this quarter relative to the
US dollar, and 1 percent relative to the euro as compared to the same quarter
last year. The result was a $2 million increase in net income, as described
in the table below. In addition, because we were holding US dollar cash in
Canada in a period where the Canadian dollar strengthened, we also realized a
foreign exchange loss of $14 million in the quarter.



-------------------------------------------------------------------------
three months ended
(millions) September 30
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US dollar sales and costs translated into Canadian dollars
(reflected in Canadian dollar sales price) $4
Foreign exchange loss realized on US dollar cash held in Canada (14)
Other (2)
-------------------------------------------------------------------------
$(12)
-------------------------------------------------------------------------

Treatment charges up for copper and down 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.



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three months ended nine months ended
September 30 September 30
2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Treatment charges
Copper (per dry
metric tonne of
concentrate) $72 $41 +76% $77 $44 +75%
Zinc (per dry
metric tonne of
concentrate) $205 $341 -40% $221 $304 -27%
-------------------------------------------------------------------------
Price participation
Copper (per pound) $0.03 $0.06 -50% $0.03 $0.04 -25%
Zinc (per pound) $0.07 $0.04 +75% $0.03 $(0.01) +400%
-------------------------------------------------------------------------
Freight charges
Copper (per dry
metric tonne of
concentrate) $48 $58 -17% $40 $53 -25%
Zinc (per dry
metric tonne of
concentrate) $20 $31 -35% $27 $38 -29%
-------------------------------------------------------------------------

Statutory tax rates remain consistent


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



-------------------------------------------------------------------------
2009 2008 change
-------------------------------------------------------------------------
Statutory tax rates
Çayeli 24% 24% -
Pyhäsalmi 26% 26% -
Ok Tedi 37% 37% -
Las Cruces 30% 30% -
-------------------------------------------------------------------------

Earnings from operations


Earnings from operations include the following:



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three months ended nine months ended
September 30 September 30
(thousands) 2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Gross sales $241,121 $247,495 -3% $693,315 $805,239 -14%
Smelter processing
charges and
freight (41,607) (49,502) -16% (122,736) (146,868) -16%
Cost of sales:
Direct production
costs (69,698) (84,628) -18% (218,547) (244,238) -11%
Inventory changes 179 2,179 -92% (1,493) 3,375 -144%
Provisions for mine
rehabilitation and
other non-cash
charges (3,187) (2,499) +28% (16,397) (13,224) +24%
Depreciation (14,558) (11,395) +28% (43,841) (29,760) +47%
-------------------------------------------------------------------------
Earnings from
operations $112,250 $101,650 +10% $290,301 $374,524 -22%
-------------------------------------------------------------------------

Gross sales were down this year



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(thousands) 2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Gross sales by
operation
Çayeli $67,612 $78,780 -14% $191,344 $277,709 -31%
Pyhäsalmi 48,262 67,694 -29% 125,244 183,851 -32%
Troilus 34,279 35,438 -3% 158,676 104,860 +51%
Ok Tedi(1) 90,968 65,583 +39% 218,051 238,819 -9%
-------------------------------------------------------------------------
$241,121 $247,495 -3% $693,315 $805,239 -14%
-------------------------------------------------------------------------
Gross sales by
metal
Copper $138,345 $134,972 +2% $348,344 $464,670 -25%
Zinc 35,237 29,115 +21% 95,289 130,106 -27%
Gold 54,099 46,326 +17% 202,824 134,659 +51%
Other 13,440 37,082 -64% 46,858 75,804 -38%
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$241,121 $247,495 -3% $693,315 $805,239 -14%
-------------------------------------------------------------------------
(1) Our 18 percent share of Ok Tedi's sales.


Change in sales mainly the combined result of higher metals prices and
lower sales volumes

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three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Higher (lower) copper prices, denominated in
Canadian dollars $16 $(96)
Higher (lower) zinc prices, denominated in Canadian
dollars 5 (19)
Higher gold prices, denominated in Canadian dollars 14 65
Changes in other metal prices (7) (9)
Lower sales volumes (34) (53)
-------------------------------------------------------------------------
Lower gross sales, compared to 2008 $(6) $(112)
-------------------------------------------------------------------------

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 calculated using 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).

In the third quarter, we recorded $9 million in positive finalization
adjustments from second quarter sales.


At the end of this quarter, the following sales had not been settled:
- 28 million pounds of copper provisionally priced at US $2.79 per
pound
- 16 million pounds of zinc provisionally priced at US $0.89 per pound.

The finalization adjustment we record for these sales will depend on the
actual price when the sale settles, which can be up to five months from the
time we initially record it. We expect these sales to settle in the following
months:



-------------------------------------------------------------------------
(millions of pounds) copper zinc
-------------------------------------------------------------------------
October 2009 13 10
November 2009 7 6
December 2009 3 -
January 2010 5 -
-------------------------------------------------------------------------
Unsettled sales at September 30, 2009 28 16
-------------------------------------------------------------------------

Lower sales volumes


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



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Sales volumes
Copper (tonnes) 20,800 22,000 -5% 57,700 59,200 -3%
Zinc (tonnes) 17,600 17,000 +4% 54,900 62,500 -12%
Gold (ounces) 51,100 61,100 -16% 183,100 178,100 +3%
Pyrite (tonnes) 98,600 225,000 -56% 295,600 491,700 -40%
-------------------------------------------------------------------------

Production
-------------------------------------------------------------------------
three months ended nine months ended revised
Inmet's September 30 September 30 objective
share(1) 2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Copper (tonnes)
Ok Tedi 7,300 7,300 - 20,800 21,400 -3% 28,600
Çayeli 6,400 8,600 -26% 21,000 24,400 -14% 31,100
Pyhäsalmi 3,700 3,300 +12% 11,000 9,900 +11% 14,000
Las Cruces 1,500 - +100% 1,500 - +100% 7,700
Troilus 1,000 1,600 -38% 4,900 3,700 +32% 6,000
-------------------------------------------------------------------------
19,900 20,800 -4% 59,200 59,400 - 87,400
-------------------------------------------------------------------------
Zinc (tonnes)
Çayeli 13,600 8,900 +53% 37,100 34,900 +6% 50,200
Pyhäsalmi 8,100 5,700 +42% 17,400 21,000 -17% 25,800
-------------------------------------------------------------------------
21,700 14,600 +49% 54,500 55,900 -3% 76,000
-------------------------------------------------------------------------
Gold (ounces)
Troilus 26,200 38,000 -31% 111,000 110,800 - 130,000
Ok Tedi 22,000 25,200 -13% 66,600 68,600 -3% 93,600
-------------------------------------------------------------------------
48,200 63,200 -24% 177,600 179,400 -1% 223,600
-------------------------------------------------------------------------
Pyrite (tonnes)
Pyhäsalmi - 177,800 -100% 323,000 483,500 -33% 388,000
-------------------------------------------------------------------------
(1) Inmet's share represents 100 percent for Çayeli, Pyhäsalmi and
Troilus, 18 percent for Ok Tedi and 70 percent for Las Cruces.

Copper production this quarter was lower than the same quarter in 2008,
because metal grades at Çayeli and Troilus were lower. This was partly
offset by new production at Las Cruces and higher grades at Pyhäsalmi.

Zinc production was up mainly because zinc grades and recoveries at Çayeli
and Pyhäsalmi were higher.

Gold production was down because grades were lower at Troilus (as production
was drawn from its low grade stockpiles) and Ok Tedi.

We suspended pyrite production in the quarter because of low demand.


2009 outlook for sales


Our outlook for sales normally ties directly to our production outlook. We
have revised our annual production objectives because production so far
this year at Çayeli, Ok Tedi and Las Cruces has been lower than we expected.
Turn to Results of our operations starting on page 13 for an explanation for
each operation. We have reduced our production objectives overall from our
second quarter estimates, by 13,100 tonnes of copper, 1,900 tonnes of zinc,
6,400 ounces of gold and 23,000 tonnes of pyrite.

Our Canadian dollar sales revenues are affected by the US dollar denominated
metal price we receive, and the exchange rate between the US dollar and
Canadian dollar. Since the uncertainty of the markets makes it difficult to
forecast metal prices, we continue to focus on maximizing the efficiency of
our operations to remain competitive in any economic environment.


Lower smelter processing charges than last year



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(thousands) 2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Smelter processing
charges and freight
by operation
Çayeli $17,580 $17,543 - $55,094 $65,121 -15%
Pyhäsalmi 12,485 21,958 -43% 33,802 47,339 -29%
Troilus 2,272 2,541 -11% 10,990 7,149 +54%
Ok Tedi(1) 9,270 7,460 +24% 22,850 27,259 -16%
-------------------------------------------------------------------------
$41,607 $49,502 -16% $122,736 $146,868 -16%
-------------------------------------------------------------------------
Smelter processing
charges and freight
by metal
Copper $21,483 $19,728 +9% $59,826 $62,138 -4%
Zinc 11,962 17,551 -32% 38,930 62,002 -37%
Other 8,162 12,223 -33% 23,980 22,728 +6%
-------------------------------------------------------------------------
$41,607 $49,502 -16% $122,736 $146,868 -16%
-------------------------------------------------------------------------
Smelter processing
charges by type
and freight
Copper treatment
and refining
charges $8,657 $5,473 +58% $27,290 $16,101 +69%
Zinc treatment
charges 7,016 10,662 -34% 24,065 36,802 -35%
Copper price
participation 1,393 1,551 -10% 4,138 5,796 -29%
Zinc price
participation 2,669 1,445 +85% 3,505 (816) -530%
Content losses 12,217 11,392 +7% 33,741 43,752 -23%
Other 2,427 693 +250% 6,334 5,651 +12%
Freight 7,228 18,286 -60% 23,663 39,582 -40%
-------------------------------------------------------------------------
$41,607 $49,502 -16% $122,736 $146,868 -16%
-------------------------------------------------------------------------
(1) Our 18 percent share of Ok Tedi's smelter processing charges and
freight.

Copper treatment and refining charges are higher this year than they were in
2008 because contract terms with smelters are less favourable. Zinc treatment
charges are lower because contract terms are more favourable, and also for
the nine months of 2009 because sales volumes were down.


2009 outlook for smelter processing charges and freight


We do not expect any significant changes in pricing in the last quarter of
this year because the majority of our sales have set pricing under long-term
contracts. We should, however, see some benefit from a small number of copper
spot sales, since terms are more favourable now than they were earlier in the
year.

Las Cruces began producing copper in June. Its copper cathode production is
sold directly to copper fabricators, bypassing the smelters and eliminating
smelting and refining charges.

We expect our ocean freight costs to be about 20 percent lower than they were
in 2008 because of the general slowdown in global economic activity.


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



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(thousands) 2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Direct production
costs by operation
Çayeli $18,583 $22,622 -18% $58,889 $68,600 -14%
Pyhäsalmi 14,026 14,090 - 45,391 44,045 +3%
Troilus 12,671 23,787 -47% 43,588 66,079 -34%
Ok Tedi(1) 24,418 24,129 +1% 70,679 65,514 +8%
-------------------------------------------------------------------------
Total direct
production costs 69,698 84,628 -18% 218,547 244,238 -11%
Inventory changes (179) (2,179) -92% 1,493 (3,375) -144%
Reclamation, accretion
and other non-cash
expenses 3,187 2,499 +28% 16,397 13,224 +24%
-------------------------------------------------------------------------
Total cost of sales $72,706 $84,948 -14% $236,437 $254,087 -7%
-------------------------------------------------------------------------
(1) Our 18 percent share of Ok Tedi's direct production costs.

Direct production costs in 2009 were lower than they were last year mainly
because Troilus completed mining in April and began recovering ore from its
lower cost stockpiles. Çayeli has also seen the benefit of continued
efficiencies and lower labour costs from the drop in value of the Turkish
lira.


2009 outlook for cost of sales


We expect cost of sales to increase in the fourth quarter assuming we begin
commercial production at Las Cruces. The cost of consumables and energy
should remain at recent levels. The total amount we spend in Canadian dollars
will also be affected by the value of the US dollar and euro relative to the
Canadian dollar.


Depreciation was higher than last year



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(thousands) 2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Depreciation by
operation
Çayeli $2,980 $3,369 -12% $9,826 $8,298 +18%
Pyhäsalmi 1,473 2,343 -37% 6,237 6,725 -7%
Troilus 3,401 2,149 +58% 10,121 6,285 +61%
Ok Tedi 6,704 3,534 +90% 17,657 8,452 +109%
-------------------------------------------------------------------------
$14,558 $11,395 +28% $43,841 $29,760 +47%
-------------------------------------------------------------------------

Depreciation is higher than last year mainly because we started depreciating
the mine tailings management plant at Ok Tedi, as well as assets associated
with an increase in our asset retirement obligations at Troilus.


2009 outlook for depreciation


We expect depreciation to be between $60 and $70 million for 2009 depending
on when Las Cruces achieves commercial production.


Corporate costs


Corporate costs include general and administration costs, taxes, interest
and other income.



Investment and other income was higher due to the impact of repaying Las
Cruces' credit facility
-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(thousands) 2009 2008 2009 2008
-------------------------------------------------------------------------
Interest income $1,135 $6,308 $3,878 $21,994
Dividend and royalty income 300 1,650 985 3,154
Loss on recognition of
settlement of interest rate
swap contract (14,823) - (14,823) -
Gain on recognition of
settlement of foreign currency
forward contract 35,615 - 35,615 -
Foreign exchange gain (loss) (17,417) (16,553) (9,319) (28,268)
Other (1,222) 3,128 (7,485) 1,049
-------------------------------------------------------------------------
$3,588 $(5,467) $8,851 $(2,071)
-------------------------------------------------------------------------

Interest income is lower than last year because market yields this year
have been lower, and we have had a lower average cash balance.

Recognition of interest rate swap contract and foreign currency forward
contract

On July 31, 2009, we repaid 100 percent of Las Cruces' US dollar denominated
bank credit facility (see also Long-term debt repayments and settlement of
interest rate swap contract on page 27), and replaced it with intergroup debt
using the proceeds from our equity offering. Las Cruces terminated its
interest rate swap contracts on July 20, 2009 paying out $16 million for
early termination. This had the following effects on investment and other
income during the third quarter:


- when we converted the Las Cruces debt from euro to US dollars in
2008, Las Cruces settled a foreign exchange forward contract and
received proceeds of $52 million. We deferred the proceeds in
accumulated other comprehensive income, and have been amortizing it
to income over the term of the debt. When we repaid the debt, we
realized the remaining deferred gain of $36 million in investment and
other income.
- when we repaid the debt, we recorded the $15 million interest rate
swap loss that we had deferred in accumulated other comprehensive
income in investment and other income.

Foreign exchange gain (loss)


We have a foreign exchange gain or loss when:


- we revalue certain foreign denominated assets and liabilities
- we distribute funds from our self-sustaining operations and recognize
the foreign exchange we previously deferred on our original
investment and on funds as they accumulated.

Foreign exchange gains (losses) are a result of the following:



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(millions) 2009 2008 2009 2008
-------------------------------------------------------------------------
Revaluation of US dollar
denominated bank credit
facility at Las Cruces $(1,348) $(12,895) $2,460 $(12,895)
Revaluation of US dollar cash
held in Canada (13,976) 16 (14,395) (11)
Distribution of funds from
subsidiaries (1,439) - 2,473 (20,384)
Revaluation of short-term
foreign intergroup loans,
cash and other monetary items (654) (3,674) 143 5,022
-------------------------------------------------------------------------
$(17,417) $(16,553) $(9,319) $(28,268)
-------------------------------------------------------------------------

Revaluation of US dollar denominated bank credit facility at Las Cruces
-----------------------------------------------------------------------
These foreign exchange movements resulted when we revalued the US dollar
credit facility at Las Cruces into euros (its functional currency). We
replaced this credit facility with intergroup debt as of July 31, 2009. There
will be foreign exchange fluctuations on the intergroup debt, but these will
not appear on the financial statements because they will be eliminated when
consolidated.


Revaluation of US dollar cash held in Canada
--------------------------------------------
At June 30, we had US $229 million set aside to fund Las Cruces' repayment of
its credit facility. We transferred the cash to Las Cruces later in July, but
in that time the Canadian dollar increased in value, resulting in a foreign
exchange loss of $14 million.


2009 outlook for investment and other income


Investment and other income is affected by cash balances, interest rates and
exchange rates. We expect to repatriate funds only from Ok Tedi over the rest
of 2009. Because Ok Tedi distributes its earnings more frequently, the effect
of repatriation is normally not that significant.

At September 30, 2009, we held (euro)14 million in Canada that could be
affected by foreign exchange gains or losses.


Asset impairment


We made a decision in 2008 not to proceed with the Cerattepe project. All
work ceased on the project and we took a $34 million charge to write down the
assets to net realizable value. We took an additional impairment charge of $6
million in the first quarter of 2009, as well as a $6 million tax recovery.


Income tax expense was higher because of higher earnings at Ok Tedi



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(thousands) 2009 2008 change 2009 2008 change
-------------------------------------------------------------------------
Çayeli $5,641 $6,428 -12% $7,272 $34,207 -79%
Pyhäsalmi 4,339 6,418 -32% 6,644 18,866 -65%
Ok Tedi 18,924 7,174 +164% 37,933 50,324 -25%
Las Cruces 7,682 (5,167) -249% 7,949 (5,001) -259%
Corporate 2,658 2,526 +5% 22,388 8,060 +178%
-------------------------------------------------------------------------
$39,244 $17,379 +126% $82,186 $106,456 -23%
-------------------------------------------------------------------------
Consolidated
effective tax rate 37% 20% +17% 31% 30% +1%
-------------------------------------------------------------------------

Our tax expense changes as our earnings change. We also recorded a $6 million
tax recovery at Çayeli in the first quarter, related to the impairment on
Cerattepe.

The tax expense at Corporate is a provision for Quebec mining duties, as well
as a reduction in our future income tax asset to reflect Troilus' earnings.
We reduced our future income tax asset by $10 million for the nine months of
2009 and $1 million for the quarter. We also recorded Quebec mining duties of
$11 million for the nine months and $2 million for the quarter. The $14
million foreign exchange loss on the revaluation of the US dollars held in
Corporate was not tax effected because of tax losses in Canada.

The increase in the consolidated effective tax rate in the quarter is due to
three main reasons:


- the $14 million foreign exchange loss in Canada not tax effected
- $7 million of foreign exchange gains recorded in Las Cruces on the
new intergroup US dollar denominated debt which is taxed in Las
Cruces. The foreign exchange impact eliminates in the consolidated
financial statements
- in the third quarter of 2009 there is proportionately more income in
higher tax rate jurisdictions. This is exacerbated by a relatively
low effective tax rate at Ok Tedi in the third quarter of 2008 where
taxes payable were reduced by kina denominated foreign exchange
losses

2009 outlook for income tax expense


We are not expecting any further changes in statutory tax rates at our operations
this year. We do, however, expect to expense approximately $12 million in Quebec
mining duties, depending on Troilus' 2009 net income.


Results of our operations


2009 estimates


Our financial review by operation includes estimates for our 2009 operating
earnings and operating cash flows. We used our 2009 objectives for production
and cost per tonne of ore milled to build these estimates, along with the
following assumptions for the remaining three months of the year:



-------------------------------------------------------------------------
Copper price US $2.70 per pound
Zinc price US $0.75 per pound
Gold price US $960 per ounce
Copper treatment cost US $75 per tonne
Zinc treatment cost US $192 per tonne
US $ to C$ exchange rate $1.10
euro to C$ exchange rate $1.54
Working capital Assume no changes for the year
-------------------------------------------------------------------------

Çayeli



-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
-------------------------------------------------------------------------
2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Tonnes of ore
milled (000's) 290 259 +12% 851 817 +4% 1,170
Tonnes of ore
milled per day 3,200 2,800 +12% 3,100 3,000 +4% 3,200
-------------------------------------------------------------------------
Grades (percent)
copper 3.1 4.0 -23% 3.2 3.7 -14% 3.4
zinc 6.5 5.2 +25% 6.2 6.0 +3% 6.1
-------------------------------------------------------------------------
Mill recoveries
(percent)
copper 72 82 -12% 76 80 -5% 78
zinc 72 66 +9% 70 71 -1% 70
-------------------------------------------------------------------------
Production
(tonnes)
copper 6,400 8,600 -26% 21,000 24,400 -14% 31,100
zinc 13,600 8,900 +53% 37,100 34,900 +6% 50,200
-------------------------------------------------------------------------
Cost per tonne
of ore milled
(C$) $64 $87 -26% $69 $84 -18% $68
-------------------------------------------------------------------------

Production results surpass 2008 achievement and we are approaching our
2009 target

Ore processing at Çayeli exceeded our 2008 levels, which is a good
accomplishment given that 2008 was a record year. Mill throughput in the
quarter was slightly below our budget because of several small production
interruptions, mainly related to power supply interruptions and minor
equipment failures. Nonetheless, we expect to come close to our original 1.2
million annual throughput objective.

Copper grades this quarter and year to date were lower than last year, and
than plan. Interruptions in stope sequencing required us to mine 55 percent
secondary stopes this quarter, and higher proportions of production came
from the lower mine, which has lower grades.

Zinc grades were higher this quarter and for the year to date compared to
last year because of the sequence of stopes.

The effect was lower copper production and higher zinc production compared
to last year, both for the quarter and year to date.

Operating costs this quarter and year to date were lower than last year,
mainly because of lower labour costs, cost savings programs and a reduction
in the cost of key commodities, like copper sulphate and electricity.


2009 outlook for production and costs


Although copper grades and recoveries should improve in the fourth quarter,
we expect to mill 1.17 million tonnes of ore, and grades to average 3.4
percent for copper and 6.1 percent for zinc. Grades are lower than our
initial objectives. We have therefore lowered our annual production outlook
to 31,100 tonnes of copper and 50,200 tonnes of zinc.

Royalties have a significant effect on costs and are variable depending on
earnings. Cost per tonne of ore milled included $8 per tonne in royalties
in the third quarter and $5 per tonne year to date. We estimate that
royalties will be $3 per tonne out of our total 2009 objective of $68 per
tonne of ore milled, depending on metal prices.

The current three-year labour agreement with the union expired in May 2009,
and negotiations ended in the third quarter without reaching an agreement.
The government appointed a labour relations conciliator to examine the
positions of both sides and we await their report. Pay increases for the
Çayeli workers have historically been higher than Turkish inflation levels,
but we believe this is not sustainable. We will continue to manage labour
cost escalations to maintain our competitiveness and achieve a long term
improvement in our labour costs, recognizing that this position could
result in a labour disruption.


Financial review


Lower earnings because of lower sales volumes



-------------------------------------------------------------------------
(millions of Canadian three months nine months revised
dollars unless ended September 30 ended September 30 objective
otherwise stated) 2009 2008 2009 2008 2009
-------------------------------------------------------------------------
Sales analysis
Copper sales (tonnes) 6,800 9,900 20,100 23,300 31,100
Zinc sales (tonnes) 10,000 10,400 37,500 41,600 50,200
--------------------------------------------------
Gross copper sales $43 $59 $116 $180 $179
Gross zinc sales 19 17 63 87 89
Other metal sales 6 3 12 11 20
--------------------------------------------------
Gross sales 68 79 191 278 288
Smelter processing
charges and freight (18) (18) (55) (65) (83)
-------------------------------------------------------------------------
Net sales $50 $61 $136 $213 $205
-------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled
(thousands) 290 259 851 817 1,170
Direct production costs
($ per tonne) $64 $87 $69 $84 $68
-------------------------------------------------------------------------
Direct production costs $19 $23 $59 $69 $80
Change in inventory (1) 2 (1) 2 -
Depreciation and other
non-cash costs 3 4 12 11 18
-------------------------------------------------------------------------
Operating costs $21 $29 $70 $82 $98
-------------------------------------------------------------------------
Operating earnings $29 $32 $66 $131 $107
-------------------------------------------------------------------------
Operating cash flow $30 $40 $45 $90 $100
-------------------------------------------------------------------------

The objective for 2009 uses the assumptions listed on page 13.


The table below shows what contributed to the change in operating earnings
and operating cash flow between 2009 and 2008.



-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Higher (lower) metal prices, denominated in
Canadian dollars $8 $(53)
Lower sales volumes (14) (24)
(Higher) lower smelter processing charges (2) 3
(Higher) lower royalty (2) 2
Lower operating costs 7 8
Higher depreciation - (2)
Other - 1
-------------------------------------------------------------------------
Lower operating earnings, compared to 2008 $(3) $(65)
Lower tax expense because earnings were lower 1 19
Changes in working capital (see note 3 on page 45) (10) (2)
Other 2 3
-------------------------------------------------------------------------
Lower operating cash flow, compared to 2008 $(10) $(45)
-------------------------------------------------------------------------

Spending in 2009 will be limited to sustaining capital



-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Capital
spending $4,100 $4,600 -11% $10,600 $16,700 -37% $18,000
-------------------------------------------------------------------------

Capital spending in the quarter and year to September was for mine equipment
replacements, some mill upgrades and mine development.


2009 outlook for capital spending


For the remainder of the year, Çayeli expects to spend about $7 million for
equipment replacements and enhancements, and additional mine development.


Pyhäsalmi



-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Tonnes of ore
milled (000's) 344 359 -4% 1,048 1,050 - 1,390
Tonnes of ore
milled per day 3,700 3,900 -4% 3,800 3,800 - 3,800
-------------------------------------------------------------------------
Grades (percent)
copper 1.1 1.0 +10% 1.1 1.0 +10% 1.1
zinc 2.6 1.8 +44% 1.9 2.2 -14% 2.1
sulphur - 43.0 -100% 41.6 41.4 - 41
-------------------------------------------------------------------------
Mill recoveries
(percent)
copper 96 94 +2% 96 95 +1% 95
zinc 90 88 +2% 89 91 -2% 88
-------------------------------------------------------------------------
Production
(tonnes)
copper 3,700 3,300 +12% 11,000 9,900 +11% 14,000
zinc 8,100 5,700 +42% 17,400 21,000 -17% 25,800
pyrite - 177,800 -100% 323,000 483,500 -33% 388,000
-------------------------------------------------------------------------
Cost per tonne
of ore milled
(C$) $41 $39 +5% $43 $42 +2% $41
-------------------------------------------------------------------------

Higher zinc grades in the quarter increase zinc production


Pyhäsalmi maintained its strong production record in the third quarter of
2009, processing at an annualized rate of 1.4 million tonnes.

Copper production is higher this quarter and year to date, compared to last
year, mainly because grades are higher. Zinc production this quarter was
higher than planned and higher than the third quarter of 2008 because changes
in stope sequencing resulted in higher grades. We did not produce any pyrite
this quarter because of the continuing lack of demand. Pyhäsalmi sold 99,000
tonnes of pyrite in the third quarter of 2009 compared to 225,000 tonnes in
the same quarter last year.


2009 outlook for production and costs


We expect zinc grades to continue to be high in the fourth quarter. We
increased our copper production objective for the year to 14,000 tonnes from
13,000 tonnes, and zinc to 25,800 tonnes from 22,600 tonnes, to reflect
higher grades and throughput. Because of continuing lack of demand, we
lowered our pyrite production objective to 388,000 tonnes.


Financial review


Lower earnings because of a significant decline in pyrite prices and
volumes

-------------------------------------------------------------------------
(millions of Canadian three months nine months revised
dollars unless ended September 30 ended September 30 objective
otherwise stated) 2009 2008 2009 2008 2009
-------------------------------------------------------------------------
Sales analysis
Copper sales (tonnes) 3,800 3,200 10,900 9,900 14,000
Zinc sales (tonnes) 7,600 6,600 17,400 20,900 25,800
Pyrite sales (tonnes) 99,000 225,000 296,000 491,700 388,000
--------------------------------------------------
Gross copper sales $26 $24 $63 $80 $84
Gross zinc sales 16 12 33 43 46
Other metal sales 6 32 29 61 35
--------------------------------------------------
Gross sales 48 68 125 184 165
Smelter processing
charges and freight (12) (22) (34) (47) (45)
-------------------------------------------------------------------------
Net sales $36 $46 $91 $137 $120
-------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled
(thousands) 344 359 1,048 1,050 1,390
Direct production costs
($ per tonne) $41 $39 $43 $42 $41
-------------------------------------------------------------------------
Direct production costs $14 $14 $45 $44 $57
Change in inventory - - (1) - -
Depreciation and other
non-cash costs 1 2 8 8 10
-------------------------------------------------------------------------
Operating costs $15 $16 $52 $52 $67
-------------------------------------------------------------------------
Operating earnings $21 $30 $39 $85 $53
-------------------------------------------------------------------------
Operating cash flow $25 $28 $46 $79 $49
-------------------------------------------------------------------------

The objective for 2009 uses the assumptions listed on page 13.


The table below shows what contributed to the change in operating earnings
and operating cash flow between 2009 and 2008.



-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Lower metal prices, denominated in Canadian
dollars $(1) $(29)
Lower pyrite sales, net of costs to sell (20) (29)
Lower smelter processing charges 7 10
Higher sales volumes 5 3
Other - (1)
-------------------------------------------------------------------------
Lower operating earnings, compared to 2008 $(9) $(46)
Lower tax expense because of lower earnings 2 12
Changes in working capital - 2
Other 4 (1)
-------------------------------------------------------------------------
Lower operating cash flow, compared to 2008 $(3) $(33)
-------------------------------------------------------------------------

Capital spending to sustain and improve



-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
(thousands) 2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Capital
spending $2,000 $2,500 -20% $5,800 $5,800 - $8,000
-------------------------------------------------------------------------

We spent $5.8 million in the year for mine equipment replacements,
replacement of zinc flotation cells and renovation of process water pumps.
The new zinc cells were installed in September and are expected to be
operational in late November when pyrite production resumes.


2009 outlook for capital spending


For the remainder of the year, we expect to spend about $2 million mainly
to complete the above projects.


Las Cruces


Commercial production anticipated for the fourth quarter


Las Cruces produced 2,200 tonnes of copper cathode in the quarter. This
was significantly below our expectations, and was the result of typical
start-up issues encountered in the plant.

Mining operations have progressed well. Las Cruces stockpiled more than
100,000 tonnes of plant feed before the anticipated rainy season, and
started stripping for Phase III of the mine.

The process challenges have been typical in the commissioning of a
complex plant and are related to equipment operation, adjustment and
component reliability. This quarter, for example, we needed to repair
one of the thickeners, which had corroded parts, and two other
thickeners, which needed adjustments to prevent jamming. There were
also problems operating the belt and pressure filters in the quarter,
which have since been resolved. All problems are corrected when they
happen. In some cases we have had to use a short term solution to keep
production going and will wait until next year to implement the longer
term solution, when we receive parts or complete more detailed analyses.
We do not expect any of these problems to have any long term effect on
the performance of the metallurgical plant.

We are focusing on ramping up production to reach the design capacity
of 72,000 tonnes of copper cathode per year. Our goal continues to be
to reach full production by February 2010 and commercial production
(about 60 percent of design capacity) in the fourth quarter of 2009.


Capital update


Las Cruces construction is complete and on budget, and, as at the end of
September, only (euro)4 million of the (euro)504 million construction budget
remained to be spent. The following table shows total spending for the
project to the end of September 2009 and our capital objective for the rest
of the year:



-------------------------------------------------------------------------
revised total
objective project
up to January to October to estimate at
December September December December
(millions) 31, 2008 2009 2009 31, 2009
-------------------------------------------------------------------------
Construction capital (euro)448 (euro)52 (euro)4 (euro)504
Mine development 6 10 7 23
Permanent water treatment plant - - 9 9
Sustaining capital - 7 9 16
Capitalized interest 18 6 - 24
Pre-operating costs capitalized,
net of sales - 11 (5) 6
Value added tax 25 (15) (10) -
Other 5 (3) 3 5
-------------------------------------------------------------------------
Capital expenditures (euro)502 (euro)68 (euro)17 (euro)587
-------------------------------------------------------------------------

2009 outlook


The table below shows expected production for 100 percent of Las Cruces for
2009 and for the mine life.



-------------------------------------------------------------------------
2009 target life of mine
-------------------------------------------------------------------------
Tonnes of ore processed (thousands) 140 17,492
-------------------------------------------------------------------------
Strip ratio 40 12.5
-------------------------------------------------------------------------
Copper cathode grades (percent) 8.8 6.2
-------------------------------------------------------------------------
Copper cathode production (tonnes) 11,000 979,000
-------------------------------------------------------------------------
Cost per tonne of ore processed (C $) $220 $87
-------------------------------------------------------------------------
Copper in ore grades
(for direct shipping) (percent) 13.6 14.0
-------------------------------------------------------------------------
Copper in ore production
(for direct shipping) (tonnes) 4,200 18,200
-------------------------------------------------------------------------

Our expectation for copper production includes 11,000 tonnes of copper
cathode and 4,200 tonnes of copper in ore. We do not expect to ship ore
directly to smelters in 2009, but should ship this ore in the first quarter
of 2010, subject to regulatory approval.

Las Cruces produced 425 tonnes of copper cathode from October 1 to October 25,
and plans to produce 600 tonnes in the last week of October, 4,000 tonnes in
November and 3,700 tonnes in December. We expect commercial production for
reporting purposes to begin in either November or December, but this will
depend on actual production and the consistency of plant performance.

The current labour agreement with the unionized workers expires at the end of
2009. The metal workers union negotiate pay increases with the regional
employers association and not directly with Las Cruces. Any disruptions during
the negotiations could impact production. There are a number of labour
disruptions scheduled by the union for the month of November. Las Cruces is
taking measures to prevent these disruptions from affecting its operations,
but the union and the regional employers association will ultimately make the
decision; there are no guarantees these efforts will be successful.


Troilus



-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Tonnes of ore
milled (000's) 1,487 1,444 +3% 4,506 4,295 +5% 6,000
Tonnes of ore
milled per
day 16,200 15,900 +3% 16,500 15,700 +5% 16,500
-------------------------------------------------------------------------
Strip ratio - 1.6 -100% 0.1 1.4 -93% 0.1
-------------------------------------------------------------------------
Grades
gold (grams/
tonne) 0.65 0.95 -32% 0.91 0.95 -4% 0.81
copper
(percent) 0.08 0.12 -33% 0.12 0.09 +33% 0.11
-------------------------------------------------------------------------
Mill recoveries
(percent)
gold 84 85 -1% 84 84 - 83
copper 90 94 -4% 92 94 -2% 92
-------------------------------------------------------------------------
Production
gold
(ounces) 26,200 38,000 -31% 111,000 110,800 - 130,000
copper
(tonnes) 1,000 1,600 -38% 4,900 3,700 +32% 6,000
-------------------------------------------------------------------------
Cost per tonne
of ore milled
(C$) $9 $16 -44% $10 $15 -33% $9
-------------------------------------------------------------------------

Troilus continues to process stockpiled ore


Troilus continued to process ore from its low-grade stockpile. This has
lowered gold grades and production compared to last year, both in the quarter
and year to date, and lowered the cost per tonne of ore milled.

Gold grades from the stockpile have been higher than we anticipated.

Troilus continued its ongoing site restoration this quarter, and finished
placing moraine on dumps and safety berms around the pits.


2009 outlook for production and costs


Troilus will continue to recover stockpiled ore for the rest of the year,
and should meet its copper production target. We have revised the gold
production objective to 130,000 ounces to reflect higher grades produced
during the third quarter. We reduced the mill throughput objective to
reflect the impact of harder ores.

We will be submitting our revised closure plan to the provincial
authorities in the fourth quarter. We will also continue to lay off mining
and maintenance personnel as primary reclamation activities and pit clean
up are completed.


Financial review


Lower operating costs improved earnings this quarter



-------------------------------------------------------------------------
(millions of Canadian three months nine months revised
dollars unless ended September 30 ended September 30 objective
otherwise stated) 2009 2008 2009 2008 2009
-------------------------------------------------------------------------
Sales analysis
Gold sales (ounces) 25,400 38,000 113,700 109,400 130,000
Copper sales (tonnes) 1,000 1,500 4,900 3,500 6,000
--------------------------------------------------
Gross gold sales $26 $26 $126 $77 $145
Gross copper sales 7 8 31 26 38
Other metal sales 1 1 2 2 3
--------------------------------------------------
Gross sales 34 35 159 105 186
Smelter processing
charges and freight (2) (2) (11) (7) (13)
-------------------------------------------------------------------------
Net sales $32 $33 $148 $98 $173
-------------------------------------------------------------------------
Cost analysis
Tonnes of ore milled
(thousands) 1,487 1,444 4,506 4,295 6,000
Direct production costs
($ per tonne) $9 $16 $10 $15 $9
-------------------------------------------------------------------------
Direct production costs $13 $24 $44 $66 $54
Change in inventory (1) - 2 (1) -
Depreciation and other
non-cash costs 6 3 17 10 24
-------------------------------------------------------------------------
Operating costs $18 $27 $63 $75 $78
-------------------------------------------------------------------------
Operating earnings $14 $6 $85 $23 $95
-------------------------------------------------------------------------
Operating cash flow $16 $7 $94 $21 $106
-------------------------------------------------------------------------

The objective for 2009 uses the assumptions listed on page 13.


The table below shows what contributed to the change in operating earnings
and operating cash flow between 2009 and 2008.



-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Higher gold price denominated in Canadian dollars $9 $46
Higher (lower) copper price denominated in
Canadian dollars 2 (7)
Higher (lower) sales volumes (11) 9
Higher smelter processing charges - (2)
Lower operating costs 9 19
Higher depreciation (1) (4)
Other - 1
-------------------------------------------------------------------------
Higher operating earnings, compared to 2008 $8 $62
Changes in working capital (6) 2
Add back of higher depreciation 1 4
Non-cash hedging (5) (5)
Settlement of gold forwards 12 12
Reclamation spending (1) (2)
-------------------------------------------------------------------------
Higher operating cash flow, compared to 2008 $9 $73
-------------------------------------------------------------------------

Ok Tedi



-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
(100 percent) 2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Tonnes of ore
milled (000's) 5,800 5,600 +4% 16,400 16,100 +2% 22,600
Tonnes of ore
milled per
day 63,300 61,300 +4% 60,000 58,800 +2% 62,000
-------------------------------------------------------------------------
Strip ratio 2.0 1.6 +25% 1.8 1.6 +13% 1.6
-------------------------------------------------------------------------
Grades
copper
(percent) 0.8 0.8 - 0.8 0.9 -11% 0.8
gold (grams/
tonne) 1.0 1.0 - 1.0 1.0 - 1.1
-------------------------------------------------------------------------
Mill recoveries
(percent)
copper 86 88 -2% 86 87 -1% 86
gold 66 71 -7% 67 73 -8% 68
-------------------------------------------------------------------------
Production
copper
(tonnes) 40,700 40,700 - 115,800 119,100 -3% 159,000
gold
(ounces) 122,200 140,100 -13% 370,200 381,300 -3% 520,000
-------------------------------------------------------------------------
Cost per tonne
of ore milled
(C$) $23 $24 -4% $24 $23 +4% $24
-------------------------------------------------------------------------

Throughput should improve after the mine tailings management plant
reaches its designed performance

Ok Tedi is in the final stages of commissioning changes to the tailings
management plant to increase its sulphur processing capacity. The initial
results are encouraging, but they indicate that the pyrite plant thickener
cannot handle high sulphur tailings, and a redesigned launder is under
construction. This meant Ok Tedi could mine only ores with low sulphur
content in the third quarter and year to date.

In spite of this, copper grades were consistent with expectations, while
gold grades were lower than expected.

Mill throughput this quarter and year to date was similar to last year, but
lower than expected because of low grinding rates on certain ores and certain
mechanical availability issues. A number of these issues were resolved during
a maintenance shutdown in August.

On June 2, we entered into a non-binding draft term sheet with PNG Sustainable
Development Programme Limited (PNG SDPL), the 52 percent majority shareholder
of Ok Tedi Mining Limited (OTML). In the draft term sheet, we propose to
exchange our 18 percent equity interest in OTML for a 5 percent net smelter
return (NSR) royalty from OTML on product revenues from the Ok Tedi mine.
Before the transaction can proceed, we need, among other things, the consent
of the Independent State of Papua New Guinea, which owns 30 percent of OTML
(and is currently reviewing the draft term sheet), and the consent of BHP
Billiton Ltd., which previously ceded its 52 percent interest in OTML to PNG
SDP.


2009 outlook for production and costs


We have adjusted our objectives for 2009 to compensate for the shortfall in
production year to date. Ok Tedi has not completed its commissioning of the
mine tailings management plant, but it does not expect grades in the fourth
quarter to be impacted by sulphur grade restrictions.

Until the mine tailings management plant is completed and working at designed
levels, Ok Tedi can put only a limited amount of sulphur in the ore feed.
Staying within these limits is a constraint on mining and, if the project is
delayed, could result in shortfalls in ore tonnes or grades.

The pit drainage tunnel project is behind schedule because there have been
changes to the construction plan but we expect it to be completed in the
fourth quarter. The tunnel is critical because it allows water to drain
freely from the pit until the end of the mine life. Ok Tedi has installed a
temporary pumping system so mining can continue uninterrupted while the
tunnel is being completed.


Financial review


Higher earnings and operating cash flow in the third quarter due to
higher copper and gold prices

-------------------------------------------------------------------------
(millions of Canadian three months nine months revised
dollars unless ended September 30 ended September 30 objective
otherwise stated) 2009 2008 2009 2008 2009
-------------------------------------------------------------------------
Sales analysis at 18%
Copper sales (tonnes) 8,100 7,500 20,500 22,400 28,600
Gold sales (ounces) 25,700 23,100 69,400 68,600 93,600
--------------------------------------------------
Gross copper sales $62 $45 $138 $178 $201
Gross gold sales 28 20 77 58 105
Other metal sales 1 1 3 3 6
--------------------------------------------------
Gross sales $91 66 $218 239 312
Smelter processing
charges and freight (9) (8) (23) (27) (34)
-------------------------------------------------------------------------
Net sales $82 $58 $195 $212 $278
-------------------------------------------------------------------------
Cost analysis at 18%
Tonnes of ore milled
(thousands) 1,050 1,000 3,000 2,950 4,070
Direct production costs
($ per tonne) $23 $24 $24 $23 $24
-------------------------------------------------------------------------
Direct production costs $24 $24 $71 $66 $98
Change in inventory 2 (4) 2 (4) -
Depreciation and other
non-cash costs 7 4 20 12 28
-------------------------------------------------------------------------
Operating costs $33 $24 $93 $74 $126
-------------------------------------------------------------------------
Operating earnings $49 $34 $102 $138 $152
-------------------------------------------------------------------------
Operating cash flow $47 $25 $61 $106 $121
-------------------------------------------------------------------------

The objective for 2009 uses the assumptions listed on page 13.


The table below shows what contributed to the change in operating earnings
and operating cash flow between 2009 and 2008.



-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Higher (lower) copper prices, denominated in
Canadian dollars $14 $(25)
Higher gold prices, denominated in Canadian
dollars 5 18
Lower sales volumes (2) (19)
(Higher) lower smelter processing and
freight charges (1) 3
(Higher) lower operating costs 1 (4)
Higher depreciation (3) (9)
Other 1 -
-------------------------------------------------------------------------
Higher (lower) operating earnings,
compared to 2008 $15 $(36)
Change in tax expense because of change in
earnings (18) 20
Changes in net working capital (see note 3 on
page 45) 16 (38)
Add back of higher depreciation 3 9
Other 6 -
-------------------------------------------------------------------------
Higher (lower) operating cash flow, compared
to 2008 $22 $(45)
-------------------------------------------------------------------------

Capital spending on pit drainage


Ok Tedi's capital spending this quarter and for the year was mainly for the
pit drainage project.


-------------------------------------------------------------------------
three months ended nine months ended revised
September 30 September 30 objective
(18 percent) 2009 2008 change 2009 2008 change 2009
-------------------------------------------------------------------------
Capital
spending $3,300 $7,800 -58% $9,900 $26,700 -63% $21,000
-------------------------------------------------------------------------

2009 outlook for capital spending


For the remainder of the year, Ok Tedi plans to spend US $55 million (our 18
percent share is $11 million) on a second dredge, the pit drainage project
and other capital projects.


Status of our development project


Cobre Panama
(formerly Petaquilla)

Drilling


We completed the drilling program in June and in the third quarter completed
preliminary pit designs and mine plan based on 70 percent of the data from
that drill program. Before we can establish a final mineral reserve estimate
for Cobre Panama we must integrate the remaining data, complete final pit
designs and a mine plan, and complete the front-end engineering and design
(FEED) study. Preliminary results, however, indicate that we can expect to
meet or exceed our target for mineral reserves that would support a minimum
mine life of 30 years at a throughput rate of 150,000 tonnes per day.


Social and environmental impact assessment


Baseline reports are mostly complete, and impact assessments and management
plans are being prepared. We expect to complete the impact assessment (ESIA)
by the end of 2009.


Engineering


We continued with engineering work and began third party reviews of all
aspects of the project so that improvements can be incorporated into the
FEED study. We expect to issue the FEED study in the first quarter of 2010.
The base case for the FEED study is a throughput rate of 150,000 tonnes of
ore per day, which equates to an average annual production of about 275,000
tonnes of copper for the first 10 years. An extensive metallurgical testing
program to further review the throughput rate and explore opportunities to
optimize this rate is nearing completion and the results are being
incorporated into mine planning.

We signed a Joint Development Agreement (JDA) with Suez Energy Central
America, S.A., a subsidiary of GDF Suez, the world's largest independent
power provider, to develop a coal-fired electric generating plant in
parallel with the development of Cobre Panama. This plant would supply all
the electricity required for operation of the project. The JDA governs the
working relationship between the parties during the design of the power
plant and includes a term sheet governing a future power purchase agreement,
which could be signed by mid 2010 (prior to detailed design, procurement
and construction of the power plant).


2009 outlook for development


Once the final FEED study is complete and the ESIA is submitted for approval
to the Panamanian regulatory authorities, we plan to begin detailed
engineering no later than the middle of 2010. Once the ESIA is approved we
can begin the permitting process for construction. With the timely receipt
of permits and a positive development decision, construction could be
completed by the end of 2014.

We have continued our process to obtain potential partners for the
development of Cobre Panama and will evaluate the suitability of all
potential partners. Proposals could take a variety of forms or structures
including, but not limited to, direct investments in the project, financing
related to concentrate purchases, direct investments in Inmet or other forms
of financing. We plan to pursue these opportunities but there can be no
assurance that any transaction will be consummated.


Managing our liquidity


We plan our financing strategy by looking at our long-term financial
requirements and our future capital needs, and deciding on the optimal
mix of cash, future operating cash flow, credit facilities and project
financing.

Our capital structure includes a liquidity cushion that gives us the
flexibility to deal with operational disruptions or general market
downturns, like the current weakness in the global economy.



-------------------------------------------------------------------------
three months ended nine months ended
September 30 September 30
(millions) 2009 2008 2009 2008
-------------------------------------------------------------------------
CASH FROM OPERATING ACTIVITIES
Çayeli $30 $40 $45 $90
Pyhäsalmi 25 28 46 79
Troilus 16 7 94 21
Ok Tedi 47 25 61 106
Corporate development and
exploration not included
in operations' cash flow (1) (3) (5) (7)
General and administration (5) (3) (14) (10)
Corporate taxes (2) (3) (12) (8)
Foreign exchange loss
on US dollar cash (14) - (14) -
Other (7) 7 (4) 23
-------------------------------------------------------------------------
89 98 197 294
-------------------------------------------------------------------------
CASH FROM INVESTING AND FINANCING

Acquisition of Petaquilla Copper,
net of cash acquired - (337) - (337)
Investment in Cobre Panama
prior to consolidation - (8) - (12)
Loans to other Cobre
Panama shareholders - (9) - (13)
(Acquisition) disposition
of investments (100) - (100) 2
Capital spending (24) (94) (205) (327)
Proceeds from issuance of common
shares, net of transaction costs - - 334 -
Long-term debt - borrowings - - - 106
- repayments (232) (14) (315) (14)
Funding by non-controlling
shareholder 6 1 50 36
Financial assurance deposits (43) (1) (52) (15)
Dividends paid on common shares - - (5) (5)
Subsidies received 5 - 71 3
Settlement of interest
rate swap contract (16) - (16) -
Settlement of foreign
currency forward contract - - - 52
Foreign exchange on cash
held in foreign currency (22) - (34) 24
Other (1) 1 (1) 1
-------------------------------------------------------------------------
(427) (461) (273) (499)
-------------------------------------------------------------------------
Decrease in cash (338) (363) (76) (205)
Cash and short-term investments
Beginning of period 835 999 573 841
End of period $497 $636 $497 $636
-------------------------------------------------------------------------

OPERATING ACTIVITIES


Key components of the change in operating cash flows



-------------------------------------------------------------------------
three months nine months
ended ended
(millions) September 30 September 30
-------------------------------------------------------------------------
Higher (lower) earnings from operations
(see page 4) $11 $(84)
Non-cash changes in operating earnings:
Add back higher depreciation
in earnings from operations 3 14
Troilus non-cash hedging in revenue in 2008 (5) (5)
Lower (higher) tax expense (19) 43
Lower interest income (5) (18)
Realized foreign exchange loss on
US dollar cash held at Corporate (14) (14)
Troilus settlement of gold forward in 2008 12 12
Changes in working capital 5 (35)
Other 3 (10)
-------------------------------------------------------------------------
Lower operating cash flow, compared to 2008 $(9) $(97)
-------------------------------------------------------------------------

Operating cash flows to date this year are lower than they were in 2008
because operating earnings are down, lower interest income, foreign exchange
losses on corporate US dollar cash and we spent more on working capital.
About $48 million of the reduction in cash flow year to date comes from our
repayment to smelters of excess provisional payments they made in 2008 before
copper prices dropped.


2009 outlook for cash from operating activities


Volatile markets make it more difficult than usual to estimate commodity
prices and foreign exchange rates. The table below shows estimated operating
cash flow at each operation, based on the market assumptions listed on page
13, and the assumptions in Results of our operations, which starts on page 13.



2009 estimated operating cash flow by operation



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

(millions)
-----------------------------------------------------
Çayeli $100
Pyhäsalmi 49
Troilus 106
Ok Tedi 121
Las Cruces -
-----------------------------------------------------
$376
-----------------------------------------------------

INVESTING AND FINANCING


Capital spending



-------------------------------------------------------------------------
three months nine months revised
ended September 30 ended September 30 objective
(millions) 2009 2008 2009 2008 2009
-------------------------------------------------------------------------
Çayeli $4 $5 $11 $17 $18
Pyhäsalmi 2 3 6 6 8
Troilus - 1 - 1 -
Ok Tedi 3 8 10 27 21
Las Cruces (10) 72 108 262 133
Cobre Panama 25 8 70 12 94
Cerattepe - 6 - 14 -
-------------------------------------------------------------------------
$24 $103 $205 $339 $274
-------------------------------------------------------------------------

Please see Results of our operations and Status of our development project
for a discussion of actual results and our 2009 objective. In the third
quarter of 2009 Las Cruces received a VAT refund of $50 million which
resulted in the negative capital expenditures.


Proceeds from issuing common shares


On June 25 we completed a public offering of 7.825 million common shares of
Inmet Mining, on a bought deal basis, at a price of $44.50 per share, for
aggregate gross proceeds of $348 million ($334 million net of transaction
costs).

We used US $240 million of this to repay the debt under Las Cruces' project
financing facility, and will use the balance for general corporate purposes.


Long-term debt repayments and settlement of interest rate swap contract


In the first half of 2009, Las Cruces made its first scheduled repayment of
US $12 million under Tranche A of its credit facility. It also repaid (euro)
42 million under Tranche B (an amount equal to the subsidies received).

On July 31, 2009, Las Cruces repaid the remaining US $203 million under
Tranche A, (euro)5 million under Tranche B and cash collateralized $32
million in letters of credit that had been secured under the credit
facility. This eliminated the Las Cruces project credit facility. We funded
100 percent of the repayment through an intercompany loan. Leucadia
guarantees 30 percent of this loan.

Las Cruces paid $16 million in July to terminate its interest rate swap
contract, in connection with the decision to repay the credit facility.


Acquisition of investments


This quarter, we bought $100 million in long term Canadian government
and corporate bonds with credit ratings of A to AAA, to increase our
return on the cash we have set aside for capital spending at Cobre
Panama.


Settlement of foreign currency forward contract in 2008


On June 30, 2008, when we converted the Las Cruces debt from euro to US
dollars, Las Cruces settled a foreign exchange forward contract and
received proceeds of $52 million.


Acquisition of Petaquilla Copper in 2008


On September 19, 2008, we acquired 95 percent of the outstanding common
shares of Petaquilla Copper Ltd. for $337 million in cash (net of $23
million in cash acquired). We acquired the remaining 5 percent in the
fourth quarter of 2008.


2009 outlook for investing and financing


We expect capital spending to be $274 million in 2009. The more
significant items include:


- $88 for the Las Cruces processing plant
- $94 million for work on the development plan at Cobre Panama
- $10 million for pit development and $7 million for an underground
drainage tunnel at Ok Tedi.

Until we start receiving significant proceeds from sales at Las Cruces,
we plan to fund its costs using sponsor contributions.


Financial condition


CASH


Our cash and cash equivalents balance at September 30, 2009 was $497
million. This included cash and money market instruments that mature
in 90 days or less, 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 to minimize the risk associated with these investments.
We base our decisions about the length of maturities on our cash flow
requirements, rates of return and other factors.

The economic downturn appears to have approached a trough, but we are
still monitoring the potential for a second wave. We have moved some of
our government funds to prime funds and have created a bond portfolio
that should provide better yields with minimal change to our investment
risk. At September 30, 2009, we held cash and short-term investments in
the following:


- 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 treasury funds and 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 benefiting directly and indirectly
from support programs by various governments and central banks.

See note 4 on page 46 in the consolidated financial statements for more details
about where our cash is invested.

The bond portfolio (Held to maturity investments) is comprised of 30 percent
Government of Canada bonds, 50 percent Provincial bonds and 20 percent
corporate bonds, with average maturities of three years.

Our restricted cash balance of $108 million as at September 30, 2009 included:


- $27 million in trust for future reclamation at Ok Tedi
- $16 million of cash collateralized letters of credit for Inmet
- $63 million related to issuing letters of credit to suppliers at Las
Cruces, a reclamation bond and for its labour bond to the government
- $2 million for future reclamation at Pyhäsalmi.

Las Cruces' restricted cash increased by $32 million in the third quarter,
mainly to secure its reclamation bond that had previously been secured under
the credit facility.


COMMON SHARES



-------------------------------------------------------------------------
Common shares outstanding as of
September 30, 2009 and October 27, 2009 56,106,660
-------------------------------------------------------------------------
Deferred share units outstanding as of
September 30, 2009
(redeemable on a one-for-one basis for common shares) 89,425
-------------------------------------------------------------------------

Dividend Declaration


Inmet's board of directors has declared an eligible dividend of $0.10 per
common share payable on December 15, 2009 to common shareholders of record as
at November 30, 2009.


FINANCIAL INSTRUMENTS


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



-------------------------------------------------------------------------
Type of Expiry Quantity Price C$ marked-to-market
contract gain (loss) at
September 30, 2009
-------------------------------------------------------------------------
Copper
forward
sales
Ok Tedi
2009 0.8 million lbs US $2.41 per lb $(0.4) 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. $(3.3 million)(2)

-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) At a copper price of US $2.81 per pound.
(2) At a gold price of US $997 per ounce.

Accounting changes


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

The Accounting Standards Board confirmed in February 2008 that International
Financial Reporting Standards (IFRS) will replace current Canadian GAAP for
financial periods beginning on and after January 1, 2011. IFRS is based on a
conceptual framework similar to Canadian GAAP, but there are significant
differences in recognition, measurement and disclosure.

While the adoption of IFRS will not change the actual cash flows we generate,
it will result in changes to our reported financial position and results of
operations.

We have prepared a comprehensive IFRS convergence plan that addresses the
changes in accounting policy, restatement of comparative periods, internal
control over financial reporting, modification of existing systems, the
training and awareness of staff, as well as other related business matters.
Senior financial management who report to and are overseen by Inmet's Audit
Committee are responsible for planning and implementing the conversion.

To date, we have preliminarily determined all of our significant accounting
policies, prepared sample financial statements and assessed the impacts on
our systems and processes. We have been working alongside our auditors in
drafting our accounting policies to ensure they agree with our choices and
that we are choosing policies that are consistent with our peers in the
industry. By the end of 2009 we plan to quantify, where possible, the impact
these new policies have on our financial statements, and document the
related internal controls. This exercise will either validate our accounting
policy choices or tell us to rethink them. Our goal is to restate our
December 31, 2009 Canadian GAAP balance sheet to IFRS in the first quarter
of 2010.

We are not expecting significant changes to the carrying values of property,
plant and equipment based on the work we have done to date. We do, however,
expect significant effects on our accounting for business combinations on a
go-forward basis. Exposure drafts on future income taxes and on accounting
for joint venture interests, which includes our investment in Ok Tedi, could
have significant effects on our financial statements. We will continue to
monitor these exposure drafts and amend our convergence plan as required.


Supplementary financial information


Pages 32 and 33 include supplementary financial information about 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 five mining operations in locations around
the world: Çayeli, Las Cruces, Pyhäsalmi, Troilus and Ok Tedi. We also
have a 100 percent interest in Cobre Panama, a development property in
Panama.


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


Third quarter conference call


Will be held on
- Wednesday, October 28, 2009
- 8:30 a.m. Eastern Time
- webcast available at
www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2837120
or www.inmetmining.com.

You can also dial in by calling
- Local or international: +1.416.644.3421
- Toll-free within North America: +1.866.250.4877

Starting 10:30 a.m. (ET) Wednesday October 28, 2009, conference call
replay will be available
- Local or international: +1.416.640.1917 passcode 4171149 followed by
the number sign.
- Toll-free within North America: +1.877.289.8525 passcode 4171149
followed by the number sign.



INMET MINING CORPORATION
Supplementary financial information

Cash costs

2009 For the nine months ended September 30
per ounce
per pound of copper of gold
----------------------------------------- ----------
TOTAL
ÇAYELI PYHÄSALMI OK TEDI COPPER TROILUS
---------------------------------------------------- --------- ----------
(US dollars)
Direct production
costs $1.01 $1.61 $1.28 $1.24 $336
Royalties and
variable compensation 0.08 - 0.04 0.05 -
Smelter processing
charges and freight 1.15 0.89 0.41 0.80 83
Metal credits (1.50) (1.86) (1.44) (1.55) (248)
----------------------------------------- ----------

Cash cost $0.74 $0.64 $0.29 $0.54 $171
----------------------------------------- ----------
----------------------------------------- ----------


2008 For the nine months ended September 30
per ounce
per pound of copper of gold
----------------------------------------- ----------
TOTAL
ÇAYELI PYHÄSALMI 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
----------------------------------------- ----------
----------------------------------------- ----------

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



Reconciliation of cash costs to statements of earnings

2009 For the nine months ended September 30
per ounce
per pound of copper of gold
----------------------------------------- ----------
(millions of Canadian
dollars, except where TOTAL
otherwise noted) ÇAYELI PYHÄSALMI OK TEDI COPPER TROILUS
---------------------------------------------------- --------- ----------
GAAP reference page 15 page 17 page 23 page 21

Direct production
costs $59 $45 $71 $175 $44
Smelter processing
charges and freight 55 34 23 112 11
By product sales (75) (62) (80) (217) (33)
Adjust smelter
processing and
freight, and sales
to production basis 1 1 2 4 -
----------------------------------------- ----------
Operating costs
net of metal credits $40 $18 $16 $74 $22
US $ to C$
exchange rate $1.17 $1.17 $1.17 $1.17 $1.17
Inmet's share of
production (000's) 46,300 24,300 45,900 116,500 111,000
----------------------------------------- ----------
Cash cost $0.74 $0.64 $0.29 $0.54 $171
----------------------------------------- ----------
----------------------------------------- ----------


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) ÇAYELI PYHÄSALMI OK TEDI COPPER TROILUS
---------------------------------------------------- --------- ----------
GAAP reference page 15 page 17 page 23 page 21

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



Cash costs

2009 For the three months ended September 30
per ounce
per pound of copper of gold
----------------------------------------- ----------
TOTAL
ÇAYELI PYHÄSALMI OK TEDI COPPER TROILUS
---------------------------------------------------- --------- ----------
(US dollars)

Direct production
costs $1.09 $1.57 $1.28 $1.27 $441
Royalties and
variable compensation 0.11 - 0.09 0.08 -
Smelter processing
charges and freight 1.38 1.21 0.45 0.95 81
Metal credits (2.12) (2.21) (1.40) (1.84) (282)
----------------------------------------- ----------
Cash cost $0.46 $0.57 $0.42 $0.46 $240
----------------------------------------- ----------
----------------------------------------- ----------


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

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

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



Reconciliation of cash costs to statements of earnings

2009 For the three months ended September 30
per ounce
per pound of copper of gold
----------------------------------------- ----------
(millions of Canadian
dollars, except where TOTAL
otherwise noted) ÇAYELI PYHÄSALMI OK TEDI COPPER TROILUS
---------------------------------------------------- --------- ----------
GAAP reference page 15 page 17 page 23 page 21

Direct production
costs $19 $14 $24 $57 $13
Smelter processing
charges and freight 18 12 9 39 2
By product sales (25) (22) (29) (76) (8)
Adjust smelter
processing and
freight, and sales
to production basis (5) 1 3 (1) -
----------------------------------------- ----------
Operating costs net
of metal credits $7 $5 $7 $19 $7
US $ to C$
exchange rate $1.10 $1.10 $1.10 $1.10 $1.10
Inmet's share of
production (000's) 14,100 8,200 16,100 38,400 26,200
----------------------------------------- ----------
Cash cost $0.46 $0.57 $0.42 $0.46 $240
----------------------------------------- ----------
----------------------------------------- ----------


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) ÇAYELI PYHÄSALMI OK TEDI COPPER TROILUS
---------------------------------------------------- --------- ----------
GAAP reference page 15 page 17 page 23 page 21

Direct production
costs $23 $14 $24 $61 $24
Smelter processing
charges and freight 18 22 8 48 2
By product sales (20) (44) (21) (85) (9)
Adjust smelter
processing and
freight, and sales
to production basis (1) 5 (1) 3 -
----------------------------------------- ----------
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 38,000
----------------------------------------- ----------
Cash cost $0.99 ($0.42) $0.64 $0.60 $432
----------------------------------------- ----------
----------------------------------------- ----------



INMET MINING CORPORATION
Quarterly review
(unaudited)

Latest Four Quarters
-------------------------------------------------------------------------
(thousands of Canadian 2009 2009 2009 2008
dollars, except per Third Second First Fourth
share amounts) quarter quarter quarter quarter
-------------------------------------------------------------------------
STATEMENTS OF EARNINGS
Gross sales $ 241,121 $ 213,042 $ 239,152 $ 139,626
Smelter processing
charges and freight (41,607) (40,589) (40,540) (32,870)
Cost of sales (72,706) (73,827) (89,904) (91,715)
Depreciation (14,558) (13,604) (15,679) (14,844)
-------------------------------------------
112,250 85,022 93,029 197
Corporate development
and exploration (1,963) (2,727) (3,232) (1,971)
General and administration (5,147) (4,785) (4,124) (3,289)
Investment and other
income (expense) 3,588 16,466 (11,203) 8,057
Asset impairment - - (6,419) (36,275)
Interest expense (496) (493) (492) (490)
Capital tax expense (744) (125) (125) (1,304)
Income tax
(expense) recovery (39,244) (24,052) (18,890) 767
Non-controlling interest (6,693) (2,778) 2,783 1,794
-------------------------------------------
Net income (loss) $ 61,551 $ 66,528 $ 51,327 ($32,514)
-------------------------------------------
Net income (loss)
per common share $ 1.10 $ 1.37 $ 1.06 ($0.67)
-------------------------------------------
Diluted net income
(loss) per common share $ 1.09 $ 1.36 $ 1.06 ($0.67)
-------------------------------------------



Previous Four Quarters
-------------------------------------------------------------------------
(thousands of Canadian 2008 2008 2008 2007
dollars, except per Third Second First Fourth
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) recovery (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
-------------------------------------------



INMET MINING CORPORATION
Consolidated balance sheets

September 30 December 31
(thousands of Canadian dollars) 2009 2008
-------------------------------------------------------------------------
(unaudited)
Assets

Current assets:
Cash and short-term investments (note 4) $496,625 $572,733
Restricted cash (note 5) 15,231 8,311
Accounts receivable 114,306 135,742
Inventories 93,015 74,362
Future income tax asset 11,132 14,311
--------------------------
730,309 805,459

Restricted cash (note 5) 92,852 52,893

Property, plant and equipment 1,852,583 1,950,535

Investments in equity securities (note 6) 28,054 17,514

Held to maturity investments (note 7) 100,093 -

Future income tax asset 1,671 5,499

Derivatives (note 8) - 4,327

Other assets 3,034 5,031
--------------------------
$2,808,596 $2,841,258
-------------------------------------------------------------------------


Liabilities

Current liabilities:
Accounts payable and accrued liabilities $147,435 $212,527
Derivatives (note 8) 433 8,693
Future income tax liabilities 5,161 -
Current portion of long-term debt (note 9) - 109,666
--------------------------
153,029 330,886

Long-term debt (note 9) 203,445 384,848

Asset retirement obligations 124,288 126,782

Derivatives (note 8) 3,253 16,417

Other liabilities (note 11) 32,197 27,122

Future income tax liabilities 13,955 15,971

Non-controlling interest 82,073 71,449
--------------------------
612,240 973,475
--------------------------

Commitments (note 10)

Shareholders' equity

Share capital (note 13) 670,062 337,464

Contributed surplus 62,552 61,925

Stock based compensation 4,459 2,688

Retained earnings 1,457,652 1,283,074

Accumulated other comprehensive income (note 14) 1,631 182,632
--------------------------

2,196,356 1,867,783
--------------------------
$2,808,596 $2,841,258
-------------------------------------------------------------------------
(see accompanying notes)



INMET MINING CORPORATION
Segmented balance sheets

2009 As at September 30

(unaudited) CORPORATE ÇAYELI PYHÄSALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Assets

Cash and short-term
investments $179,904 $117,499 $90,663 $ -
Other current assets 7,333 42,461 34,880 20,281
Restricted cash 16,459 - 1,880 -
Property, plant
and equipment 985 124,571 69,231 17,261
Investments in
equity securities 28,054 - - -
Held to maturity
investments 100,093 - - -
Other non-current
assets 1,813 403 - -
--------------------------------------------------
$334,641 $284,934 $196,654 $37,542
--------------------------------------------------

Liabilities

Current liabilities $21,605 $30,300 $17,891 $8,320
Long-term debt 18,675 - - -
Asset retirement
obligations 23,551 8,830 15,707 9,936
Derivatives - - - -
Other liabilities 4,752 5,432 - -
Future income
tax liabilities 2,351 2,381 9,019 -
Non-controlling interest - - - -
--------------------------------------------------
$70,934 $46,943 $42,617 $18,256
--------------------------------------------------


2009 As at September 30
COBRE
(unaudited) OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

Assets

Cash and short-term
investments $51,080 $53,073 $4,406 $496,625
Other current assets 57,463 70,681 585 233,684
Restricted cash 26,621 47,892 - 92,852
Property, plant
and equipment 85,145 1,025,580 529,810 1,852,583
Investments in
equity securities - - - 28,054
Held to maturity
investments - - - 100,093
Other non-current assets 1,074 1,415 - 4,705
-------------------------------------- -----------
$221,383 $1,198,641 $534,801 $2,808,596
-------------------------------------- -----------

Liabilities

Current liabilities $37,244 $31,234 $6,435 $153,029
Long-term debt - 184,770 - 203,445
Asset retirement
obligations 22,536 43,728 - 124,288
Derivatives 3,253 - - 3,253
Other liabilities 1,309 20,704 - 32,197
Future income
tax liabilities - 204 - 13,955
Non-controlling interest - 82,073 - 82,073
-------------------------------------- -----------
$64,342 $362,713 $6,435 $612,240
-------------------------------------- -----------



2008 As at December 31

CORPORATE ÇAYELI PYHÄSALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Assets

Cash and short-term
investments $241,238 $192,881 $65,976 $ -
Other current assets 15,992 43,946 39,428 22,595
Restricted cash 16,343 - 2,104 -
Property, plant
and equipment 916 144,124 74,790 27,659
Investments in
equity securities 17,514 - - -
Other non-current assets 3,183 454 - 1,825
--------------------------------------------------
$295,186 $381,405 $182,298 $52,079
--------------------------------------------------

Liabilities

Current liabilities $15,983 $52,112 $11,537 $11,029
Long-term debt 19,741 - - -
Asset retirement
obligations 23,501 9,654 16,307 12,626
Derivatives - - - -
Other liabilities 4,911 5,374 - 1,484
Future income
tax liabilities 1,026 5,509 9,215 -
Non-controlling interest - - - -
--------------------------------------------------
$65,162 $72,649 $37,059 $25,139
--------------------------------------------------


2008 As at December 31
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

Assets

Cash and short-term
investments $37,547 $33,981 $1,110 $572,733
Other current assets 43,148 66,774 843 232,726
Restricted cash 16,667 17,779 - 52,893
Property, plant
and equipment 105,145 1,065,435 532,466 1,950,535
Investments in
equity securities - - - 17,514
Other non-current assets 7,039 2,356 - 14,857
-------------------------------------- -----------
$209,546 $1,186,325 $534,419 $2,841,258
-------------------------------------- -----------

Liabilities

Current liabilities $45,711 $182,535 $11,979 $330,886
Long-term debt - 365,107 - 384,848
Asset retirement
obligations 25,016 39,678 - 126,782
Derivatives 1,670 14,747 - 16,417
Other liabilities 2,232 13,121 - 27,122
Future income
tax liabilities - 221 - 15,971
Non-controlling interest - 71,449 - 71,449
-------------------------------------- -----------
$74,629 $686,858 $11,979 $973,475
-------------------------------------- -----------



INMET MINING CORPORATION
Consolidated statements of earnings
(unaudited)

Three Months Ended Nine Months Ended
(thousands of Canadian dollars September 30 September 30
except per share amounts) 2009 2008 2009 2008
--------------------------------------------------- ---------------------
Gross sales $241,121 $247,495 $693,315 $805,239

Smelter processing
charges and freight (41,607) (49,502) (122,736) (146,868)

Cost of sales (72,706) (84,948) (236,437) (254,087)

Depreciation (14,558) (11,395) (43,841) (29,760)

--------------------------------------------------- ---------------------
112,250 101,650 290,301 374,524

Corporate development
and exploration (1,963) (3,548) (7,922) (8,649)

General and administration (5,147) (3,411) (14,056) (9,849)

Investment and other
income (expense) (note 15) 3,588 (5,467) 8,851 (2,071)

Asset impairment (note 18) - - (6,419) -

Interest expense (496) (476) (1,481) (1,394)

Capital tax expense (744) (125) (994) (375)

Income tax expense (note 16) (39,244) (17,379) (82,186) (106,456)

Non-controlling interest (6,693) 3,813 (6,688) 3,706

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

Net income $61,551 $75,057 $179,406 $249,436
--------------------------------------------------- ---------------------

Basic net income per
common share (note 17) $1.10 $1.55 $3.51 $5.17
--------------------------------------------------- ---------------------

Diluted net income per
common share (note 17) $1.09 $1.55 $3.50 $5.16
--------------------------------------------------- ---------------------

Weighted average shares
outstanding (000's) 56,107 48,282 51,062 48,282
--------------------------------------------------- ---------------------
(see accompanying notes)



INMET MINING CORPORATION
Segmented statements of earnings
(unaudited)

2009 For the nine months ended September 30

CORPORATE ÇAYELI PYHÄSALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Gross sales $ - $191,344 $125,244 $158,676
Smelter processing
charges and freight - (55,094) (33,802) (10,990)
Cost of sales (1,401) (60,549) (46,079) (52,953)
Depreciation - (9,826) (6,237) (10,121)
--------------------------------------------------
(1,401) 65,875 39,126 84,612

Corporate development
and exploration (4,581) (971) (2,370) -
General and
administration (14,056) - - -
Investment and other
income (expense) (10,798) 822 (421) 645
Asset impairment
charges - (6,419) - -
Interest expense (1,481) - - -
Capital tax expense (994) - - -
Income tax expense (22,388) (7,272) (6,644) -
Non-controlling interest - - - -
--------------------------------------------------
Net income ($55,699) $52,035 $29,691 $85,257
--------------------------------------------------
--------------------------------------------------


2009 For the nine months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

Gross sales $218,051 $ - $ - $693,315
Smelter processing
charges and freight (22,850) - - (122,736)
Cost of sales (75,455) - - (236,437)
Depreciation (17,657) - - (43,841)
-------------------------------------- -----------
102,089 - - 290,301

Corporate development
and exploration - - - (7,922)
General and
administration - - - (14,056)
Investment and other
income (expense) (3,299) 21,902 - 8,851
Asset impairment
charges - - - (6,419)
Interest expense - - - (1,481)
Capital tax expense - - - (994)
Income tax expense (37,933) (7,949) - (82,186)
Non-controlling interest - (6,688) - (6,688)
-------------------------------------- -----------
Net income $60,857 $7,265 $ - $179,406
-------------------------------------- -----------
-------------------------------------- -----------


2008 For the nine months ended September 30

CORPORATE ÇAYELI PYHÄSALMI 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 8,483 2,140 (228) 4,083
Interest expense (1,394) - - -
Capital tax expense (375) - - -
Income tax expense (8,060) (34,207) (18,866) -
Non-controlling interest - - - -
--------------------------------------------------
Net income ($19,166) $98,576 $63,991 $26,653
--------------------------------------------------
--------------------------------------------------


2008 For the nine months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

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 241 (16,790) - (2,071)
Interest expense - - - (1,394)
Capital tax expense - - - (375)
Income tax expense (50,324) 5,001 - (106,456)
Non-controlling interest - 3,706 - 3,706
-------------------------------------- -----------
Net income $87,465 ($8,083) $ - $249,436
-------------------------------------- -----------
-------------------------------------- -----------


2009 For the three months ended September 30

CORPORATE ÇAYELI PYHÄSALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Gross sales $ - $67,612 $48,262 $34,279
Smelter processing
charges and freight - (17,580) (12,485) (2,272)
Cost of sales (409) (18,263) (13,504) (14,510)
Depreciation - (2,980) (1,473) (3,401)
--------------------------------------------------
(409) 28,789 20,800 14,096

Corporate development
and exploration (1,207) (70) (686) -
General and
administration (5,147) - - -
Investment and
other income (expense) (17,218) (248) 1 284
Asset impairment charges - - - -
Interest expense (496) - - -
Capital tax recovery (744) - - -
Income tax expense (2,658) (5,641) (4,339) -
Non-controlling interest - - - -
--------------------------------------------------

Net income ($27,879) $22,830 $15,776 $14,380
--------------------------------------------------


2009 For the three months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

Gross sales $90,968 $ - $ - $241,121
Smelter processing
charges and freight (9,270) - - (41,607)
Cost of sales (26,020) - - (72,706)
Depreciation (6,704) - - (14,558)
-------------------------------------- -----------
48,974 - - 112,250

Corporate development
and exploration - - - (1,963)
General and
administration - - - (5,147)
Investment and
other income (expense) (813) 21,582 - 3,588
Asset impairment charges - - - -
Interest expense - - - (496)
Capital tax recovery - - - (744)
Income tax expense (18,924) (7,682) - (39,244)
Non-controlling interest - (6,693) - (6,693)
-------------------------------------- -----------
$29,237 $7,207 $ - $61,551
-------------------------------------- -----------


2008 For the three months ended September 30

CORPORATE ÇAYELI PYHÄSALMI 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 (2,526) (6,428) (6,418) -
Non-controlling interest - - - -
--------------------------------------------------
Net income ($1,425) $23,596 $22,394 $7,798
--------------------------------------------------


2008 For the three months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

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 (7,174) 5,167 - (17,379)
Non-controlling interest - 3,813 - 3,813
-------------------------------------- -----------
Net income $30,827 ($8,133) $ - $75,057
-------------------------------------- -----------



INMET MINING CORPORATION
Consolidated statements of cash flows
(unaudited)

Three Months Ended Nine Months Ended
September 30 September 30
(thousands of Canadian dollars) 2009 2008 2009 2008
--------------------------------------------------- ---------------------

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

Net income $61,551 $75,057 $179,406 $249,436
Add (deduct) items
not affecting cash:
Depreciation 14,558 11,395 43,841 29,760
Future income tax 5,427 2,126 16,746 (1,930)
Accretion expense 1,180 1,085 3,655 3,229
Non-controlling interest 6,693 (3,813) 6,688 (3,706)
Asset impairment (note 18) - - 6,419 -
Foreign exchange loss (gain) 2,951 11,257 (5,897) 30,147
Gain on recognition of foreign
currency forward contract
settlement (note 15) (35,615) - (35,615) -
Loss on recognition of
interest rate swap contract
settlement (note 15) 14,823 - 14,823 -
Other 3,198 1,704 10,808 4,913
Settlement of gold
forward contracts - (12,399) - (12,399)
Settlement of asset
retirement obligations (2,093) (638) (4,849) (1,462)
Net change in non-cash
working capital (note 3) 16,604 12,031 (39,055) (4,475)
------------------------------------------
89,277 97,805 196,970 293,513
------------------------------------------

Cash provided by (used in)
investing activities

Capital spending (23,789) (94,371) (204,911) (326,813)
(Acquisition) disposition
of investments (note 7) (100,000) - (100,000) 1,521
Sale of short-term
investments 53,958 29,254 8,707 204,239
Acquisition of Petaquilla
Copper, net of cash acquired - (336,911) - (336,911)
Investment in Cobre Panama
prior to consolidation - (8,412) - (12,167)
Loans to other Cobre
Panama shareholders - (9,143) - (13,234)
------------------------------------------
(69,831) (419,583) (296,204) (483,365)
------------------------------------------

Cash provided by (used in) financing activities

Long-term debt:
Borrowings - - - 106,240
Repayment (note 9) (232,101) (13,871) (314,603) (13,871)
Issuance of common
shares (note 13) - - 334,284 -
Funding by non-controlling
shareholder 5,676 1,432 49,617 36,188
Settlement of foreign
currency forward contract - - - 52,256
Financial assurance deposits
(notes 5 and 9) (43,078) (1,344) (51,818) (15,316)
Dividends paid on
common shares - - (4,828) (4,828)
Settlement of interest rate
swap contract (note 8) (15,982) - (15,982) -
Subsidies received (note 12) 4,730 - 70,939 3,233
Other (1,251) (46) (1,341) (138)
------------------------------------------
(282,006) (13,829) 66,268 163,764
------------------------------------------

Cash assumed on
consolidation of Cobre Panama - 2,201 - 2,201
------------------------------------------

Foreign exchange change
on cash held in
foreign currency (21,535) 18 (34,435) 23,586
------------------------------------------

Decrease in cash (284,095) (333,388) (67,401) (301)

Cash:
Beginning of period 753,753 855,592 537,059 522,505
------------------------------------------
End of period 469,658 522,204 469,658 522,204

Short-term investments 26,967 114,079 26,967 114,079
------------------------------------------

Cash and short-term
investments $496,625 $636,283 $496,625 $636,283
-------------------------------------------------------------------------
(see accompanying notes)

(1)Supplementary cash flow
information:

Cash interest paid $972 $1,657 $10,867 $9,779
Cash taxes paid $7,189 $44,163 $17,828 $124,412
-------------------------------------------------------------------------



INMET MINING CORPORATION
Segmented statements of cash flows
(unaudited)

2009 For the nine months ended September 30

CORPORATE ÇAYELI PYHÄSALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Cash provided by (used
in) operating activities
Before net change
in non-cash
working capital ($49,832) $60,713 $37,886 $96,113
Net change
in non-cash
working capital 947 (15,612) 8,009 (2,495)
--------------------------------------------------
(48,885) 45,101 45,895 93,618
--------------------------------------------------

Cash provided by (used
in) investing activities
Capital spending (278) (10,631) (5,823) -
Purchase of long-term
investments (100,000) - - -
Sale of short-term
investments 8,707 - - -
--------------------------------------------------
(91,571) (10,631) (5,823) -
--------------------------------------------------

--------------------------------------------------
Cash provided by
(used in) financing
activities 329,201 - - -
--------------------------------------------------


Foreign exchange change
on cash held in
foreign currency - (20,512) (5,462) -
--------------------------------------------------

Intergroup funding
(distributions) (241,372) (89,340) (9,923) (93,618)
--------------------------------------------------

Increase (decrease)
in cash (52,627) (75,382) 24,687 -
Cash:
Beginning of period 205,564 192,881 65,976 -
--------------------------------------------------
End of period 152,937 117,499 90,663 -
Short-term investments 26,967 - - -
--------------------------------------------------

Cash and short-term
investments $179,904 $117,499 $90,663 $ -
--------------------------------------------------


2009 For the nine months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

Cash provided by (used
in) operating activities
Before net change
in non-cash
working capital $91,145 $ - $ - $236,025
Net change
in non-cash
working capital (29,904) - - (39,055)
-------------------------------------- -----------
61,241 - - 196,970
-------------------------------------- -----------
Cash provided by (used
in) investing activities
Capital spending (9,907) (108,147) (70,125) (204,911)
Purchase of long-term
investments - - - (100,000)
Sale of short-term
investments - - - 8,707
-------------------------------------- -----------
(9,907) (108,147) (70,125) (296,204)
-------------------------------------- -----------

-------------------------------------- -----------
Cash provided by
(used in) financing
activities (11,965) (250,968) - 66,268
-------------------------------------- -----------

Foreign exchange change
on cash held in
foreign currency (7,612) (731) (118) (34,435)
-------------------------------------- -----------

Intergroup funding
(distributions) (18,224) 378,938 73,539 -
-------------------------------------- -----------

Increase (decrease)
in cash 13,533 19,092 3,296 (67,401)
Cash:
Beginning of period 37,547 33,981 1,110 537,059
-------------------------------------- -----------
End of period 51,080 53,073 4,406 469,658
Short-term investments - - - 26,967
-------------------------------------- -----------

Cash and short-term
investments $51,080 $53,073 $4,406 $496,625
-------------------------------------- -----------


2008 For the nine months ended September 30

CORPORATE ÇAYELI PYHÄSALMI 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
Cobre Panama 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 $ -
--------------------------------------------------


2008 For the nine months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

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
Cobre Panama - - - 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
-------------------------------------- -----------


2009 For the three months ended September 30

CORPORATE ÇAYELI PYHÄSALMI TROILUS
-------------------------------------------------------------------------
(thousands of
Canadian dollars) (Turkey) (Finland) (Canada)

Cash provided by (used
in) operating activities
Before net change
in non-cash
working capital ($28,693) $25,746 $22,518 $17,254
Net change
in non-cash
working capital 868 4,174 2,136 (1,322)
--------------------------------------------------
(27,825) 29,920 24,654 15,932
--------------------------------------------------
Cash provided by (used
in) investing activities
Capital spending (17) (4,076) (2,045) -
Sale (purchase) of
long-term investments (100,000) - - -
Purchase of
short-term investments 53,958 - - -
Loans to Petaquilla
shareholders - - - -
--------------------------------------------------
($46,059) (4,076) (2,045) -
--------------------------------------------------

--------------------------------------------------
Cash provided by (used
in) financing activities (63) - - -
--------------------------------------------------

Foreign exchange
change on cash held
in foreign currency - (9,837) (3,810) -
--------------------------------------------------

Intergroup funding
(distributions) (248,439) 827 (22,878) (15,932)
--------------------------------------------------

Increase (decrease)
in cash (322,386) 16,834 (4,079) -
Cash:
Beginning of period 475,323 100,665 94,742 -
--------------------------------------------------
End of period 152,937 117,499 90,663 -
Short-term investments 26,967 - - -
--------------------------------------------------

Cash and short-term
investments $179,904 $117,499 $90,663 $ -
--------------------------------------------------
--------------------------------------------------


2009 For the three months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

Cash provided by (used
in) operating activities
Before net change
in non-cash
working capital $35,848 $ - $ - $72,673
Net change
in non-cash
working capital 10,748 - - 16,604
-------------------------------------- -----------
46,596 - - 89,277
-------------------------------------- -----------
Cash provided by (used
in) investing activities
Capital spending (3,317) 10,403 (24,737) (23,789)
Sale (purchase) of
long-term investments - - - (100,000)
Purchase of
short-term investments - - - 53,958
Loans to Petaquilla
shareholders - - - -
-------------------------------------- -----------
(3,317) 10,403 (24,737) ($69,831)
-------------------------------------- -----------

-------------------------------------- -----------
Cash provided by (used
in) financing activities (11,216) (270,727) - (282,006)
-------------------------------------- -----------

Foreign exchange
change on cash held
in foreign currency (5,661) (2,102) (125) (21,535)
-------------------------------------- -----------

Intergroup funding
(distributions) (18,119) 280,195 24,346 -
-------------------------------------- -----------

Increase (decrease)
in cash 8,283 17,769 (516) (284,095)
Cash:
Beginning of period 42,797 35,304 4,922 753,753
-------------------------------------- -----------
End of period 51,080 53,073 4,406 469,658
Short-term investments - - - 26,967
-------------------------------------- -----------

Cash and short-term
investments $51,080 $53,073 $4,406 $496,625
-------------------------------------- -----------
-------------------------------------- -----------


2008 For the three months ended September 30

CORPORATE ÇAYELI PYHÄSALMI 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)
Sale (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
Cobre Panama 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 $ -
--------------------------------------------------


2008 For the three months ended September 30
COBRE
OK TEDI LAS CRUCES PANAMA TOTAL
------------------------------------------------------------- -----------
(thousands of (Papua New
Canadian dollars) Guinea) (Spain) (Panama)

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)
Sale (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
Cobre Panama - - - 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
-------------------------------------- -----------



INMET MINING CORPORATION
Consolidated statements of retained earnings
(unaudited)

Three Months Ended Nine Months Ended
(thousands of September 30 September 30
Canadian dollars) 2009 2008 2009 2008
------------------------------------------------- -----------------------

Retained earnings,
beginning of period $1,396,101 $1,244,313 $1,283,074 $1,074,762
Net income 61,551 75,057 179,406 249,436
Dividends on common shares - - (4,828) (4,828)
------------------------ -----------------------
Retained earnings,
end of period $1,457,652 $1,319,370 $1,457,652 $1,319,370
------------------------------------------------- -----------------------
(see accompanying notes)



Consolidated statements of comprehensive income
(unaudited)

Three Months Ended Nine Months Ended
(thousands of September 30 September 30
Canadian dollars) 2009 2008 2009 2008
------------------------------------------------- -----------------------

Net income $61,551 $75,057 $179,406 $249,436
------------------------ -----------------------

Other comprehensive income
(loss) for the period:
Changes in fair value
of gold forward
sales contracts (775) 3,593 (1,880) (3,690)

Changes in fair value
of interest rate
swap contract (1,081) (445) 3,903 (327)

Changes in fair value
of foreign exchange
forward contract - - - 7,054

Changes in fair
value of investments 986 (2,930) 10,387 (4,676)

Currency translation
adjustments (103,221) (24,030) (174,798) 40,456

Reclassification to net
income of gains
(losses) realized:
Gain on sale of investment - - - (256)

Troilus gold hedge loss - 7,932 - 24,372

Ok Tedi gold hedge loss - - - 1,013

Amortization of deferred
Troilus gold hedges - (1,361) - (4,083)
Amortization of gain
on foreign exchange
forward contract (2,626) (3,195) (5,657) (3,195)
Recognition of gain
on foreign exchange
forward contract
(note 15)(1) (28,158) - (28,158) -

Recognition of loss on
interest rate swap
contract (note 15)(2) 11,711 - 11,711 -

Foreign exchange loss
(gain) on reduction of
net investment in
self-sustaining foreign
operations (note 15) 1,439 - (2,473) 20,384
Income tax recovery
(expense) related to
other comprehensive
income (note 19) 8,822 - 5,685 -
-------------------------- ---------------------
(112,903) (20,436) (181,280) 77,052
-------------------------- ---------------------
Comprehensive income
(loss) ($51,352) $54,621 ($1,874) $326,488
--------------------------------------------------- ---------------------
(see accompanying notes)
(1) Gain of $35,615 net of non-controlling interest of $7,457.
(2) Loss of $14,823 net of non-controlling interest of $3,112.



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). 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 2008 Annual Review.

The interim consolidated financial statements have been approved by
Inmet's board of directors and have been reviewed by our external
auditors.

2. Changes in accounting policies

Effective January 1, 2009, we adopted CICA Handbook Section 3064,
Goodwill and Intangible Assets, which replaces Section 3062 -
Goodwill and Other Intangible Assets and Section 3450 - Research and
Development Costs. This new standard establishes standards for the
recognition, measurement, presentation and disclosure of goodwill
subsequent to its initial recognition and of intangible assets. It
provides guidance for recognizing 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. The adoption of this standard did not have an
impact on our consolidated financial statements.

Emerging Issues Committee 173 - Credit Risk and the fair value of
financial assets and financial liabilities

Effective January 1, 2009, we adopted EIC-173, Credit Risk and the
Fair Value of Financial Assets and Financial Liabilities
retroactively, without restatement. This EIC provides guidance on how
to take into account credit risk of an entity and counterparty when
determining the fair value of financial assets and financial
liabilities, including derivative instruments. The adoption of EIC
173 did not have a significant impact on our consolidated financial
statements.

3. 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, 2009
-------------------------------------------------------------------------

(thousands) Corporate Çayeli Pyhäsalmi Troilus Ok Tedi Total
-------------------------------------------------------------------------

Accounts
receivable(1) ($272) ($17,674) ($8,108) ($1,180) ($53,308) ($80,542)
Inventories - (585) (375) 5,428 1,149 5,617
Accounts payable
and accrued
liabilities (1,319) 1,028 2,625 (6,743) (799) (5,208)
Taxes 5,247 1,621 13,867 - 23,846 44,581
Other (2,709) (2) - - (792) (3,503)
-------------------------------------------------------------------------
$947 ($15,612) $8,009 ($2,495) ($29,904) ($39,055)
-------------------------------------------------------------------------


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

(thousands) Corporate Çayeli Pyhäsalmi Troilus Ok Tedi Total
-------------------------------------------------------------------------

Accounts
receivable $10,753 ($1,188) $11,987 $533 $18,254 $40,339
Inventories - (992) (91) (1,194) (8,587) (10,864)
Accounts
payable and
accrued
liabilities (10,530) 1,335 891 (3,462) (1,408) (13,174)
Taxes (1,752) (12,718) (6,726) - 375 (20,821)
Other 108 32 - - (95) 45
-------------------------------------------------------------------------
($1,421) ($13,531) $6,061 ($4,123) $8,539 ($4,475)
-------------------------------------------------------------------------
(1) Includes changes in accounts payable related to metal sales.


For the three months ended September 30, 2009
-------------------------------------------------------------------------

(thousands) Corporate Çayeli Pyhäsalmi Troilus Ok Tedi Total
-------------------------------------------------------------------------

Accounts
receivable ($338) ($1,996) ($1,905) ($685) ($4,908) ($9,832)
Inventories - (804) (765) 1,490 1,161 1,082
Accounts
payable and
accrued
liabilities 1,552 6,550 1,368 (2,127) (1,181) 6,162
Taxes (95) 449 3,438 - 16,175 19,967
Other (251) (25) - - (499) (775)
-------------------------------------------------------------------------
$868 $4,174 $2,136 ($1,322) $10,748 $16,604
-------------------------------------------------------------------------


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

(thousands) Corporate Çayeli Pyhäsalmi Troilus Ok Tedi Total
-------------------------------------------------------------------------

Accounts
receivable $1,921 $12,617 $2,625 $5,646 $16,778 $39,587
Inventories - 2,188 623 1,126 (7,085) (3,148)
Accounts payable
and accrued
liabilities (259) (631) 971 (2,995) 2,824 (90)
Taxes (4,890) 537 (2,456) - (18,011) (24,820)
Other 60 (78) - 421 99 502
-------------------------------------------------------------------------
($3,168) $14,633 $1,763 $4,198 ($5,395) $12,031
-------------------------------------------------------------------------

4. Cash and short-term investments

At period end, our cash and short-term investments are held in:

---------------------------------------------------------------------
September 30 December 31
(thousands) 2009 2008
---------------------------------------------------------------------
Cash:
Liquidity funds $199,852 $276,301
Bankers' acceptances 28,932 64,293
Money market funds 67,476 38,683
Term deposits 59,920 78,041
Overnight deposits 10,576 14,684
Bank deposits 102,902 52,429
Provincial short-term notes - 12,628
----------------------------
469,658 537,059
Short-term investments:
Provincial short-term notes - 35,674
Commercial paper 26,967 -
---------------------------------------------------------------------
26,967 35,674
---------------------------------------------------------------------
Total cash and short-term investments $496,625 $572,733
---------------------------------------------------------------------

5. Restricted cash

---------------------------------------------------------------------
September 30 December 31
(thousands) 2009 2008
---------------------------------------------------------------------
Collateralized cash for
letter of credit facility $16,459 $16,343
In trust for Ok Tedi rehabilitation 26,621 16,667
Collateralized cash for letters
of credit - Las Cruces 63,123 26,090
Collateralized cash for Pyhäsalmi reclamation 1,880 2,104
---------------------------------------------------------------------
108,083 61,204
Less current portion:
Collateralized cash for letters
of credit - Las Cruces (15,231) (8,311)
---------------------------------------------------------------------
$92,852 $52,893
---------------------------------------------------------------------

Las Cruces' restricted cash which secures a restoration bond
increased by (euro)5 million in the first quarter and
(euro)15 million in the third quarter. Also in the third quarter, Las
Cruces' restricted cash securing subsidies advanced increased by
(euro)5 million. The increases in the third quarter result from
repayment of its credit facility which also included a letter of
credit facility (note 9).

During the third quarter, Ok Tedi paid US $50 million in trust to
fund future rehabilitation (our share was US $9 million).

6. Investments in equity securities

---------------------------------------------------------------------
September 30 December 31
(thousands) 2009 2008
---------------------------------------------------------------------
Available-for-sale equity securities:
Premier Gold Mines Ltd. $25,704 $15,309
Other 2,350 2,205
---------------------------------------------------------------------
$28,054 $17,514
---------------------------------------------------------------------

7. Held to maturity investments

During the third quarter, we purchased $100 million of long-term
Canadian government and corporate bonds with credit ratings of A to
AAA. The bonds mature between December 2010 and June 2014. We have
designated these bonds as held to maturity investments and measure
them at amortized cost.

8. Derivatives

---------------------------------------------------------------------
September 30 December 31
(thousands) 2009 2008
---------------------------------------------------------------------
Derivative asset:
Ok Tedi copper forward sales contracts $- $4,327
Derivative liabilities:
Ok Tedi gold forward sales contracts $3,253 $1,670
Ok Tedi copper forward sales contracts 433 -
Las Cruces interest rate swap contracts - 23,440
---------------------------------------------------------------------
$3,686 $25,110
---------------------------------------------------------------------

In connection with the decision to repay the credit facility (note
9), Las Cruces paid $16 million in the third quarter to terminate its
interest rate swap contract. The $15 million interest rate swap loss
that was deferred in accumulated other comprehensive income was
recognized in investment and other income (note 15).

9. Long-term debt

---------------------------------------------------------------------
September 30 December 31
(thousands) 2009 2008
---------------------------------------------------------------------
Credit facility - Tranche A $- $262,504
- Tranche B - 80,364
Promissory note 18,675 19,741
Loans from non-controlling shareholder 184,770 131,905
---------------------------------------------------------------------
203,445 494,514
Less current portion:
Credit facility - Tranche A - (29,302)
- Tranche B - (80,364)
---------------------------------------------------------------------
$203,445 $384,848
---------------------------------------------------------------------

Credit facility

In the first half of 2009, Las Cruces made its first scheduled
repayment of US $12 million under Tranche A of its credit facility.
It also repaid (euro)42 million under Tranche B (an amount equal to
the subsidies received).

On July 31, 2009, Las Cruces repaid the remaining US $203 million
under Tranche A, (euro)5 million under Tranche B and cash
collateralized $32 million in letters of credit that had been secured
under the credit facility. This eliminated the Las Cruces project
credit facility. We funded 100 percent of the repayment through an
intercompany loan. Leucadia guarantees 30 percent of this loan


Loans from non-controlling shareholder

During the second quarter, Las Cruces received intercompany loan
advances of (euro)40 million. 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)118 million, is
reflected in long-term debt at September 30, 2009. Loans from
non-controlling shareholders approximate fair value because the loans
accrue interest at prevailing market rates.

10. Commitments

Our operations have the following capital commitments as at
September 30, 2009:

- Ok Tedi has committed approximately $93 million (our
proportionate share is $16.7 million) to capital expenditures
related to the mine waste management project.

- Las Cruces has committed $8 million related to the purchase of
material and supplies and certain operating costs.

- Cobre Panama has committed $152 million for the design and supply
of certain mill equipment.

11. Leases

Las Cruces has a contract for the supply of oxygen, effective during
the first quarter, from a plant owned and operated by a third party
and located at the mine site. This arrangement contains a capital
lease with minimum lease payments of:

2009 $2,001
2010 2,668
2011 2,668
2012 2,668
2013 2,668
Thereafter 27,348
---------------------------------
Total $40,021
---------------------------------

We have recognized the oxygen plant in property, plant and equipment
at $23 million. This amount is based on the total minimum future
lease payments, discounted at Las Cruces' incremental borrowing rate
of 8.2 percent. We have also recognized capital lease obligations of
$23 million in other liabilities. The oxygen plant will be
depreciated over its estimated useful life of 15 years once Las
Cruces is substantially complete.

12. Las Cruces subsidies

Las Cruces received (euro)3 million of subsidy grants during the
third quarter of 2009 and (euro)40 million year to date. This
operation must meet certain minimum employment and share capital
requirements for a five year period, otherwise subsidies received
must be repaid. Las Cruces expects to meet these conditions and has
recognized total subsidies of (euro)53 million as a reduction of the
cost of the related property, plant and equipment.

13. Share capital

On June 25, 2009, we completed a public offering of 7.825 million
common shares, on a bought deal basis, at a price of $44.50 per share
for aggregate gross proceeds of $348 million ($333 million net of
transaction costs).

14. Accumulated other comprehensive income (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 $1,030) ($2,402)
Unrealized gains on foreign exchange forward contract(1) 21,023
Unrealized losses on interest rate swap contracts(2) (9,962)
Unrealized gains on investments (net of tax of $667) 3,314
Currency translation adjustment 170,659
---------------------------------------------------------------------
AOCI, December 31, 2008 $182,632
Impact on adoption of EIC 173 - January 1, 2009 (note 2) 279
Other comprehensive income for the nine months
ending September 30, 2009 (181,280)
---------------------------------------------------------------------
AOCI, September 30, 2009 $1,631
---------------------------------------------------------------------

AOCI September 30, 2009 comprises:
Unrealized losses on gold forward sales contracts
(net of tax of $1,594) ($3,718)
Unrealized gains on investments (net of tax of $2,407) 11,961
Currency translation adjustment (6,612)
---------------------------------------------------------------------
AOCI, September 30, 2009 $1,631
---------------------------------------------------------------------
(1) Net of tax of $12,792 and non-controlling interest of $8,956.
(2) Net of tax of $6,102 and non-controlling interest of $4,270.

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

---------------------------------------------------------------------
September 30 December 31
(thousands) 2009 2008
---------------------------------------------------------------------
Pyhäsalmi (euro functional currency) $1,570 $17,480
Las Cruces (euro functional currency) 22,571 57,947
Çayeli (US dollar functional currency) (14,427) 24,751
Ok Tedi (US dollar functional currency) (13,387) 6,224
Cobre Panama (US dollar functional currency) (2,939) 64,257
---------------------------------------------------------------------
($6,612) $170,659
---------------------------------------------------------------------

The US dollar to Canadian dollar exchange rate was $1.07 at September
30, 2009 and $1.22 at December 31, 2008. The euro to Canadian dollar
exchange rate was $1.57 at September 30, 2009 and $1.70 at December
31, 2008.

15. Investment and other income

---------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
(thousands) 2009 2008 2009 2008
---------------------------------------------------------------------
Interest income $1,135 $6,308 $3,878 $21,994
Foreign exchange
gain (loss) (17,417) (16,553) (9,319) (28,268)
Loss on recognition
of settlement of Las
Cruces interest rate
swap contract (note 8) (14,823) - (14,823) -

Gain on recognition of
settlement of Las
Cruces foreign exchange
forward contract 35,615 - 35,615 -

Dividend and
royalty income 300 1,650 985 3,154
Mark to market on
Ok Tedi copper
forward contracts (802) 3,780 (3,228) (636)
Other (420) (652) (4,257) 1,685
---------------------------------------------------------------------
$3,588 ($5,467) $8,851 ($2,071)
---------------------------------------------------------------------

Foreign exchange

For transactions with foreign currencies we use the exchange rates in
effect:
- at period-end for monetary assets and liabilities
- on the date of the transaction for non-monetary assets and
liabilities
- on the date of the transaction for income and expenses

Foreign exchange gain (loss) is a result of:

---------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
(thousands) 2009 2008 2009 2008
---------------------------------------------------------------------
Translation of Las Cruces'
US dollar-denominated
bank credit facility ($1,348) ($12,895) $2,460 ($12,895)
Translation of US
dollar - denominated
cash held at corporate (13,976) 16 (14,395) (11)
Distribution of funds
from subsidiaries (1,439) - 2,473 (20,384)
Translation of
other-monetary assets
and liabilities (654) (3,674) 143 5,022
---------------------------------------------------------------------
($17,417) ($16,553) ($9,319) $(28,268)
---------------------------------------------------------------------

Gain on foreign exchange forward contract

When we converted the Las Cruces debt from euro to US dollars in
2008, Las Cruces settled a foreign exchange forward contract and
received proceeds of $52 million. We deferred the proceeds in
accumulated other comprehensive income, and have been amortizing it
to income over the term of the debt. When we repaid the debt, we
realized the remaining deferred gain of $37 million in investment and
other income.

16. Income tax expense

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

For the nine months ended September 30, 2009
-------------------------------------------------------------------------
Las
(thousands) Corporate Çayeli Pyhäsalmi Ok Tedi Cruces Total
-------------------------------------------------------------------------

Current income
taxes $12,220 $17,654 $6,114 $29,452 $ - $65,440
Future income
taxes 10,168 (10,382) 530 8,481 7,949 16,746
-------------------------------------------------------------------------
$22,388 $7,272 $6,644 $37,933 $7,949 $82,186
-------------------------------------------------------------------------


For the nine months ended September 30, 2008
-------------------------------------------------------------------------
Las
(thousands) Corporate Çayeli Pyhäsalmi 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 $18,886 $50,324 ($5,001) $106,456
-------------------------------------------------------------------------


For the three months ended September 30, 2009
-------------------------------------------------------------------------
Las
(thousands) Corporate Çayeli Pyhäsalmi Ok Tedi Cruces Total
-------------------------------------------------------------------------

Current income
taxes $2,056 $7,048 $4,356 $20,357 $ - $33,817
Future income
taxes 602 (1,407) (17) (1,433) 7,682 5,427
-------------------------------------------------------------------------
$2,658 $5,641 $4,339 $18,924 $7,682 $39,244
-------------------------------------------------------------------------


For the three months ended September 30, 2008
-------------------------------------------------------------------------
Las
(thousands) Corporate Çayeli Pyhäsalmi 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
-------------------------------------------------------------------------

17. 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) 2009 2008 2009 2008
---------------------------------------------------------------------
Net income available
to common shareholders $61,551 $75,057 $179,406 $249,436
---------------------------------------------------------------------


(thousands)
---------------------------------------------------------------------
Weighted average common
shares outstanding 56,107 48,282 51,062 48,282
Plus incremental shares
from assumed conversions:
Deferred share units 89 78 89 78
Long term incentive
plan units 43 - 43 -
---------------------------------------------------------------------
Diluted weighted
average common
shares outstanding 56,239 48,360 51,194 48,360
---------------------------------------------------------------------


(Canadian dollars
per share)
---------------------------------------------------------------------
Basic net income
per common share $1.10 $1.55 $3.51 $5.17
Dilutive effect from
assumed conversions of
deferred share units and
long term incentive plan
units per common share ($0.01) - ($0.01) (0.01)
---------------------------------------------------------------------
Diluted net income
per common share $1.09 $1.55 $3.50 $5.16
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18. Asset impairment

We made a decision in 2008 not to proceed with the Cerattepe project
and all work has ceased on the project. During the first quarter, we
recognized an asset impairment charge of $6 million and an associated
tax recovery of $6 million.

19. Income taxes recovery (expense) included in other comprehensive
income

---------------------------------------------------------------------
Three months ended Nine months ended
September 30 September 30
(thousands) 2009 2008 2009 2008
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Changes in fair value
of gold forward
sales contracts $233 ($678) $564 ($962)
Changes in fair value
of interest rate
swap contracts 411 272 (1,482) 200
Changes in fair value
of foreign exchange
forward contracts - (19) - (4,338)
Changes in fair value
of investments (165) 590 (1,740) 1,025
Recognition of gain
on foreign exchange
forward contract 12,792 - 12,792 -
Recognition of loss
on interest rate swap
contract (4,449) - (4,449) -
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$8,822 $165 $5,685 ($4,075)
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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