Inmet Mining Corporation
TSX : IMN

Inmet Mining Corporation

April 28, 2011 19:35 ET

Inmet Announces First Quarter Earnings

TORONTO, CANADA--(Marketwire - April 28, 2011) - Inmet Mining Corporation (TSX:IMN) -

All amounts in Canadian dollars unless indicated otherwise

Inmet announces first quarter earnings of $2.33 per share, reflecting earnings from discontinued operations of $1.36 per share after the sale of its interest in Ok Tedi and $0.97 per share from continuing operations compared to $0.96 per share in the first quarter of 2010.

First quarter highlights

--  Strong earnings from operations 

Earnings from operations were $117 million compared to $68 million in the first quarter of last year - a result of higher metal prices, the inclusion of earnings from Las Cruces and higher copper sales volumes at Cayeli.

--  Inmet reaffirms 2011 copper production objective 

Copper production this quarter was lower than expected during the ramp up of Las Cruces and because Cayeli deferred the processing of higher grade ore to later this year. We remain confident that we will achieve our production guidance of 94,400 tonnes of copper this year.

--  Sale of our interest in Ok Tedi 

On January 29, 2011, we sold our 18 percent equity interest in Ok Tedi for US $335 million. Our net proceeds after Papua New Guinea withholding taxes were US $307 million. As a result, we have reported the after-tax earnings relating to Ok Tedi of $83 million or $1.36 per share as discontinued operations.

--  Merger-related costs and foreign exchange losses reduce net income 

We incurred approximately $6 million of expenses this quarter related to the agreement to merge with Lundin Mining Corporation which was terminated on March 29, 2011. Additionally, we recognized foreign exchange losses of $10 million on US dollar proceeds we received from the sale of our equity interest in Ok Tedi.

--  Las Cruces progressing on commissioning plan 

Las Cruces produced 8,100 tonnes of copper cathode this quarter, a level affected by temporary disruptions in the supply and distribution of oxygen in the leaching process. We are in the process of installing new generation oxygen distributors that should enable a step-change increase in production. We remain confident that we will reach nameplate production rates of 6,000 tonnes of copper cathode per month by year end.

--  Temasek expected to convert subscription receipts 

Panamanian law changed this quarter to allow foreign governmental bodies or authorities to hold an interest in mining concessions in Panama. We understand that Temasek is in the course of completing its legal review and we expect Temasek to convert their $500 million in subscriptions receipts into Inmet common shares well before June 30, 2011.

--  Pyhasalmi signs additional long-term pyrite agreement 

In March 2011, Pyhasalmi signed a five year sales contract with a customer in the Far East for up to 400,000 tonnes of pyrite per year. Including its current European contracts, Pyhasalmi now has long-term agreements covering sales of up to 760,000 tonnes annually, and expects to produce and sell 800,000 tonnes pyrite in 2011, an increase of 200,000 tonnes from our initial objective. In total, we are expecting gross sales and contribution (net of smelter treatment charges and freight and variable costs that result from pyrite production) from pyrite and other metal sales of $67 million and $47 million respectively in 2011. For future years, prices are negotiated annually with reference to sulphur and fine iron ore prices and ocean transportation costs.

--  New higher grade Balboa discovery at Cobre Panama indicating high grade
    potential 

On March 8, 2011, we announced that Minera Panama S.A. (MPSA) discovered a significant new higher grade mineralized zone, the Balboa deposit, on its Cobre Panama project. MPSA drilled 10 holes on approximately 200 metre centres. Three of the drill holes have intersected sheeted quartz-bornite-chalcopyrite veins returning higher copper and gold grades than those encountered at any time previously on the Cobre Panama property in over 40 years of exploration drilling. The Balboa mineralization starts near surface and this implies that it could be mined with a low strip ratio but at generally higher copper and gold grades than the current mineral resources. Four drills continue to delineate the extents of zone on 200 metre centres. Additional drills are also being mobilized to begin infill drilling on 100 metre centres with a view to establishing resources and reserves by year-end.

Key financial data                                                          
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                three months ended March 31 
(thousands, except per share amounts)            2011        2010    change 
----------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS                                                        
Sales                                                                       
Gross sales                               $   254,277 $   161,162       +58%
Net income                                                                  
Net income from continuing operations     $    59,405 $    49,371       +20%
Net income from continuing operations per                                   
 share                                    $      0.97 $      0.96        +1%
Net income from discontinued operations   $    83,439 $    30,718      +172%
Net income from discontinued operations                                     
 per share                                $      1.36 $      0.55      +147%
Net income attributable to Inmet                                            
 shareholders                             $   142,844 $    84,771       +69%
Net income per share                      $      2.33 $      1.51       +54%
Cash flow                                                                   
Cash flow provided by operating                                             
 activities                               $   118,176 $    45,127      +162%
Cash flow provided by operating                                             
 activities per share (1)                 $      1.92 $      0.80      +140%
Capital spending (2)                      $    40,730 $    17,541      +132%
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OPERATING HIGHLIGHTS                                                        
Production(3)                                                               
  Copper (tonnes)                              17,700      14,500       +22%
  Zinc (tonnes)                                21,200      18,700       +13%
  Gold (ounces)                                     -      19,300      -100%
  Pyrite (tonnes)                             186,100     197,500        -6%
Copper cash cost (US $ per pound)(4)      $      0.95 $      0.41      +132%
----------------------------------------------------------------------------
                                                                       as at
                                                          as at     December
                                                       March 31           31
FINANCIAL CONDITION                                        2011         2010
Current ratio                                          4.4 to 1     3.4 to 1
Gross debt to total equity                                   1%           1%
Net working capital balance (millions)                     $535         $626
Liquidity balance including cash and long-term bonds                        
 (millions)                                              $1,083         $699
Gross debt (millions)                                       $17          $17
Shareholders' equity (millions)                          $2,732       $2,555
----------------------------------------------------------------------------
(1) Cash flow provided by operating activities divided by average shares    
outstanding for the period.                                                 
(2) For the three months ended March 31, 2011, this includes capital        
spending of $23 million at Cobre Panama and $15 million at Las Cruces. For  
the three months ended March 31, 2010, this includes capital spending of $18
million at Cobre Panama.                                                    
(3) Inmet's share. 2010 production volumes exclude our share of Ok Tedi.    
(4) Copper cash cost per pound is a non-GAAP financial measure - see        
Supplementary financial information on pages 31 to 32. Copper cash costs    
this quarter were higher due to the impact of Las Cruces as it ramps up to  
full production. In the first quarter of 2010, Las Cruces' results were not 
included in cash costs as it had not yet reached commercial production.     

First quarter press release

Where to find it

Our financial results                                                      5
Key changes in 2011                                                        5
Understanding our performance                                              6
  Earnings from operations                                                 8
  Corporate costs                                                         13
Results of our operations                                                 15
  Cayeli                                                                  16
  Las Cruces                                                              18
  Pyhasalmi                                                               20
Status of our development project                                         22
  Cobre Panama                                                            22
Managing our liquidity                                                    24
Financial condition                                                       28
Accounting changes                                                        29
Supplementary financial information                                       31

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 March 31, 2011. Revised objective is as of April 28, 2011.

Adoption of International Financial Reporting Standards

We have prepared our first quarter 2011 consolidated financial statements and other financial information according to International Financial Reporting Standards, and restated our 2010 comparative financial statements and other financial information following our IFRS accounting policies. See Adoption of International Financial Reporting Standards on page 29 for more information.

Forward looking information

Securities regulators encourage companies to disclose forward-looking information to help investors understand a company's future prospects. This press release contains statements about our future financial condition, results of operations and business.

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

Our financial results                                                       
----------------------------------------------------------------------------
(thousands, except                                                          
per share amounts)                              three months ended March 31 
                                                 2011         2010   change 
----------------------------------------------------------------------------
EARNINGS FROM OPERATIONS (1)                                                
Cayeli                                      $  51,473  $    31,036      +66%
Las Cruces                                     30,576            -     +100%
Pyhasalmi                                      34,453       22,865      +51%
Other                                               -       14,178     -100%
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                                              116,502       68,079      +71%
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DEVELOPMENT AND EXPLORATION                                                 
Corporate development and exploration         (13,411)      (2,779)    +383%
----------------------------------------------------------------------------
CORPORATE COSTS                                                             
General and administration                     (8,422)      (5,421)     +55%
Investment and other income                    (5,773)       1,204     -579%
Stand by costs                                      -       (6,753)    -100%
Finance costs                                  (2,331)      (1,873)     +24%
Income and capital taxes                      (27,160)      (3,086)    +780%
----------------------------------------------------------------------------
                                              (43,686)     (15,929)    +174%
----------------------------------------------------------------------------
Net income from continuing operations          59,405       49,371      +20%
Income from discontinued operation (net of                                  
 taxes)                                        83,439       30,718     +172%
----------------------------------------------------------------------------
Non-controlling interest                            -        4,682     -100%
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Net income attributable to Inmet                                            
 shareholders                               $ 142,844  $    84,771      +69%
----------------------------------------------------------------------------
Income from continuing operations per                                       
 common share                               $    0.97  $      0.96       +1%
----------------------------------------------------------------------------
Diluted income from continuing operations                                   
 per common share                           $    0.96  $      0.96        - 
----------------------------------------------------------------------------
Basic net income per common share           $    2.33  $      1.51      +54%
----------------------------------------------------------------------------
Diluted net income per common share         $    2.31  $      1.51      +53%
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Weighted average shares outstanding            61,549       56,107      +10%
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(1) Gross sales less smelter processing charges and freight, cost of sales  
including depreciation and provisions for mine reclamation at closed        
properties.                                                                 
Key changes in 2011                                                         
-------------------------------------------------------------------------
                                                   three months          
                                                    ended March          
(millions)                                                   31  see page
-------------------------------------------------------------------------
EARNINGS FROM OPERATIONS                                                 
Sales                                                                    
Higher copper prices denominated in Canadian                             
 dollars                                                 $  15          8
Other changes in prices denominated in Canadian                          
 dollars                                                     3          8
Higher sales volumes                                        14          8
Costs                                                                    
Higher operating costs, including costs that vary                         
 with income and cash flows                                 (1)        11
Operating earnings at Las Cruces                            31         19
2010 earnings from Troilus                                 (14)          
-------------------------------------------------------------------------
Higher earnings from operations compared to 2010            48           
CORPORATE COSTS                                                          
Costs related to proposed merger with Lundin                (6)        13
Exploration of Balboa deposit at Cobre Panama               (2)        13
Standby charges in 2010                                      7         13
Foreign exchange changes                                   (10)        13
Higher income taxes                                        (24)        14
Other                                                       (3)          
-------------------------------------------------------------------------
Higher net income from continuing operations                             
 compared to 2010                                           10           
Higher income from discontinued operation - Ok                           
 Tedi                                                       53         14
Non-controlling interest in 2010                            (5)          
-------------------------------------------------------------------------
Higher net income attributable to Inmet                                  
 shareholders compared to 2010                           $  58           
-------------------------------------------------------------------------

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 8).

-----------------------------------------------------------------------
                                            three months ended March 31
                                           2011        2010      change
-----------------------------------------------------------------------
US dollar metal prices                                                 
  Copper (per pound)                   US $4.29    US $3.42        +25%
  Zinc (per pound)                     US $1.06    US $1.03         +3%
-----------------------------------------------------------------------
Canadian dollar metal prices                                           
 Copper (per pound)                     C $4.23     C $3.56        +19%
 Zinc (per pound)                       C $1.05     C $1.07         -2%
-----------------------------------------------------------------------

Copper

Copper prices on the London Metals Exchange (LME) averaged US $4.38 per pound this quarter, an increase of 12 percent from the fourth quarter of 2010 and a 28 percent increase over the first quarter of 2010.

Zinc

Zinc prices on the LME averaged US $1.09 per pound this quarter, slightly higher than last quarter's average price of US $1.05 per pound.

Pyrite

Prices for sulphur continued to rise this quarter. The earthquake in Japan resulted in the closure of a number of sulphur and acid producing plants and higher prices at the end of the quarter. Rising sulphur prices could have a positive impact on our pyrite prices this year.

Exchange rates

Exchange rates affect our revenue and earnings. The table below shows the average exchange rates we realized this quarter and year to date compared to 2010.

---------------------------------------------------------
                              three months ended March 31
                        2011          2010         change
---------------------------------------------------------
Exchange rates                                           
 1 US$ to C$      $     0.99    $     1.04            -5%
 1 euro to C$     $     1.35    $     1.44            -6%
 1 euro to US$    $     1.37    $     1.39            -1%
---------------------------------------------------------

Our sales are affected by the conversion of US dollar revenue to Canadian dollars. Compared to the same quarter last year, the value of the Canadian dollar appreciated 5 percent relative to the US dollar, and 6 percent relative to the euro.

Our earnings are affected by changes in foreign currency exchange rates when we:

--  translate the results of our operations from their functional currency
    (US dollars or euros) to Canadian dollars 
--  revalue US dollars and euros that we hold in cash and long-term bonds at
    Corporate. 

Treatment charges down for copper

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. Zinc contracts for 2011 and 2010 were not finalized in the first quarter of the respective years and therefore the average charges represent the contract prices from the relevant prior year. Adjustments to contracts will be reflected in the second quarter.

----------------------------------------------------------------------------
                                                 three months ended March 31
(US$)                                               2011   2010(1)    change
----------------------------------------------------------------------------
Treatment charges                                                           
  Copper (per dry metric tonne of concentrate)    US $48    US $58      -17%
  Zinc (per dry metric tonne of concentrate)     US $258   US $203      +27%
----------------------------------------------------------------------------
  Price participation                                                       
  Copper (per pound)                            US $0.02  US $0.02         -
  Zinc (per pound)                              US $0.00  US $0.09     -100%
----------------------------------------------------------------------------
  Freight charges                                                           
  Copper (per dry metric tonne of concentrate)    US $50    US $47       +6%
  Zinc (per dry metric tonne of concentrate)      US $25    US $29      -14%
----------------------------------------------------------------------------
(1) 2010 charges exclude Ok Tedi charges.                                   

Statutory tax rates remain consistent

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

----------------------------------------------------------------------------
                                                    2011      2010    change
----------------------------------------------------------------------------
Statutory tax rates                                                         
  Cayeli                                             24%       24%         -
  Las Cruces                                         30%       30%         -
  Pyhasalmi                                          26%       26%         -
----------------------------------------------------------------------------

Earnings from operations

---------------------------------------------------------------------------
                                                three months ended March 31
(thousands)                                   2011         2010      change
---------------------------------------------------------------------------
Gross sales                            $   254,277  $   161,162        +58%
Smelter processing charges and freight     (31,585)     (33,101)        -5%
Cost of sales:                                                             
 Direct production costs                   (71,428)     (48,805)       +46%
 Inventory changes                          (7,154)      (1,966)      +264%
 Other non-cash expenses                      (568)      (1,495)       -62%
 Depreciation                              (27,040)      (7,716)      +250%
---------------------------------------------------------------------------
Earnings from operations               $   116,502  $    68,079        +71%
---------------------------------------------------------------------------

Gross sales were significantly higher

-------------------------------------------------------------------------
                                              three months ended March 31
(thousands)                              2011            2010      change
-------------------------------------------------------------------------
Gross sales by operation                                                 
  Cayeli                        $      99,053   $      75,268        +32%
  Las Cruces                           90,826               -       +100%
  Pyhasalmi                            64,398          51,440        +25%
  Other (Troilus)                           -          34,454       -100%
-------------------------------------------------------------------------
                                $     254,277   $     161,162        +58%
-------------------------------------------------------------------------
 Gross sales by metal                                                    
  Copper                        $     191,704   $      79,985       +140%
  Zinc                                 44,871          46,673         -4%
  Gold                                      -          23,257       -100%
  Other                                17,702          11,247        +57%
-------------------------------------------------------------------------
                                $     254,277   $     161,162        +58%
-------------------------------------------------------------------------

Key components of the change in sales: gross sales at Las Cruces, no sales at Troilus due to conclusion of operations

--------------------------------------------------------------------------
                                                       three months ended 
(millions)                                                       March 31 
--------------------------------------------------------------------------
Higher copper prices, denominated in Canadian dollars             $    15 
Lower zinc prices, denominated in Canadian dollars                     (2)
Changes in other metal prices                                           5 
Gross sales at Las Cruces                                              91 
2010 gross sales from Troilus                                         (34)
Higher sales volumes at our other mines                                18 
--------------------------------------------------------------------------
Higher gross sales, compared to 2010                              $    93 
--------------------------------------------------------------------------

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

This quarter, we recorded $1 million in negative finalization adjustments from fourth quarter 2010 sales.

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

--  22 million pounds of copper provisionally priced at US $4.28 per pound 
--  19 million pounds of zinc provisionally priced at US $1.07 per pound. 

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

-----------------------------------------------------
(millions of pounds)                 copper      zinc
-----------------------------------------------------
April 2011                               11        19
May 2011                                  5         -
June 2011                                 4         -
July 2011                                 2         -
-----------------------------------------------------
Unsettled sales at March 31, 2011        22        19
-----------------------------------------------------

Significantly higher copper and pyrite sales volumes, no gold sales volumes

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

--  Copper production and sales volumes were up this quarter mainly because
    of Las Cruces production. Copper sales volumes were higher than
    production volumes mainly because of the timing of shipments at Cayeli
    and Las Cruces. 
--  Zinc sales volumes were consistent with 2010. 
--  There were no gold production and sales volumes this quarter because
    Troilus ceased production in June 2010 and Ok Tedi was sold in January
    2011. 
--  Pyhasalmi realized higher pyrite sales volumes this quarter because of
    higher European customer demand. 
Sales volumes                                                               
------------------------------------------------------------
                                three months ended March 31 
                          2011        2010(1)         change
------------------------------------------------------------
Copper (tonnes)         20,600         13,300           +55%
Zinc (tonnes)           19,700         19,700              -
Gold (ounces)                -         21,200          -100%
Pyrite (tonnes)        141,300         90,800           +56%
------------------------------------------------------------
Production                                                                  
----------------------------------------------------------------------
                                                               revised
                              three months ended March 31    objective
Inmet's share(2)           2011      2010(1)       change      2011(3)
----------------------------------------------------------------------
Copper (tonnes)                                                       
  Cayeli                  6,000        7,100         -15%       30,900
  Las Cruces              8,100        3,200        +153%       50,200
  Pyhasalmi               3,600        2,900         +24%       13,300
  Troilus                     -        1,300        -100%            -
----------------------------------------------------------------------
                         17,700       14,500         +22%       94,400
----------------------------------------------------------------------
Zinc (tonnes)                                                         
  Cayeli                 12,500       11,500          +9%       48,600
  Pyhasalmi               8,700        7,200         +21%       31,900
----------------------------------------------------------------------
                         21,200       18,700         +13%       80,500
----------------------------------------------------------------------
Gold (ounces)                                                         
  Troilus                     -       19,300        -100%            -
----------------------------------------------------------------------
Pyrite (tonnes)                                                       
  Pyhasalmi             186,100      197,500          -6%      800,000
----------------------------------------------------------------------
(1) 2010 volumes have been revised to exclude Ok Tedi                       
(2) Inmet's share: 100 percent for Cayeli, Pyhasalmi and Troilus. Our share 
of Las Cruces is 70 percent until December 15, 2010 and 100 percent         
thereafter.                                                                 
(3) 2011 objective was revised from original target to increase expected    
pyrite production. All other production objectives remain unchanged.        

2011 outlook for sales

We use our production objectives to estimate our sales target.

--  We expect copper production in 2011 to be 94,400 tonnes. Copper
    production at Las Cruces should more than double compared to 2010 as the
    operation ramps up to its nameplate capacity of 72,000 tonnes of copper
    cathode and because we increased our ownership in Las Cruces from 70
    percent to 100 percent in December 2010. 
--  We expect 2011 zinc sales volumes to be similar to 2010 volumes because
    zinc production should be approximately the same as it was in 2010. 
--  With production ceasing at Troilus in 2010 and the sale of Ok Tedi in
    January 2011, no gold sales are expected for 2011. 
--  In March 2011, Pyhasalmi signed a five year sales contract with a
    customer in the Far East for up to 400,000 tonnes of pyrite per year.
    Including its current European contracts, Pyhasalmi now has long term
    agreements covering sales of up to 760,000 tonnes annually, and expects
    to produce and sell 800,000 tonnes of pyrite in 2011, an increase of
    200,000 tonnes from our initial objective. We expect total revenues from
    pyrite and other metals to be approximately $67 million and contribution
    (net of smelter processing charges and freight and variable costs that
    result from pyrite production) of $47 million. Prices are negotiated
    annually with reference to sulphur and fine iron ore prices and ocean
    transportation costs. 

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.

Lower smelter processing charges, higher freight                            
-------------------------------------------------------------------------
                                             three months ended March 31 
(thousands)                                  2011         2010    change 
-------------------------------------------------------------------------
Smelter processing charges and                                           
 freight by operation                                                    
  Cayeli                              $    17,894  $    18,838        -5%
  Las Cruces                                  268            -      +100%
  Pyhasalmi                                13,423       11,505       +17%
  Other (Troilus)                               -        2,758      -100%
-------------------------------------------------------------------------
                                      $    31,585  $    33,101        -5%
-------------------------------------------------------------------------
Smelter processing charges and                                           
 freight by metal                                                        
  Copper                              $    11,201  $    10,121       +11%
  Zinc                                     17,677       20,475       -14%
  Other                                     2,707        2,505        +8%
-------------------------------------------------------------------------
                                      $    31,585  $    33,101        -5%
-------------------------------------------------------------------------
Smelter processing charges by type                                       
 and freight                                                             
  Copper treatment and refining                                          
   charges                            $     3,381  $     3,989       -15%
  Zinc treatment charges                    9,762        8,069       +21%
  Copper price participation                  386          425        -9%
  Zinc price participation                   (200)       3,934      -105%
  Content losses                           11,621       11,638         - 
  Freight                                   6,307        4,958       +27%
  Other                                       328           88      +273%
-------------------------------------------------------------------------
                                      $    31,585  $    33,101        -5%
-------------------------------------------------------------------------

Our copper treatment and refining charges were lower than they were in 2010 because of the cessation of operations at Troilus. Zinc treatment charges were higher this quarter than they were in the same quarter of last year, but lower price participation charges decreased total zinc charges compared to the first quarter of 2010. Freight was higher this quarter mainly because of more pyrite and copper shipments.

2011 outlook for smelter processing charges and freight

We expect costs for copper treatment and refining to be higher in 2011 based on recently signed agreements with our customers. We sell approximately 90 percent of our copper concentrate under long-term contracts. In addition, we expect spot smelter processing charges to be significantly higher than 2010 because the short-term market for copper concentrates has been negatively affected by copper smelter production stoppages resulting from the earthquake in Japan in March. We expect copper price participation to be minimal.

We expect total zinc smelter processing charges, including price participation, to be lower than in 2010 because of a balanced zinc concentrate market.

We expect our ocean freight costs to be similar to rates realized in 2010.

Las Cruces sells its copper cathode production directly to buyers in the Spanish and Mediterranean markets and therefore does not incur smelter processing charges and has relatively low freight costs.

Direct production costs and cost of sales higher                            
----------------------------------------------------------------------------
                                                three months ended March 31 
(thousands)                                    2011          2010    change 
----------------------------------------------------------------------------
Direct production costs by operation                                        
  Cayeli                                $    23,378   $    21,736        +8%
  Las Cruces                                 33,488             -      +100%
  Pyhasalmi                                  14,562        14,978        -3%
  Other (Troilus)                                 -        12,091      -100%
----------------------------------------------------------------------------
Total direct production costs                71,428        48,805       +46%
Inventory changes                             7,154         1,966      +264%
Other non-cash expenses                         568         1,495       -62%
----------------------------------------------------------------------------
Total cost of sales                     $    79,150   $    52,266       +51%
----------------------------------------------------------------------------

Direct production costs

Direct production costs are higher this quarter, mainly because we began recognizing operating results at Las Cruces in our consolidated income statement effective July 1, 2010, and because of higher labour, consumables and royalty costs at Cayeli as anticipated in our guidance. This was partly offset by the closure of Troilus mid-year in 2010.

Inventory changes

Copper inventories at Cayeli and Las Cruces decreased this quarter end because of the timing of shipments.

2011 outlook for cost of sales

We expect consolidated direct production costs to be higher in 2011 because we will recognize a full year of production costs in the income statement for Las Cruces. This will be somewhat offset by the planned closure of Troilus.

Our budget for 2011 assumes our costs at Cayeli and Pyhasalmi will be similar to 2010. Costs at Las Cruces will rise to reflect increased production, but will decrease significantly per pound of copper produced as this operation continues to ramp up to full production.

Certain variable costs may continue to affect our earnings, depending on metal prices:

--  royalties at Cayeli are affected by its net income 
--  royalties at Las Cruces are affected by its net sales. 

Higher depreciation

------------------------------------------------------------------
                                      three months ended March 31 
(thousands)                          2011          2010    change 
------------------------------------------------------------------
Depreciation by operation                                         
Cayeli                        $     5,226   $     4,710       +11%
Las Cruces                         19,556             -      +100%
Pyhasalmi                           2,258         2,021       +12%
Other (Troilus)                         -           985      -100%
------------------------------------------------------------------
                              $    27,040   $     7,716      +250%
------------------------------------------------------------------

Depreciation was higher this quarter mainly because Las Cruces began to depreciate its operating assets in the income statement on July 1, 2010. There was no depreciation at Troilus this quarter because the mine concluded operations in June 2010.

2011 outlook for depreciation

We expect depreciation to be higher in 2011 mainly because we will recognize Las Cruces' operating results in earnings for the entire year. This will be offset somewhat by the closure of Troilus.

Corporate costs

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

Corporate development and exploration

Costs this quarter were $11 million higher than the first quarter of 2010. We incurred approximately $6 million of expenses this quarter from the work related to the arrangement agreement to merge with Lundin Mining Corporation. Inmet and Lundin Mining Corporation agreed to mutually terminate their arrangement agreement on March 29, 2011. All of the costs incurred in connection with the proposed merger have been expensed and classified as corporate development and exploration in the consolidated statement of earnings. In addition, we incurred $2 million in expenditures this quarter to drill the Balboa deposit at Cobre Panama. See Status of development project - Cobre Panama on page 22 for more information.

Investment and other income                                                 
--------------------------------------------------------------------------
                                              three months ended March 31 
(thousands)                                         2011             2010 
--------------------------------------------------------------------------
Interest income                            $       2,772    $       1,597 
Foreign exchange losses                          (10,826)          (1,061)
Dividend and royalty income                          600              714 
Other                                              1,681              (46)
--------------------------------------------------------------------------
                                           $      (5,773)   $       1,204 
--------------------------------------------------------------------------

Interest income

Interest income was higher this quarter compared to the same period last year because our long-term bond portfolio provided higher yields and because our cash and long-term bond balances were higher.

Foreign exchange losses

We have foreign exchange gains or losses when we revalue certain foreign denominated assets and liabilities.

Our foreign exchange losses were from:

----------------------------------------------------------------------------
                                                three months ended March 31 
(thousands)                                             2011           2010 
----------------------------------------------------------------------------
  Translation of US dollar held-to-maturity                                 
   investments                                   $    (1,452)   $         - 
  Translation of US dollar cash held at                                     
   corporate                                          (8,237)          (403)
  Translation of other monetary assets and                                  
   liabilities                                        (1,137)          (658)
----------------------------------------------------------------------------
                                                 $   (10,826)   $    (1,061)
----------------------------------------------------------------------------

We continue to hold the proceeds we received from the sale of our equity interest in Ok Tedi in US dollars, and plan to use this money to fund our US dollar denominated capital program at Cobre Panama. This quarter, we recognized total foreign exchange losses of $9.5 million on these funds because the US dollar depreciated in value relative to the Canadian dollar.

2011 outlook for investment and other income

Investment and other income is affected by our cash and held to maturity investment balances, and by interest rates and exchange rates.

Stand-by costs

In the first quarter of 2010, we could not mine ore at Las Cruces because of the water levels in the pit. We expensed $6.8 million in operating and maintenance costs for the water purification plant because they did not relate to production activities. We recognized these expenses as stand-by costs because we were not yet at commercial production.

Income tax expense                                                          
----------------------------------------------------------------------------
                                                three months ended March 31 
(thousands)                                  2011           2010     change 
----------------------------------------------------------------------------
Cayeli                                $    11,656    $     6,866            
Las Cruces                                  7,497         (7,634)           
Pyhasalmi                                   7,803          4,959            
Corporate and other                           204         (1,187)           
----------------------------------------------------------------------------
                                      $    27,160    $     3,004            
----------------------------------------------------------------------------
Consolidated effective tax rate                31%             6%      +417%
----------------------------------------------------------------------------

Our tax expense changes as our earnings change.

The consolidated effective tax rate increased this quarter compared to the same quarter of last year, mainly because in 2010 Las Cruces recognized a tax recovery on a foreign exchange loss from its intercompany US dollar denominated debt. The foreign exchange eliminates on consolidation, but the tax recovery does not, since there is no corresponding tax expense on the foreign exchange gain.

2011 outlook for income tax expense

We expect statutory tax rates at our operations to remain the same as they were in 2010 unless a statutory tax rate change is enacted.

Discontinued operation

As a result of the sale of our 18 percent equity interest in Ok Tedi in January 2011, we have presented our results relating to Ok Tedi as discontinued operations retroactively. In 2011, after-tax income of $83 million from this discontinued operation includes net earnings of $17 million in January, before the sale, and a gain on sale of $66 million net of withholding taxes. Papua New Guinea withholding taxes of $28 million were paid on the sale and no Canadian taxes were payable, but we expect to reduce our tax-effected Canadian tax loss pools by about $2 million.

Results of our operations

2011 estimates

Our financial review by operation includes estimates for our 2011 operating earnings and operating cash flows. We used our 2011 objectives for production and cost per tonne of ore milled to build these estimates, as well as the following assumptions for the remaining nine months of the year:

----------------------------------------------------------------------------
Copper price                  US $4.30 per pound                            
Zinc price                    US $1.00 per pound                            
Copper treatment cost         US $54 per tonne for contracts                
Zinc treatment cost           US $224 per tonne (basis US $2,500 per tonne) 
                              for contracts                                 
US $ to C$ exchange rate      $1.00                                         
euro to C$ exchange rate      $1.35                                         
Working capital               Assume no changes for the year                
----------------------------------------------------------------------------

Cayeli

----------------------------------------------------------------------------
                                                                     revised
                                       three months ended March 31 objective
                                          2011      2010    change      2011
----------------------------------------------------------------------------
Tonnes of ore milled (000's)               293       289       +1%     1,200
Tonnes of ore milled per day             3,300     3,200       +1%     3,300
----------------------------------------------------------------------------
Grades (percent)          copper           2.9       3.1       -6%       3.2
                          zinc             6.3       5.6      +13%       5.9
----------------------------------------------------------------------------
Mill recoveries (percent) copper            71        79      -10%        80
                          zinc              68        72       -6%        68
----------------------------------------------------------------------------
Production (tonnes)       copper         6,000     7,100      -15%    30,900
                          zinc          12,500    11,500       +9%    48,600
----------------------------------------------------------------------------
Cost per tonne of ore milled (C$)          $80       $75       +7%       $81
----------------------------------------------------------------------------

Copper production down due to lower grades and recoveries

Copper grades this quarter were lower than 2010 and plan, while zinc grades were higher, because we produced from different areas of the mine containing high grade zinc bornite ore.

Ore containing bornite minerals posed significant challenges to the process plant, resulting in lower metallurgical recoveries this quarter for both copper and zinc. The lower grade copper ore additionally lead to lower overall copper recoveries.

The result was lower copper production compared to 2010 and compared to what we expected, and zinc production slightly ahead of expectations. Higher copper grade ore deferred this quarter should be produced in the coming months and we continue to expect to meet our original target this year.

Cost per tonne of ore milled this quarter was higher than the same quarter last year mainly because royalties were higher, pushed up by higher realized metals prices, and the cost of labour and consumables increased. This change was consistent with our expectations and the objective for the year.

2011 outlook

In 2011, production levels should remain at approximately 1.2 million tonnes. We expect copper grades to be 3.2 percent consistent with our original target and zinc grades to increase to 5.9 percent from 5.6 percent. Bornite containing ore is expected to continue in the mill feed; therefore we have reduced our objective for zinc recoveries from 73 percent to 68 percent. However, because we anticipate higher zinc grades than our original objective we have not revised our objective for zinc production. Copper production is also expected to remain consistent with our original objective.

Financial review

Higher copper sales volumes and lower zinc sales volumes due to timing of shipments

----------------------------------------------------------------------------
(millions of Canadian dollars                                       revised 
 unless                           three months ended March 31     objective 
otherwise stated)                          2011          2010          2011 
----------------------------------------------------------------------------
Sales analysis                                                              
Copper sales (tonnes)                     7,500         5,600        30,900 
Zinc sales (tonnes)                      10,000        12,300        48,600 
                                  ------------------------------------------
Gross copper sales                  $        70   $        43   $       294 
Gross zinc sales                             23            29           109 
Other metal sales                             6             3            13 
                                  ------------------------------------------
Gross sales                                  99            75           416 
Smelter processing charges and                                              
 freight                                    (18)          (19)          (83)
----------------------------------------------------------------------------
Net sales                           $        81   $        56   $       333 
----------------------------------------------------------------------------
Cost analysis                                                               
Tonnes of ore milled (thousands)            293           289         1,200 
Direct production costs ($ per                                              
 tonne)                             $        80   $        75   $        81 
----------------------------------------------------------------------------
Direct production costs             $        23   $        22   $        97 
Change in inventory                           1            (2)            - 
Depreciation and other non-cash                                             
 costs                                        6             5            18 
----------------------------------------------------------------------------
Operating costs                     $        30   $        25   $       115 
----------------------------------------------------------------------------
Operating earnings                  $        51   $        31   $       218 
----------------------------------------------------------------------------
Operating cash flow                 $        54   $        30   $       189 
----------------------------------------------------------------------------

The objective for 2011 uses the assumptions listed on page 15.

The table below shows what contributed to the change in operating earnings and operating cash flow between 2011 and 2010.

-------------------------------------------------------------------------
                                                            three months 
                                                             ended March 
(millions)                                                            31 
-------------------------------------------------------------------------
Higher copper prices, denominated in Canadian dollars        $        11 
Higher copper sales volumes                                            8 
Lower zinc sales volumes                                              (1)
Other                                                                  2 
-------------------------------------------------------------------------
Higher operating earnings, compared to 2010                           20 
Change in tax expense because of change in taxable income             (1)
Changes in working capital (see note 17 on page 71)                    4 
Other                                                                  1 
-------------------------------------------------------------------------
Higher operating cash flow, compared to 2010                 $        24 
-------------------------------------------------------------------------
Capital spending                                                            
---------------------------------------------------------------------------
                                  three months ended March 31     objective
(thousands)                       2011         2010    change          2011
---------------------------------------------------------------------------
Capital spending           $     2,400  $     1,800       +33%  $    19,000
---------------------------------------------------------------------------

2011 outlook for capital spending

We expect to spend $19 million on capital in 2011, for underground development, ore pass rehabilitation, mobile equipment, a shotcrete delivery line extension, a new concrete batch plant and additional mill improvements.

Las Cruces

----------------------------------------------------------------------------
                                                                    revised 
                                   three months ended March 31    objective 
(100 percent)                         2011      2010    change         2011 
----------------------------------------------------------------------------
Tonnes of ore processed                                                     
 (000's)                               173        77      +125%         981 
----------------------------------------------------------------------------
Copper grades (percent)                6.1       6.9       -12%         6.0 
----------------------------------------------------------------------------
Plant recoveries                                                            
 (percent)                              77        85        -9%          85 
----------------------------------------------------------------------------
Cathode copper production                                                   
 (tonnes)                            8,100     4,500       +80%      50,200 
----------------------------------------------------------------------------
Cost per pound of cathode                                                   
 produced (C$)                 $      1.88       n/a       n/a  $      1.15 
----------------------------------------------------------------------------

Progress update

Since October 2010, we have focused on the efficiency of oxygen distribution and its chemical reaction with the ferrous and ferric iron in solution to leach copper. Our challenge has been to keep the ferric iron level high enough to leach the copper, requiring gradual increases to throughput to avoid sacrificing recoveries. We believe that by early May 2011, we will have substantially improved this part of the leaching process to the point where we will then be able to ramp up throughput rates over the balance of the year to achieve nameplate production levels by year end.

In January 2011, there was a failure in the oxygen plant supplying oxygen to our reactors and delivery was intermittent for the two weeks that followed. During our investigation and reactor maintenance, we discovered that oxygen was only being dispersed properly in two of the eight reactors. Since early March, we have repaired broken and plugged oxygen lines, installed new generation oxygen distributors in seven of the reactors and will install the remaining distributor in early May.

The oxygen supply disruption and distribution problems caused recoveries to drop to 76 percent in January and 70 percent in February. After our repairs and replacement of the oxygen distributors, recoveries have increased and remained near the plant design level of 90 percent. Our success in leaching copper is directly related to our ability to generate ferric iron through effective oxidation in the reactors. The proper distribution and use of oxygen is critical to improving plant performance by creating and maintaining the proper level of ferric iron in the leach reactors while we increase the copper feed to the plant.

As a result of the issues with oxygen distribution, Las Cruces produced 8,100 tonnes copper cathode this quarter, lower than the 9,000 tonnes produced in the fourth quarter of 2010. Las Cruces sold 9,700 tonnes of copper cathode this quarter as it drew down its cathode copper inventory.

In March, we began mining ore in the pit again after the rainy season. Our ability to dewater the bottom of the pit was delayed this quarter while we waited for permits for the permanent water treatment plant, which have since been granted for one of the three purification trains. Pit dewatering is now on track to facilitate consistent uninterrupted feed to the plant. Mining operations this quarter focused on overburden removal in Phase 3 of the pit, and we have mined ore as it has become exposed from the pit dewatering program.

We commissioned the contact water section of the permanent water treatment plant this quarter and we also commenced operation of the first of the three sections of the Dewatering and Reinjection System (DRS) purification system. Although the construction and commissioning of these water purification systems have not directly limited our copper production, they are critical to our continued operation under our authorizations from the local and provincial regulatory authorities. The progress made this quarter on receiving the required permits and on commissioning the water treatment facilities are significant to our ongoing water management activities.

2011 outlook

We consider the ability to substantially improve the efficiency of oxygen dispersion to be a major breakthrough in the ramp up process, following the changes already made that have addressed mechanical bottlenecks. Now that we've taken steps that directly impact the oxygen efficiency, and its reaction with iron to leach copper, we expect throughput to continue to improve and a step-change increase in production to result. Additionally, we will take steps to monitor the status of each reactor individually so we can take quick action to address any leaching performance issues. We have decreased our expected copper grade for 2011 to 6 percent. This should enhance stability through constant copper feed rates during ramp up, a better alignment of stockpiles and our mining plan as well as conforming to the plant design for iron-copper ratios in the feed. Consistent with lower grades, we have increased our throughput objective for 2011 from 750,000 tonnes of ore processed to 981,000 tonnes as the plant is driven by the leaching of contained copper as opposed to ore grades. Crushing and grinding has continued to function well and is not seen as limiting plant capacity. The planned modifications to the grinding thickener scheduled in June will also mitigate any potential capacity issues that we may have with feeding the ground ore to leaching. We have not revised our production objective for 2011, despite a shortfall of 2,500 tonnes this quarter as we expect to make this up with an improved production rate coming in the latter half of the year. We are back on track and estimate that production for the month of April will be 3,500 tonnes based on results to date. Second quarter production will be impacted by a scheduled 15 day shutdown in June to modify the grinding thickener which is anticipated in our projections. We will also install the remaining stainless steel agitators in the reactors as they are received with the final reactor expected in October. By the end of the year, we expect to be producing at a rate of 6,000 tonnes per month - full plant production capacity - and we expect to produce a total of 50,200 tonnes of copper cathode in 2011.

Financial review

New operating earnings and operating cash flow at Las Cruces this year

----------------------------------------------------------------------------
(millions of Canadian dollars unless otherwise   three months       revised 
 stated)                                       ended March 31     objective 
                                               -----------------------------
                                                         2011          2011 
                                               -----------------------------
Sales analysis                                                              
  Copper sales (tonnes)                                 9,700        50,200 
                                               -----------------------------
  Gross copper sales                              $        91   $       481 
  Smelter processing charges and freight                    -            (1)
----------------------------------------------------------------------------
  Net sales                                       $        91   $       480 
----------------------------------------------------------------------------
  Cost analysis                                                             
  Pounds of copper produced (millions)                     18           111 
  Direct production costs ($ per pound)           $      1.88   $      1.15 
----------------------------------------------------------------------------
  Direct production costs                         $        33   $       127 
  Change in inventory                                       7             - 
  Depreciation and other non-cash costs                    20            86 
----------------------------------------------------------------------------
  Operating costs                                 $        60   $       213 
----------------------------------------------------------------------------
  Operating earnings                              $        31   $       267 
----------------------------------------------------------------------------
  Operating cash flow                             $        58   $       354 
----------------------------------------------------------------------------

The objective for 2011 uses the assumptions listed on page 15.

Capital spending                                                            
---------------------------------------------------------------------------
(100 percent and millions of                                               
 Canadian dollars)                  three months ended March 31   objective
                                       2011       2010   change        2011
---------------------------------------------------------------------------
Capital                           $      15  $      10      +50%  $      52
  Pre-operating costs                                                      
   capitalized, net of sales,                                              
   working capital and other              -        (13)    -100%          -
---------------------------------------------------------------------------
Capital spending                  $      15  $      (3)    -600%  $      52
---------------------------------------------------------------------------

Capital spending this year was mainly on plant improvements, the permanent water purification plant and mine development. In 2010 it was mainly for the permanent water purification plant.

2011 outlook for capital spending

We expect to spend $52 million on capital projects in 2011, including $15 million for mine development and $37 million for plant improvements.

Pyhasalmi                                                                   
----------------------------------------------------------------------------
                                                                     revised
                                       three months ended March 31 objective
                                          2011      2010    change      2011
----------------------------------------------------------------------------
Tonnes of ore milled (000's)               335       345       -3%     1,370
Tonnes of ore milled per day             3,700     3,800       -3%     3,750
----------------------------------------------------------------------------
Grades (percent)            copper         1.1       0.9      +22%       1.0
                            zinc           2.9       2.3      +26%       2.6
                            sulphur         42        43       -2%        43
----------------------------------------------------------------------------
Mill recoveries (percent)   copper          96        96         -        95
                            zinc            91        91         -        90
----------------------------------------------------------------------------
Production (tonnes)         copper       3,600     2,900      +24%    13,300
                            zinc         8,700     7,200      +21%    31,900
                            pyrite     186,100   197,500       -6%   800,000
----------------------------------------------------------------------------
Cost per tonne of ore milled (C$)          $43       $43         -       $40
----------------------------------------------------------------------------

Higher copper and zinc grades this quarter

Pyhasalmi processed at an annualized rate in-line with its annual objective. The operation maintained its strong production record and achieved copper recoveries of 96 percent and zinc recoveries of 91 percent. Copper and zinc grades were significantly higher than in the first quarter of 2010 and were also higher than target as we mined in different areas of the mine than planned. Copper and zinc production this quarter were therefore higher than the comparative quarter of 2010.

The backfill raise system functioned well this quarter. The total volume of underground voids at the end of March was well below plan.

2011 outlook

We expect to mine 1.4 million tonnes of 1 percent copper and 2.6 percent zinc in 2011, and produce 13,300 tonnes of copper and 31,900 tonnes of zinc.

In March 2011, Pyhasalmi signed a five year sales contract with a customer in the Far East for up to 400,000 tonnes of pyrite per year. Including its current European contracts, Pyhasalmi now has long term agreements covering sales of up to 760,000 tonnes annually, and expects to produce and sell 800,000 tonnes pyrite in 2011, an increase of 200,000 tonnes from our initial objective. Prices are negotiated annually with reference to sulphur and fine iron ore prices and ocean transportation costs. As a result, we have increased our full year objective for other metal sales (which includes pyrite) to $67 million from previous guidance of $44 million.

Financial review

Higher earnings because of higher copper prices and sales volumes

----------------------------------------------------------------------------
(millions of Canadian dollars                                       revised 
 unless                           three months ended March 31     objective 
otherwise stated)                          2011          2010          2011 
----------------------------------------------------------------------------
Sales analysis                                                              
Copper sales (tonnes)                     3,500         3,300        13,300 
Zinc sales (tonnes)                       9,700         7,400        31,900 
Pyrite sales (tonnes)                   141,300        90,800       800,000 
                                  ------------------------------------------
Gross copper sales                  $        31   $        26   $       127 
Gross zinc sales                             22            18            72 
Other metal sales                            11             8            67 
                                  ------------------------------------------
Gross sales                                  64            52           266 
Smelter processing charges and                                              
 freight                                    (13)          (12)          (50)
----------------------------------------------------------------------------
Net sales                           $        51   $        40   $       216 
----------------------------------------------------------------------------
Cost analysis                                                               
Tonnes of ore milled (thousands)            335           345         1,370 
Direct production costs ($ per                                              
 tonne)                             $        43   $        43   $        40 
----------------------------------------------------------------------------
Direct production costs             $        15   $        15   $        54 
Depreciation and other non-cash                                             
 costs                                        2             2             8 
----------------------------------------------------------------------------
Operating costs                     $        17   $        17   $        62 
----------------------------------------------------------------------------
Operating earnings                  $        34   $        23   $       154 
----------------------------------------------------------------------------
Operating cash flow                 $        40   $        15   $       125 
----------------------------------------------------------------------------

The objective for 2011 uses the assumptions listed on page 15.

The table below shows what contributed to the change in operating earnings and operating cash flow between 2011 and 2010.

---------------------------------------------------------------------------
                                                        three months ended 
(millions)                                                        March 31 
---------------------------------------------------------------------------
Higher copper prices, denominated in Canadian dollars     $              4 
Lower zinc prices, denominated in Canadian dollars                      (2)
Higher sales volumes                                                     7 
Other                                                                    2 
---------------------------------------------------------------------------
Higher operating earnings, compared to 2010                             11 
Change in tax expense because of change in earnings                     (3)
Changes in working capital (see note 17 on page 71)                     16 
Other                                                                    1 
---------------------------------------------------------------------------
Higher operating cash flow, compared to 2010              $             25 
---------------------------------------------------------------------------
Capital spending                                                            
--------------------------------------------------------------------------
                                three months ended March 31      objective
(thousands)                   2011          2010     change           2011
--------------------------------------------------------------------------
Capital spending      $        300  $        500        -40%  $      8,000
--------------------------------------------------------------------------

2011 outlook for capital spending

Capital spending in 2011 is mainly to replace underground mobile equipment.

Status of our development project

Cobre Panama

Engineering, infrastructure and power

Basic engineering progressed as scheduled this quarter. Metallurgical test work is currently underway to confirm improvements in overall process performance, including the potential to increase copper recoveries and grades, particularly in the first 10 to 15 years of mine life.

There are several projects underway that must be completed before we can begin site capture and construction (expected to begin in the first quarter of 2012). These include access road improvements, a road to access the future tailings management facility and preparation of fuel storage facilities and campsites. We need environmental permits before we can begin some of these projects which we hope to receive during the second quarter. Construction of bridges over the San Juan de Turbe and Coclecito rivers is now complete and access to the property during storm events is greatly improved. Engineering, acquisition of rights-of-way and permitting activities are progressing as planned.

We continue to work with GDF Suez Energy Central America to select an Engineering, Procurement and Construction (EPC) contractor for the development of a 300 megawatt coal-fired power plant to supply power for the project. The plant is designed to exceed IFC and Panamanian environmental standards. Based on current information, we continue to believe that a coal-fired power plant is the best option; however, we will pursue other options in parallel.

Environmental and social impact assessment review and approval process

The review of the environmental and social impact assessment (ESIA) for the project progressed as expected during the quarter. We received the first round of questions and clarifications from the Autoridad Nacional del Ambiente (ANAM) and provided our responses in early February. There was nothing unexpected in the questions from ANAM. The review process calls for one or two additional rounds of questions and we expect approval of the ESIA to be received in the third quarter. Once this is received, permitting will begin to facilitate project construction.

Drilling

We continued with resource drilling this quarter. On March 8, 2011, we announced the discovery of a significantly higher grade mineralized zone, the Balboa deposit, on the project property. We drilled 10 holes on approximately 200 metre centres. Three of the drill holes have intersected sheeted quartz-bornite-chalcopyrite veins returning higher copper and gold grades than those encountered at any time previously on the Cobre Panama property in over 40 years of exploration drilling. The Balboa mineralization starts near surface and this implies that it could be mined with a low strip ratio but at generally higher copper and gold grades than the current mineral resources. The March 8, 2011 press release is available at www.inmetmining.com. Four drills continue to delineate the extents of zone on 200 metre centres. Additional drills are also being mobilized to begin infill drilling on 100 metre centres with a view to establishing resources and reserves by year-end.

2011 outlook for development

We plan to:

--  continue our dialogue with stakeholders at the community, regional and
    national levels, to increase their understanding of the project and its
    benefits to Panama, and our understanding of stakeholder concerns 
--  continue to work with ANAM to ensure a thorough ESIA review process 
--  continue to improve site access and infrastructure 
--  complete additional drilling for geotechnical and hydrological purposes
    and to improve our understanding of mineralization not currently
    included in the project base case 
--  complete basic engineering and prepare to begin site capture when we
    receive the main permits 
--  select an EPC contractor and award a contract for the development of a
    300 megawatt thermal power plant to supply power for the project 
--  spend $224 million to carry out the work described. 

After we receive the required ESIA approval and permitting, site capture, preparation and construction should take approximately 48 months.

We are proceeding with our partnering and financing strategy for the project to reduce our interest in the project to between 40 percent and 60 percent. We also continue to advance and evaluate other financing alternatives, including project debt and corporate debt instruments.

Managing our liquidity

We develop our financing strategy by looking at our long-term capital requirements 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.

----------------------------------------------------------------------------
                                                three months ended March 31 
(millions)                                         2011                2010 
----------------------------------------------------------------------------
CASH FROM OPERATING ACTIVITIES                                              
Cayeli                                          $    54 $                30 
Las Cruces                                           58                  (7)
Pyhasalmi                                            40                  15 
Other (Troilus)                                       -                  19 
Corporate development and exploration not                                   
 incurred by operations                             (12)                 (2)
General and administration                           (8)                 (6)
Foreign exchange losses on US dollar funds          (10)                  - 
Other                                                (4)                 (4)
----------------------------------------------------------------------------
                                                    118                  45 
----------------------------------------------------------------------------
CASH FROM INVESTING AND FINANCING                                           
Purchase of property, plant and equipment           (41)                (18)
Purchase and maturing of long-term investments,                             
 net                                               (267)               (102)
Foreign exchange on cash held in foreign                                    
 currency                                             3                 (14)
Other                                                (2)                  5 
--------------------------------------------------------------------------- 
                                                   (307)               (129)
----------------------------------------------------------------------------
CASH FROM DISCONTINUED OPERATION (OK TEDI)          307                  39 
----------------------------------------------------------------------------
Increase (decrease) in cash                         118                 (45)
Cash and short-term investments                                             
  Beginning of period                               326                 534 
----------------------------------------------------------------------------
  End of period                                 $   444 $               489 
----------------------------------------------------------------------------

Our available liquidity also includes $639 million of held to maturity investments ($373 million at December 31, 2010), providing a total of $1,083 million in capital available to finance our growth strategy as at March 31, 2011.

OPERATING ACTIVITIES

Key components of the change in operating cash flows

----------------------------------------------------------------------------
                                                                      three 
                                                                     months 
                                                                      ended 
(millions)                                                         March 31 
----------------------------------------------------------------------------
Higher earnings from operations (see page 5)                      $      48 
Add back higher depreciation included in earnings from operations        19 
Higher tax expense                                                       (3)
Changes in working capital (see note 17 on page 71)                      21 
Realized foreign exchange loss on cash                                   (7)
Higher corporate development and exploration                            (11)
Stand-by costs in 2010                                                    7 
Other                                                                    (1)
----------------------------------------------------------------------------
Higher operating cash flow, compared to 2010                      $      73 
----------------------------------------------------------------------------

Operating cash flows this year were higher than 2010 because our operating earnings before depreciation was higher. The large inflow of cash related to working capital this quarter mainly reflects lower accounts receivable at Cayeli and Pyhasalmi due to the timing of collections from customers.

2011 outlook for cash from operating activities

The table below shows expected operating cash flow from our key operations, based on our outlook for metal prices and production listed on page 15, and the assumptions in Results of our operations, which starts on page 15.

2011 estimated operating cash flow by operation

----------------------------------------------------------------------------
(millions)                                                                  
----------------------------------------------------------------------------
Cayeli                                                                $  189
Las Cruces                                                               354
Pyhasalmi                                                                125
----------------------------------------------------------------------------
                                                                      $  668
----------------------------------------------------------------------------

INVESTING AND FINANCING

Capital spending                                                            
----------------------------------------------------------------------------
                                   three months ended March 31     objective
(millions)                          2011                  2010          2011
----------------------------------------------------------------------------
Cayeli                          $      2  $                  2   $        19
Las Cruces                            15                    (3)           52
Pyhasalmi                              -                     1             8
Cobre Panama                          24                    18           224
----------------------------------------------------------------------------
                                $     41  $                 18   $       303
----------------------------------------------------------------------------

Please see Results of our operations and Status of our development project for a discussion of actual results and our 2011 objective. Capital spending this quarter was mainly for Cobre Panama and for plant improvements at Las Cruces.

Cash from discontinued operation

In January 2011, we sold our 18 percent equity interest in Ok Tedi for net proceeds of $307 million after Papua New Guinea withholding taxes.

Purchase of long-term investments

We used the US dollar proceeds from the sale of Ok Tedi to purchase US $273.9 million in US Treasury bonds with AAA credit ratings. The bonds mature between March 2012 and January 2016 and have a weighted average annual yield to maturity of 1.2 percent. In the first quarter of 2010, we purchased $102 million in medium-term Canadian government and corporate bonds.

2011 outlook for investing and financing

Capital spending

We expect capital spending to be $303 million in 2011. The more significant items include:

--  $224 million for work on the development at Cobre Panama, including
    basic engineering, advance payments for mill equipment and other costs
    to advance development 
--  $52 million at Las Cruces, including $18 million for mine development
    and $25 million for plant improvements. 

Subscription receipts

Last year, we entered into a subscription agreement with a subsidiary of Temasek Holdings (Private) Limited (Temasek), under which Temasek received 7.78 million subscription receipts for total proceeds of $500 million. The subscription receipts are exchangeable into Inmet common shares, subject to the satisfaction of certain conditions, including the coming into effect of legislation passed by the legislative assembly of the Republic of Panama amending Panama's Mineral Resources Code (the "Code") to permit entities in which foreign governmental bodies or authorities have an interest to hold direct or indirect interests in mining concessions in Panama.

The legislation to amend the Code passed final reading in the Panamanian Assembly and came into effect in February 2011. However, these modifications were subsequently repealed by the National Assembly of Panama and given legal effect on March 18. The repeal recognized concerns from indigenous communities over mining within semi-autonomous areas known as Comarcas that are recognized under Panamanian law. The Cobre Panama project is neither situated on nor adjacent to any Comarcas. As part of the repeal, the Government of Panama appointed a special commission to consider and recommend to the National Assembly of Panama future modifications to the Code in consultation with affected parties. This consultation process is currently ongoing.

We have received written confirmation from the Government of Panama that our ability to continue with development of the Cobre Panama project under Law 9, the legal regime that establishes the Cobre Panama mineral concession, remains unaffected by the repeal. In addition, under operation of Panamanian law, the repeal of the modified Code did not reinstate certain provisions of the Code that contained impediments to the ability of foreign state-owned entities from owning interests in mining concessions. It is our view, based on the legal opinions received, that Panamanian law allows for the conversion of the subscription receipts. We understand that Temasek is in the course of completing its legal review and we expect Temasek to convert their subscriptions receipts well before June 30, 2011 as provided for in the relevant agreement.

Financial condition

Our strategy is to make sure we have sufficient liquidity (including cash and committed credit facilities) to finance our operating requirements as well as our growth projects. At March 31, 2011, we had $1,083 million in total funds, including $444 million of cash and short-term investments and $639 million invested in long-term bonds.

Cash

At March 31, 2011 our cash and short-term investments of $444 million included cash and money market instruments that mature in 90 days or less.

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 reversed, but we are still monitoring the potential for a second downturn. At March 31, 2011, we held cash and short-term investments in the following:

--  A to AAA rated treasury funds and money market funds managed by leading
    international fund managers, who are 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 that are benefiting directly and
    indirectly from support programs by various governments and central
    banks. 

See note 7 on page 65 in the consolidated financial statements for more details about where our cash is invested.

Medium-term bonds

We have created a bond portfolio that should provide better yields with little change to our investment risk. As at March 31, 2011, the portfolio was $639 million (Held to maturity investments): 52 percent US Treasury bonds, 4 percent Government of Canada bonds, 38 percent Provincial Government bonds and 6 percent corporate bonds. The bonds mature between June 2011 and January 2016. Although our intention is to hold these investments to maturity, there is a liquid market for them and they are available at any time to us.

Restricted cash

Our restricted cash balance of $75 million as at March 31, 2011 included:

--  $17 million in cash collateralized letters of credit for Inmet 
--  $56 million at Las Cruces related to a reclamation bond, issuing letters
    of credit to suppliers and the local water authority and for its labour
    bond to the government 
--  $2 million for future reclamation at Pyhasalmi. 

COMMON SHARES

----------------------------------------------------------------------------
Common shares outstanding as of March 31, 2011                    61,549,172
----------------------------------------------------------------------------
Deferred share units outstanding as of March 31, 2011                       
(redeemable on a one-for-one basis for common shares)                112,285
----------------------------------------------------------------------------

Dividend declaration

The board of directors has declared an eligible dividend of $0.10 per common share payable on June 15, 2011 to common shareholders of record as at May 31, 2011.

Accounting changes

Adoption of International Financial Reporting Standards

The Accounting Standards Board incorporated International Financial Reporting Standards (IFRS) into the Canadian Institute of Chartered Accountants Accounting Handbook effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The first quarter of 2011 is the first presentation of our results under IFRS, with an effective transition date of January 1, 2010. While the adoption of IFRS did not change our business activities, it has significantly changed our reported financial position. Our key controls over financial reporting did not change as a result of our transition to IFRS. For all changes to policies and procedures that have been identified, the effectiveness of internal controls over financial reporting and disclosure controls and procedures has been assessed and any changes have been implemented. In addition, controls over the IFRS changeover process have been implemented as necessary.

A complete list of our significant accounting policies followed on adoption of IFRS is included in note 3 to our first quarter consolidated financial statements. Additionally, see note 6 to the financial statements for a detailed description of our conversion to IFRS, including a line-by-line reconciliation of our financial statements previously prepared under Canadian GAAP to those under IFRS for the three months ended March 31, 2010 and for the year ended December 31, 2010.

The table below reconciles total equity under Canadian GAAP to total equity under IFRS, and illustrates the after-tax effect of each of the most significant adjustments had on equity.

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                        January 1,  March 31,  December 31, 
                                Notes         2010       2010          2010 
----------------------------------------------------------------------------
Canadian GAAP equity                   $ 2,238,145 $2,206,829 $   2,758,484 
IFRS adjustments:                                                           
Reclassification of non-                                                    
 controlling interest to equity             78,005     66,758             - 
Revenue recognition                 i       14,210     16,164        30,023 
Reversal of impairment of assets                                            
 - Cayeli                          ii       42,395     39,357        34,005 
Provision for asset retirement                                              
 obligations                      iii      (38,349)   (36,334)      (41,310)
Acquisition of the non-                                                     
 controlling interest in Las                                                
 Cruces                            iv            -          -      (254,056)
Property, plant and equipment                                               
 associated with asset                                                      
 retirement obligations             v        8,304      9,853        12,175 
Other                                       18,702     17,027        15,218 
----------------------------------------------------------------------------
IFRS equity                            $ 2,361,412 $2,319,654 $   2,554,539 
----------------------------------------------------------------------------

i) Revenue

Under Canadian GAAP, we recognized revenue when title was legally transferred to the purchaser. For certain shipments at Cayeli, Pyhasalmi and Ok Tedi, we transfer title when we receive the first provisional payment, which is later than the transfer point for risks and rewards of ownership.

Under IFRS, we recognize revenue when all significant risks and rewards of ownership of our products are transferred to the purchaser.

ii) Impairment of assets

Under Canadian GAAP, we used a two-step approach to impairment testing:

--  first comparing asset carrying values with undiscounted future cash
    flows to determine whether impairment exists 
--  then measuring any impairment by comparing asset carrying values with
    fair values (generally assessed using a discounted cash flow valuation
    process). 

Under IFRS we use a one step approach to test for and measure impairment, and compare asset carrying values directly with the higher of fair value less costs to sell and value in use (which uses discounted future cash flows). IFRS also requires a full or partial reversal of previous impairment losses when circumstances have changed and the impairments have been reduced. Impairment losses were not reversed under Canadian GAAP.

We increased January 1, 2010 property plant and equipment at Cayeli by approximately $50 million to reverse an impairment charge we recognized for this operation in 1996. The increase is the IFRS carrying amount we would have calculated, net of depreciation, if we had not recognized the original impairment. This will also result in a higher ongoing depreciation expense for Cayeli, including an increase of $8 million for the year ended December 31, 2010.

iii) Asset retirement obligations

Under Canadian GAAP, we used a credit adjusted risk free interest rate and were not required to update the rate when market rates change.

Under IFRS, we measure asset retirement obligations using a risk free interest rate and revalue when market risk free interest rates change.

iv) Business combinations

Under Canadian GAAP, companies that acquired an additional interest in an entity they already controlled accounted for it as a step acquisition. Under IFRS, acquiring a non-controlling interest is not considered a business combination, and is instead accounted for as an equity transaction.

Under IFRS, we have accounted for our acquisition of the remaining 30 percent interest in Las Cruces in December 2010 as an equity transaction, because we already controlled it. We recognized the difference between the non-controlling interest (as determined under IFRS) and the fair value of the consideration paid, in retained earnings.

v) First time adoption of IFRS: property, plant and equipment associated with asset retirement obligations

First time adoption of International Financial Reporting Standards (IFRS 1) provides specific exemptions that we used when we adopted IFRS.

IFRS and Canadian GAAP both require us to recognize a corresponding change in asset retirement obligations in the carrying value of the related property, plant and equipment (where we identify an asset) and depreciate this amount prospectively. The amount under IFRS was different from the amount determined under Canadian GAAP because of the different way IFRS determines asset retirement obligations.

We used an optional transitional calculation to determine the property, plant and equipment associated with our provision for asset retirement obligations. Under the transitional calculation, we measured the provision at the transition date and discounted it to the date the liability first arose. The result became the initial asset value. Depreciation was applied to this value. We applied this exemption to certain mines instead of determining property, plant and equipment associated with asset retirement obligations retrospectively.

Supplementary financial information

Page 32 includes supplementary financial information about cash costs. These measures do not fall into the category of International Financial Reporting Standards.

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 financial measures under International Financial Reporting Standards, 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 and zinc. We have interests in three mining operations in locations around the world: Cayeli, Las Cruces and Pyhasalmi. 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

First quarter conference call

Will be held on

--  Friday, April 29, 2011 
--  8:30 a.m. Eastern Time 
--  webcast available at
    http://events.digitalmedia.telus.com/inmet/042911/index.php or
    www.inmetmining.com 

You can also dial in by calling

--  Local or international: +1.416.695.6616 
--  Toll-free within North America: +1.800.952.6845 

Starting at approximately 10:30 a.m. (ET) Friday, April 29, 2011, a conference call replay will be available

--  Local or international: +1.905.694.9451 passcode 1388402 
--  Toll-free within North America: +1.800.408.3053 passcode 1388402   
INMET MINING CORPORATION                                                    
Supplementary financial information                                         
Cash costs                                                                  
2011 For the three months ended                                             
 March 31                                                                   
                                          per pound of copper               
                               ---------------------------------------------
                                    CAYELI  LAS CRUCES  PYHASALMI      TOTAL
----------------------------------------------------------------------------
(US dollars)                                                                
Direct production costs          $   1.62   $     1.83  $   1.87   $   1.77 
Royalties and variable                                                      
 compensation                        0.18         0.09         -       0.10 
Smelter processing charges and                                              
 freight                             1.83         0.01      1.30       0.89 
Metal credits                       (3.02)           -     (3.86)     (1.81)
                               ---------------------------------------------
Cash cost                        $   0.61   $     1.93    ($0.69)  $   0.95 
                               ---------------------------------------------
                               ---------------------------------------------
2010 For the three months ended March 31                                    
                                     per pound of copper                    
                        ----------------------------------------------------
                                        LAS CRUCES                          
                              CAYELI           (1)   PYHASALMI        TOTAL 
----------------------------------------------------------------------------
(US dollars)                                                                
Direct production costs   $     1.19   $         -  $     2.21   $     1.49 
Royalties and variable                                                      
 compensation                   0.13             -           -         0.09 
Smelter processing                                                          
 charges and freight            1.35             -        1.44         1.38 
Metal credits                  (2.04)            -       (3.79)       (2.55)
                        ----------------------------------------------------
Cash cost                 $     0.63   $         -      ($0.14)  $     0.41 
                        ----------------------------------------------------
                        ----------------------------------------------------
Reconciliation of cash costs to statements of                               
 earnings                                                                   
2011 For the three                                                          
 months ended March 31                                                      
                                     per pound of copper                    
                        --------------------------------------------------- 
(millions of Canadian                                                       
 dollars, except where                                                      
 otherwise noted)             CAYELI    LAS CRUCES   PYHASALMI        TOTAL 
-------------------------------------------------------------- ------------ 
GAAP reference               page 17       page 19     page 21              
Direct production costs   $       23   $        33  $       15   $       71 
Smelter processing                                                          
 charges and freight              18             -          13           31 
By product sales                 (30)            -         (33)         (63)
Adjust smelter                                                              
 processing and freight,                                                    
 and sales to production                                                    
 basis                            (3)            -           -           (3)
                        -------------------------------------- -------------
Operating costs net of                                                      
 metal credits            $        8   $        33         ($5)  $       36 
US $ to C$ exchange rate  $     0.99   $      0.99  $     0.99   $     0.99 
Inmet's share of                                                            
 production (000's)           13,200        17,800       8,000       39,000 
                        -------------------------------------- -------------
Cash cost                 $     0.61   $      1.93      ($0.69)  $     0.95 
                        -------------------------------------- -------------
                        -------------------------------------- -------------
2010 For the three months ended                                             
 March 31                                                                   
                                          per pound of copper               
                                 --------------------------------- ---------
(millions of Canadian dollars,                                              
 except where otherwise noted)     CAYELI LAS CRUCES (1) PYHASALMI    TOTAL 
                                 --------------------------------- ---------
GAAP reference                    page 17        page 19   page 21          
Direct production costs            $   22   $          -  $     15   $   37 
Smelter processing charges and                                              
 freight                               19              -        12       31 
By product sales                      (32)             -       (26)     (58)
Adjust smelter processing and                                               
 freight, and sales to production                                           
 basis                                  1              -        (2)      (1)
                                 --------------------------------- ---------
Operating costs net of metal                                                
 credits                           $   10   $          -       ($1)  $    9 
US $ to C$ exchange rate           $ 1.04   $          -  $   1.04   $ 1.04 
Inmet's share of production         15,70                             22,10 
 (000's)                                0              -     6,400        0 
                                 --------------------------------- ---------
Cash cost                          $ 0.63   $          -    ($0.14)  $ 0.41 
                                 --------------------------------- ---------
                                 --------------------------------- ---------
(1) Las Cruces' results were included                                       
 from July 1, 2010                                                          
INMET MINING CORPORATION 
Quarterly review
(unaudited)
Latest Four Quarters                                                        
----------------------------------------------------------------------------
(thousands of Canadian               2011     2010(1)    2010(1)    2010(1) 
 dollars, except per share          First      Fourth      Third     Second 
 amounts)                         quarter     quarter    quarter    quarter 
----------------------------------------------------------------------------
STATEMENTS OF EARNINGS                                                      
Gross sales                   $   254,277 $   230,269 $  225,960 $  161,165 
Smelter processing charges and                                              
 freight                          (31,585)    (35,733)   (34,358)   (35,272)
Cost of sales (excluding                                                    
 depreciation)                    (79,150)    (82,967)   (70,503)   (48,123)
 Depreciation                     (27,040)    (18,882)   (19,062)   (10,328)
                              ----------------------------------------------
                                  116,502      92,687    102,037     67,442 
Corporate development and                                                   
 exploration                      (13,411)     (5,434)    (2,758)    (2,524)
General and administration         (8,422)     (4,758)    (3,985)    (6,200)
Investment and other income        (5,773)     50,622      3,197      3,321 
Finance costs                      (2,331)     (4,294)    (5,239)    (1,770)
Capital tax expense                     -        (127)       (82)       (82)
Income tax expense                (27,160)    (31,833)   (25,184)    (8,693)
                              ----------------------------------------------
Income from continuing                                                      
 operations                        59,405      96,863     67,986     51,494 
Income from discontinued                                                    
 operation (net of taxes)          83,439      47,993     33,569     12,475 
                              ----------------------------------------------
Net income                    $   142,844 $   144,856 $  101,555 $   63,969 
                              ----------------------------------------------
Net income attributable to:                                                 
 Inmet equity holders         $   142,844 $   146,932 $   91,678 $   68,495 
 Non-controlling interest               -      (2,076)     9,877     (4,526)
                              ----------------------------------------------
                              $   142,844 $   144,856 $  101,555 $   63,969 
                              ----------------------------------------------
Income from continuing                                                      
 operations per share                                                       
 Basic                        $      0.97 $      1.73 $     1.04 $     1.00 
 Diluted                      $      0.96 $      1.73 $     1.03 $     1.00 
Income from discontinuing                                                   
 operations per share                                                       
 Basic                        $      1.36 $      0.84 $     0.60 $     0.22 
 Diluted                      $      1.35 $      0.84 $     0.60 $     0.22 
Net Income per share                                                        
 Basic                        $      2.33 $      2.57 $     1.64 $     1.22 
 Diluted                      $      2.31 $      2.57 $     1.63 $     1.22 
(1) Information from 2010 restated in accordance with IFRS, including      
 presentation of our share of Ok Tedi as discontinued operations.           

(unaudited)

Previous Four Quarters                                                      
----------------------------------------------------------------------------
(thousands of Canadian          2010(1)       2009(2)    2009(2)    2009(2) 
 dollars, except per share        First        Fourth      Third     Second 
 amounts)                       quarter       quarter    quarter    quarter 
----------------------------------------------------------------------------
STATEMENTS OF EARNINGS                                                      
Gross sales                 $   161,162   $   290,570   $241,121   $213,042 
Smelter processing charges                                                  
 and freight                    (33,101)      (53,696)   (41,607)   (40,589)
Cost of sales (excluding                                                    
 depreciation)                  (52,266)      (74,995)   (72,706)   (73,827)
  Depreciation                   (7,716)      (17,911)   (14,558)   (13,604)
                          --------------------------------------------------
                                 68,079       143,968    112,250     85,022 
Corporate development and                                                   
 exploration                     (2,779)       (2,915)    (1,963)    (2,727)
General and administration       (5,421)       (9,836)    (5,147)    (4,785)
Investment and other                                                        
 income                           1,204           280      3,588     16,466 
Asset impairment                      -        (3,496)         -          - 
Stand-by costs                   (6,753)            -          -          - 
Finance costs                    (1,873)         (496)      (496)      (493)
Capital tax expense                 (82)           69       (744)      (125)
Income tax expense               (3,004)      (38,668)   (39,244)   (24,052)
                          --------------------------------------------------
Income from continuing                                                      
 operations                      49,371        88,906     68,244     69,306 
Income from discontinued                                                    
 operation (net of taxes)        30,718             -          -          - 
                          --------------------------------------------------
Net income                  $    80,089   $    88,906   $ 68,244   $ 69,306 
                          --------------------------------------------------
Net income attributable                                                     
 to:                                                                        
  Inmet equity holders      $    84,771   $    89,763   $ 61,551   $ 66,528 
  Non-controlling interest       (4,682)         (857)     6,693      2,778 
                          --------------------------------------------------
                            $    80,089   $    88,906   $ 68,244   $ 69,306 
                          --------------------------------------------------
Income from continuing                                                      
 operations per share                                                       
  Basic                     $      0.96   $      1.60   $   1.10   $   1.37 
  Diluted                   $      0.96   $      1.60   $   1.09   $   1.36 
Income from discontinuing                                                   
 operations per share                                                       
  Basic                     $      0.55   $         -   $      -   $      - 
  Diluted                   $      0.55   $         -   $      -   $      - 
Net Income per share                                                        
  Basic                     $      1.51   $      1.60   $   1.10   $   1.37 
  Diluted                   $      1.51   $      1.60   $   1.09   $   1.36 
(1) Information from 2010 restated in accordance with IFRS, including      
    presentation of our share of Ok Tedi as discontinued operations.        
(2) Information from 2009 is presented in accordance with Canadian GAAP    
    and was not required to be restated to IFRS.                            
Consolidated financial statements 
INMET MINING CORPORATION
Consolidated statements of financial position
(unaudited) 
(thousands of              Note      March 31,   December 31,     January 1,
 Canadian dollars)    reference           2011        2010(1)        2010(1)
----------------------------------------------------------------------------
Assets                                                                      
Current assets:                                                             
 Cash and short term                                                        
  investments                 7  $     444,260  $     326,425  $     533,913
 Restricted cash              8            695            617         15,130
 Accounts receivable                   108,510        119,426        155,761
 Inventories                            61,154         72,154         98,324
 Current portion of                                                         
  held to maturity                                                          
  investments                 9         75,425         53,915          9,993
 Assets held for                                                            
  sale                       10             92        319,082              -
                               ---------------------------------------------
                                       690,136        891,619        813,121
Restricted cash               8         73,848         70,059        101,589
Property, plant and                                                         
 equipment                           1,766,671      1,736,065      1,945,669
Investments in                                                              
 equity securities                       5,636          2,694         42,411
Held to maturity                                                            
 investments                  9        563,266        318,615         89,891
Deferred income tax                                                         
 assets                                  3,372          8,721          2,360
Other assets                             2,379          2,335          1,903
                               ---------------------------------------------
Total assets                     $   3,105,308  $   3,030,108  $   2,996,944
----------------------------------------------------------------------------
Liabilities                                                                 
Current liabilities:                                                        
 Accounts payable                                                           
  and accrued                                                               
  liabilities                    $     137,778  $     136,345  $     170,524
 Provisions                  11         17,588         17,668         17,417
 Derivatives                                 -              -          1,543
 Liabilities                                                                
  associated with                                                           
  assets held for                                                           
  sale                       10              -        111,896              -
                               ---------------------------------------------
                                       155,366        265,909        189,484
Long-term debt                          17,361         16,619        200,026
Provisions                   11        165,475        162,399        196,430
Other liabilities                       18,833         18,117         20,695
Derivatives                                  -              -          3,165
Deferred income tax                                                         
 liabilities                            15,830         12,525         25,732
                               ---------------------------------------------
Total liabilities                      372,865        475,569        635,532
                               ---------------------------------------------
Commitments and                                                             
 contingencies               18                                             
Equity                                                                      
Share capital                        1,089,576      1,089,576        669,952
Contributed surplus                     66,282         66,131         64,809
Share based                                                                 
 compensation                            7,583          6,542          5,170
Retained earnings                    1,720,351      1,577,507      1,527,109
Accumulated other                                                           
 comprehensive                                                              
 income (loss)               12      (151,349)      (185,217)         19,093
                               ---------------------------------------------
Total equity                                                                
 attributable to                                                            
 Inmet equity                                                               
 holders                             2,732,443      2,554,539      2,286,133
Non-controlling                                                             
 interest                                    -              -         75,279
                               ---------------------------------------------
Total equity                         2,732,443      2,554,539      2,361,412
                               ---------------------------------------------
Total liabilities                                                           
 and equity                      $   3,105,308  $   3,030,108  $   2,996,944
----------------------------------------------------------------------------
(1) Refer to note 6 for effects of                                          
 adoption of IFRS                                                           
(See accompanying notes)                                                    
INMET MINING CORPORATION                                                    
Segmented statements of financial position                                  
(unaudited)                                                                 
2011 As at March                                                            
 31                                                                         
                    CORPORATE &                                             
                          OTHER         CAYELI     LAS CRUCES      PYHASALMI
----------------------------------------------------------------------------
(thousands of                                                               
 Canadian                                                                   
 dollars)                             (Turkey)        (Spain)      (Finland)
Assets                                                                      
Cash and short-                                                             
 term                                                                       
 investments      $      54,172  $     155,255  $      87,572  $     142,899
Other current                                                               
 assets                  82,975         48,754         53,757         59,287
Restricted cash          16,692              -         55,468          1,688
Property, plant                                                             
 and equipment              847        146,257        975,666         67,304
Investments in                                                              
 equity                                                                     
 securities               5,636              -              -              -
Held to maturity                                                            
 investments            499,829         63,437              -              -
Other non-                                                                  
 current assets           1,028          4,723              -              -
                ------------------------------------------------------------
                ------------------------------------------------------------
                  $     661,179  $     418,426  $   1,172,463  $     271,178
                ------------------------------------------------------------
                ------------------------------------------------------------
Liabilities                                                                 
Current                                                                     
 liabilities      $      26,695  $      37,177  $      52,957  $      32,571
Long-term debt           17,361              -              -              -
Provisions               55,902         21,511         60,089         27,973
Other                                                                       
 liabilities                676              -         18,157              -
Deferred income                                                             
 tax liabilities             54              -          3,160         12,616
                ------------------------------------------------------------
                  $     100,688  $      58,688  $     134,363  $      73,160
                ------------------------------------------------------------
2011 As at March                                             
 31                                                          
                                  DISCONTINUED               
                                  OPERATIONS -               
                   COBRE PANAMA        OK TEDI          TOTAL
-------------------------------------------------------------
(thousands of                                                
 Canadian                           (Papua New               
 dollars)              (Panama)        Guinea)               
Assets                                                       
Cash and short-                                              
 term                                                        
 investments      $       4,362  $           -  $     444,260
Other current                                                
 assets                   1,103              -        245,876
Restricted cash               -              -         73,848
Property, plant                                              
 and equipment          576,597              -      1,766,671
Investments in                                               
 equity                                                      
 securities                   -              -          5,636
Held to maturity                                             
 investments                  -              -        563,266
Other non-                                                   
 current assets               -              -          5,751
                ---------------------------------------------
                ---------------------------------------------
                  $     582,062  $           -  $   3,105,308
                ---------------------------------------------
                ---------------------------------------------
Liabilities                                                  
Current                                                      
 liabilities      $       5,966  $           -  $     155,366
Long-term debt                -              -         17,361
Provisions                    -              -        165,475
Other                                                        
 liabilities                  -              -         18,833
Deferred income                                              
 tax liabilities              -              -         15,830
                ---------------------------------------------
                  $       5,966  $           -  $     372,865
                ---------------------------------------------
2010 As at          CORPORATE &                                             
 December 31              OTHER         CAYELI     LAS CRUCES      PYHASALMI
----------------------------------------------------------------------------
(thousands of                                                               
 Canadian                                                                   
 dollars)                             (Turkey)        (Spain)      (Finland)
Assets                                                                      
Cash and short-                                                             
 term                                                                       
 investments      $      53,184  $     107,750  $      59,866  $      97,056
Other current                                                               
 assets                  60,785         58,959         59,602         66,193
Restricted cash          16,906              -         51,521          1,632
Property, plant                                                             
 and equipment              779        152,653        941,434         66,984
Investments in                                                              
 equity                                                                     
 securities               2,694              -              -              -
Held to maturity                                                            
 investments            253,749         64,866              -              -
Other non-                                                                  
 current assets             952          5,754          4,350              -
                ------------------------------------------------------------
                  $     389,049  $     389,982  $   1,116,773  $     231,865
                ------------------------------------------------------------
Liabilities                                                                 
Current                                                                     
 liabilities      $      30,286  $      39,654  $      47,220  $      28,913
Long-term debt           16,619              -              -              -
Provisions               57,536         21,607         56,439         26,817
Other                                                                       
 liabilities                676              -         17,441              -
Deferred income                                                             
 tax liabilities            176              -              -         12,349
                ------------------------------------------------------------
                  $     105,293  $      61,261  $     121,100  $      68,079
                ------------------------------------------------------------
                                  DISCONTINUED               
2010 As at                        OPERATIONS -               
 December 31       COBRE PANAMA        OK TEDI          TOTAL
-------------------------------------------------------------
(thousands of                                                
 Canadian                           (Papua New               
 dollars)              (Panama)        Guinea)               
Assets                                                       
Cash and short-                                              
 term                                                        
 investments      $       8,569  $           -  $     326,425
Other current                                                
 assets                     686        318,969        565,194
Restricted cash               -              -         70,059
Property, plant                                              
 and equipment          574,215              -      1,736,065
Investments in                                               
 equity                                                      
 securities                   -              -          2,694
Held to maturity                                             
 investments                  -              -        318,615
Other non-                                                   
 current assets               -              -         11,056
                ---------------------------------------------
                  $     583,470  $     318,969  $   3,030,108
                ---------------------------------------------
Liabilities                                                  
Current                                                      
 liabilities      $       7,940  $     111,896  $     265,909
Long-term debt                -              -         16,619
Provisions                    -              -        162,399
Other                                                        
 liabilities                  -              -         18,117
Deferred income                                              
 tax liabilities              -              -         12,525
                ---------------------------------------------
                  $       7,940  $     111,896  $     475,569
                ---------------------------------------------
INMET MINING CORPORATION                                                    
Segmented statements of financial position (continued)                      
(unaudited)                                                                 
2010 As at          CORPORATE &                                             
 January 1                OTHER         CAYELI     LAS CRUCES      PYHASALMI
----------------------------------------------------------------------------
(thousands of                                                               
 Canadian                                                                   
 dollars)                             (Turkey)        (Spain)      (Finland)
Assets                                                                      
Cash and short-                                                             
 term                                                                       
 investments      $     251,570  $     158,631  $      10,039  $      66,314
Other current                                                               
 assets                  37,591         40,341         73,501         49,882
Restricted cash          16,492              -         56,878          1,854
Property, plant                                                             
 and equipment           13,508        168,389      1,034,947         72,183
Investments in                                                              
 equity                                                                     
 securities              42,411              -              -              -
Held to maturity                                                            
 investments             89,891              -              -              -
Other non-                                                                  
 current assets             729          2,196            412              -
                ------------------------------------------------------------
                  $     452,192  $     369,557  $   1,175,777  $     190,233
                ------------------------------------------------------------
Liabilities                                                                 
Current                                                                     
 liabilities      $      42,278  $      35,144  $      29,173  $      27,665
Long-term debt           18,094              -        181,932              -
Provisions               56,281         21,214         55,929         21,522
Other                                                                       
 liabilities                676              -         20,019              -
Derivatives                   -              -              -              -
Deferred income                                                             
 tax liabilities          3,128              -              -         11,448
                ------------------------------------------------------------
                  $     120,457  $      56,358  $     287,053  $      60,635
                ------------------------------------------------------------
                                  DISCONTINUED               
2010 As at                        OPERATIONS -               
 January 1         COBRE PANAMA        OK TEDI          TOTAL
-------------------------------------------------------------
(thousands of                                                
 Canadian                           (Papua New               
 dollars)              (Panama)        Guinea)               
Assets                                                       
Cash and short-                                              
 term                                                        
 investments      $      10,728  $      36,631  $     533,913
Other current                                                
 assets                     468         77,425        279,208
Restricted cash               -         26,365        101,589
Property, plant                                              
 and equipment          537,251        119,391      1,945,669
Investments in                                               
 equity                                                      
 securities                   -              -         42,411
Held to maturity                                             
 investments                  -              -         89,891
Other non-                                                   
 current assets               -            926          4,263
                ---------------------------------------------
                  $     548,447  $     260,738  $   2,996,944
                ---------------------------------------------
Liabilities                                                  
Current                                                      
 liabilities      $      10,855  $      44,369  $     189,484
Long-term debt                -              -        200,026
Provisions                    -         41,484        196,430
Other                                                        
 liabilities                  -              -         20,695
Derivatives                   -          3,165          3,165
Deferred income                                              
 tax liabilities              -         11,156         25,732
                ---------------------------------------------
                  $      10,855  $     100,174  $     635,532
                ---------------------------------------------
INMET MINING CORPORATION                                                    
Consolidated statements of changes in equity                                
(unaudited)                                                                 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            Attributable to Inmet equity holders            
----------------------------------------------------------------------------
(thousands of                                                               
 Canadian                            Retained     Contributed    Share based
 dollars)        Share Capital       earnings         surplus   compensation
----------------------------------------------------------------------------
Balance as at                                                               
 January 1,                                                                 
 2010(1)         $     669,952  $   1,527,109   $      64,809  $       5,170
Comprehensive                                                               
 income                      -         84,771               -              -
Equity settled                                                              
 share-based                                                                
 compensation                                                               
 plans                       -              -             324            658
Other                        -              -               -              -
                ------------------------------------------------------------
Balance as at                                                               
 March 31,                                                                  
 2010(1)         $     669,952  $   1,611,880   $      65,133  $       5,828
                ------------------------------------------------------------
Comprehensive                                                               
 income                      -        307,105               -              -
Equity settled                                                              
 share-based                                                                
 compensation                                                               
 plans                       -              -             998            714
Dividends on                                                                
 common shares               -        (11,210)              -              -
Acquisition of                                                              
 non-controlling                                                            
 interest in Las                                                            
 Cruces                419,624       (330,268)              -              -
Other                        -              -               -              -
                ------------------------------------------------------------
Balance as at                                                               
 December 31,                                                               
 2010(1)         $   1,089,576  $   1,577,507   $      66,131  $       6,542
                ------------------------------------------------------------
Comprehensive                                                               
 income                      -        142,844               -              -
Equity settled                                                              
 share-based                                                                
 compensation                                                               
 plans                       -              -             151          1,041
                ------------------------------------------------------------
Balance as at                                                               
 March 31, 2011  $   1,089,576  $   1,720,351   $      66,282  $       7,583
                ------------------------------------------------------------
(1) Refer to                                                                
 note 6 for                                                                 
 effects of                                                                 
 adoption of                                                                
 IFRS                                                                       
(See                                                                        
 accompanying                                                               
 notes)                                                                     
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                         Non-               
                  Attributable to Inmet equity    controlling               
                            holders                  interest  Total equity 
----------------------------------------------------------------------------
                    Accumulated                                             
                          other                                             
(thousands of     comprehensive                                             
 Canadian         income (loss)                                             
 dollars)             (note 13)           Total                             
----------------------------------------------------------------------------
Balance as at                                                               
 January 1,                                                                 
 2010(1)          $      19,093   $   2,286,133   $    75,279   $ 2,361,412 
Comprehensive                                                               
 income                (117,575)        (32,804)       (9,907)      (42,711)
Equity settled                                                              
 share-based                                                                
 compensation                                                               
 plans                        -             982             -           982 
Other                         -               -           (29)          (29)
                ------------------------------------------------------------
Balance as at                                                               
 March 31,                                                                  
 2010(1)               ($98,482)  $   2,254,311   $    65,343   $ 2,319,654 
                ------------------------------------------------------------
Comprehensive                                                               
 income                 (79,830)        227,275         1,595       228,870 
Equity settled                                                              
 share-based                                                                
 compensation                                                               
 plans                        -           1,712             -         1,712 
Dividends on                                                                
 common shares                -         (11,210)            -       (11,210)
Acquisition of                                                              
 non-controlling                                                            
 interest in Las                                                            
 Cruces                  (6,905)         82,451       (66,847)       15,604 
Other                         -               -           (91)          (91)
                ------------------------------------------------------------
Balance as at                                                               
 December 31,                                                               
 2010(1)              ($185,217)  $   2,554,539   $         -   $ 2,554,539 
                ------------------------------------------------------------
Comprehensive                                                               
 income                  33,868         176,712             -       176,712 
Equity settled                                                              
 share-based                                                                
 compensation                                                               
 plans                        -           1,192             -         1,192 
                ------------------------------------------------------------
Balance as at                                                               
 March 31, 2011       ($151,349)  $   2,732,443   $         -   $ 2,732,443 
                ------------------------------------------------------------
(1) Refer to                                                                
 note 6 for                                                                 
 effects of                                                                 
 adoption of                                                                
 IFRS                                                                       
(See accompanying notes)                                                    
INMET MINING CORPORATION
Consolidated statements of earnings
(unaudited) 
                                          Three Months Ended March 31       
(thousands of Canadian dollars        Note                                  
 except per share amounts)       reference            2011          2010(1) 
----------------------------------------------------------------------------
Gross sales                                 $      254,277   $      161,162 
Smelter processing charges and                                              
 freight                                           (31,585)         (33,101)
Cost of sales (excluding                                                    
 depreciation)                                     (79,150)         (52,266)
  Depreciation                                     (27,040)          (7,716)
----------------------------------------------------------------------------
Earnings from operations                           116,502           68,079 
Corporate development and                                                   
 exploration                                       (13,411)          (2,779)
General and administration                          (8,422)          (5,421)
Investment and other income             13          (5,773)           1,204 
Stand-by charges                                         -           (6,753)
Finance costs                           14          (2,331)          (1,873)
----------------------------------------------------------------------------
Income before taxation                              86,565           52,457 
Capital tax expense                                      -              (82)
Income tax expense                      15         (27,160)          (3,004)
----------------------------------------------------------------------------
Income from continuing                                                      
 operations                                 $       59,405   $       49,371 
Income from discontinued                                                    
 operation (net of taxes)               10          83,439           30,718 
----------------------------------------------------------------------------
Net income                                  $      142,844   $       80,089 
----------------------------------------------------------------------------
Net income attributable to:                                                 
 Inmet equity holders                       $      142,844   $       84,771 
 Non-controlling interest                                -           (4,682)
----------------------------------------------------------------------------
                                            $      142,844   $       80,089 
----------------------------------------------------------------------------
Earnings per common share               16                                  
Income from continuing                                                      
 operations                                                                 
 Basic                                      $         0.97   $         0.96 
 Diluted                                    $         0.96   $         0.96 
----------------------------------------------------------------------------
Income from discontinued                                                    
 operation                                                                  
 Basic                                      $         1.36   $         0.55 
 Diluted                                    $         1.35   $         0.55 
----------------------------------------------------------------------------
Net income                                                                  
 Basic                                      $         2.33   $         1.51 
 Diluted                                    $         2.31   $         1.51 
----------------------------------------------------------------------------
(1) Refer to note 6 for effects of adoption                                 
 of IFRS                                                                    
(See accompanying notes)                                                    
2011 For the                                                                
 three months       CORPORATE                                               
 ended March 31        & OTHER         CAYELI     LAS CRUCES      PYHASALMI 
----------------------------------------------------------------------------
(thousands of                                                               
 Canadian                                                                   
 dollars)                            (Turkey)        (Spain)      (Finland) 
Gross sales       $          -   $     99,053   $     90,826   $     64,398 
Smelter                                                                     
 processing                                                                 
 charges and                                                                
 freight                     -        (17,894)          (268)       (13,423)
Cost of sales                                                               
 (excluding                                                                 
 depreciation)               -        (24,460)       (40,426)       (14,264)
 Depreciation                -         (5,226)       (19,556)        (2,258)
                ------------------------------------------------------------
Earnings from                                                               
 operations                  -         51,473         30,576         34,453 
Corporate                                                                   
 development and                                                            
 exploration            (9,969)          (478)            (5)          (730)
General and                                                                 
 administration         (8,422)             -              -              - 
Investment and                                                              
 other income           (6,995)           850            248            124 
Finance costs             (941)          (147)        (1,024)          (219)
Income tax                                                                  
 expense                  (204)       (11,656)        (7,497)        (7,803)
                ------------------------------------------------------------
Net income from                                                             
 continuing                                                                 
 operations           ($26,531)  $     40,042   $     22,298   $     25,825 
Income from                                                                 
 discontinued                                                               
 operation (net                                                             
 of taxes)                   -              -              -              - 
                ------------------------------------------------------------
Net income                                                                  
 (loss)               ($26,531)  $     40,042   $     22,298   $     25,825 
                ------------------------------------------------------------
2011 For the                      DISCONTINUED               
 three months            COBRE    OPERATIONS -               
 ended March 31         PANAMA         OK TEDI         TOTAL 
-------------------------------------------------------------
(thousands of                                                
 Canadian                           (Papua New               
 dollars)             (Panama)         Guinea)               
Gross sales       $          -   $           -  $    254,277 
Smelter                                                      
 processing                                                  
 charges and                                                 
 freight                     -               -       (31,585)
Cost of sales                                                
 (excluding                                                  
 depreciation)               -               -       (79,150)
 Depreciation                -               -       (27,040)
                ---------------------------------------------
Earnings from                                                
 operations                  -               -       116,502 
Corporate                                                    
 development and                                             
 exploration            (2,229)              -       (13,411)
General and                                                  
 administration              -               -        (8,422)
Investment and                                               
 other income                -               -        (5,773)
Finance costs                -               -        (2,331)
Income tax                                                   
 expense                     -               -       (27,160)
                -------------------------------------------- 
Net income from                                              
 continuing                                                  
 operations            ($2,229)  $           -  $     59,405 
Income from                                                  
 discontinued                                                
 operation (net                                              
 of taxes)                   -          83,439        83,439 
                -------------------------------------------- 
Net income                                                   
 (loss)                ($2,229)  $      83,439  $    142,844 
                -------------------------------------------- 
2010 For the                                                                
 three months        CORPORATE                           LAS                
 ended March 31        & OTHER         CAYELI         CRUCES      PYHASALMI 
----------------------------------------------------------------------------
(thousands of                                                               
 Canadian                                                                   
 dollars)                            (Turkey)        (Spain)      (Finland) 
Gross sales       $     34,454   $     75,268   $          -   $     51,440 
Smelter                                                                     
 processing                                                                 
 charges and                                                                
 freight                (2,758)       (18,838)             -        (11,505)
Cost of sales                                                               
 (excluding                                                                 
 depreciation)         (16,533)       (20,684)             -        (15,049)
 Depreciation             (985)        (4,710)             -         (2,021)
                ------------------------------------------------------------
Earnings from                                                               
 operations             14,178         31,036              -         22,865 
Corporate                                                                   
 development and                                                            
 exploration            (1,878)           (66)             -           (835)
General and                                                                 
 administration         (5,421)             -              -              - 
Investment and                                                              
 other income            1,129            119            (44)             - 
Stand-by charges             -              -         (6,753)             - 
Finance costs             (969)          (149)          (569)          (186)
Capital tax                                                                 
 expense                   (82)             -              -              - 
Income tax                                                                  
 expense                 1,187         (6,866)         7,634         (4,959)
                ------------------------------------------------------------
Net income from                                                             
 continuing                                                                 
 operations       $      8,144   $     24,074   $        268   $     16,885 
Income from                                                                 
 discontinued                                                               
 operation (net                                                             
 of taxes)                   -              -              -              - 
                ------------------------------------------------------------
Net income        $      8,144   $     24,074   $        268   $     16,885 
                ------------------------------------------------------------
2010 For the                    DISCONTINUED               
 three months           COBRE   OPERATIONS -               
 ended March 31        PANAMA        OK TEDI         TOTAL 
-----------------------------------------------------------
(thousands of                                              
 Canadian                         (Papua New               
 dollars)            (Panama)        Guinea)               
Gross sales        $        -  $           -  $    161,162 
Smelter                                                    
 processing                                                
 charges and                                               
 freight                    -              -       (33,101)
Cost of sales                                              
 (excluding                                                
 depreciation)              -              -       (52,266)
 Depreciation               -              -        (7,716)
                -------------------------------------------
Earnings from                                              
 operations                 -              -        68,079 
Corporate                                                  
 development and                                           
 exploration                -              -        (2,779)
General and                                                
 administration             -              -        (5,421)
Investment and                                             
 other income               -              -         1,204 
Stand-by charges            -              -        (6,753)
Finance costs               -              -        (1,873)
Capital tax                                                
 expense                    -              -           (82)
Income tax                                                 
 expense                    -              -        (3,004)
                -------------------------------------------
Net income from                                            
 continuing                                                
 operations        $        -  $           -  $     49,371 
Income from                                                
 discontinued                                              
 operation (net                                            
 of taxes)                  -         30,718        30,718 
                -------------------------------------------
Net income         $        -  $      30,718  $     80,089 
                -------------------------------------------
INMET MINING CORPORATION
Consolidated statements of comprehensive income (loss)
(unaudited)
                                                Three months ended March 31 
                                          Note                              
(thousands of Canadian dollars)      reference          2011        2010(1) 
------------------------------------------------------------ -------------- 
Net income                                      $    142,844   $     80,089 
                                              -------------- -------------- 
Other comprehensive income (loss)                                           
 for the period:                                                            
Continuing operations                                                       
  Changes in fair value of                                                  
   investments                                          (540)           172 
  Currency translation adjustments                    17,956       (117,730)
  Income tax recovery related to                                            
   investments - other                                                      
   comprehensive income                                   77            605 
                                              ----------------------------- 
                                                      17,493       (116,953)
                                              ----------------------------- 
Other comprehensive income from                                             
 discontinued operation (net of                                             
 taxes)                                               16,375         (5,847)
                                              ----------------------------- 
Comprehensive income (loss)                     $    176,712       ($42,711)
--------------------------------------------------------------------------- 
Comprehensive income (loss)                                                 
 attributable to:                                                           
  Inmet equity holders                          $    176,712       ($32,804)
  Non-controlling interests                                -         (9,907)
                                              ----------------------------- 
                                                $    176,712       ($42,711)
--------------------------------------------------------------------------- 
(1) Refer to note 6 for effects of adoption of IFRS                         
(See accompanying notes)                                                    
INMET MINING CORPORATION
Consolidated statements of cash flows
(unaudited)
                                                Three months ended March 31 
                                          Note                              
(thousands of Canadian dollars)      reference          2011        2010(1) 
----------------------------------------------------------------------------
Cash provided by (used in)                                                  
 operating activities(2)                                                    
Net income from continuing                                                  
 operations                                     $     59,405   $     49,371 
Add (deduct) items not affecting                                            
 cash:                                                                      
      Depreciation                                    27,040          7,716 
      Deferred income taxes                 15         8,389        (12,906)
      Accretion expense on asset                                            
       retirement obligations and                                           
       capital leases                                  1,891          1,420 
      Foreign exchange loss                            4,225            545 
      Other                                             (418)           739 
Settlement of asset retirement                                              
 obligations                                          (1,666)          (573)
Net change in non-cash working                                              
 capital                                    17        19,310         (1,185)
                                              ------------------------------
                                                     118,176         45,127 
                                              ------------------------------
Cash provided by (used in)                                                  
 investing activities                                                       
Purchase of property, plant and                                             
 equipment                                           (40,730)       (17,541)
Acquisition of long term                                                    
 investments                                 9      (275,456)      (102,380)
Maturing of held to maturity                                                
 investments                                           8,000              - 
Funding received under Cobre Panama                                         
 option                                                3,944          2,139 
Purchase of equity securities                         (3,493)             - 
Sale of short-term investments                         7,278         26,996 
Other                                                    126              - 
                                              ------------------------------
                                                    (300,331)       (90,786)
                                              ------------------------------
Cash provided by (used in)                                                  
 financing activities                                                       
Financial assurance payments                          (1,952)           (31)
Funding by non-controlling                                                  
 shareholder                                               -          2,795 
Other                                                   (884)          (127)
                                              ------------------------------
                                                      (2,836)         2,637 
                                              ------------------------------
Foreign exchange on cash held                                               
  in foreign currencies                                3,140        (13,957)
                                              ------------------------------
Cash provided by discontinued                                               
  operation                                 10       306,982         39,342 
                                              ------------------------------
Increase (decrease) in cash:                         125,131        (17,637)
Cash:                                                                       
  Beginning of period                                319,129        506,917 
                                              ------------------------------
  End of period                                 $    444,260   $    489,280 
Short term investments                                     -              - 
                                              ------------------------------
Cash and short-term investments                 $    444,260   $    489,280 
----------------------------------------------------------------------------
(1) Refer to note 6 for effects of                                          
 adoption of IFRS                                                           
(See accompanying notes)                                                    
(2) Supplementary cash flow                                                 
 information:                                                               
    Cash interest paid                          $        562   $        600 
    Cash taxes paid                             $     17,509   $     19,831 
----------------------------------------------------------------------------
INMET MINING CORPORATION
Segmented statements of cash flows
(unaudited)
2011 For the         CORPORATE                                              
 three months                &                           LAS                
 ended March 31          OTHER         CAYELI         CRUCES      PYHASALMI 
----------------------------------------------------------------------------
(thousands of                                                               
 Canadian                                                                   
 dollars)                            (Turkey)        (Spain)      (Finland) 
Cash provided by                                                            
 (used in)                                                                  
 operating                                                                  
 activities                                                                 
Before net                                                                  
 change in non-                                                             
 cash working                                                               
 capital              ($26,890)  $     46,882   $     52,264   $     28,329 
Net change in                                                               
 non-cash                                                                   
 working capital        (4,331)         7,115          5,426         11,610 
                ------------------------------------------------------------
                       (31,221)        53,997         57,690         39,939 
                ------------------------------------------------------------
Cash provided by                                                            
 (used in)                                                                  
 investing                                                                  
 activities                                                                 
Purchase of                                                                 
 property, plant                                                            
 and equipment            (182)        (2,416)       (14,834)          (326)
Funding received                                                            
 under Cobre                                                                
 Panama option                                                              
 agreement                   -              -              -              - 
Purchase of                                                                 
 held-to-                                                                   
 maturity                                                                   
 investments          (274,979)          (477)             -              - 
Maturity of                                                                 
 held-to-                                                                   
 maturity                                                                   
 investments             8,000              -              -              - 
Purchase of                                                                 
 equity                                                                     
 securities             (3,493)             -              -              - 
Sale of short-                                                              
 term                                                                       
 investments                 -              -          7,278              - 
Other                      126              -              -              - 
                ------------------------------------------------------------
                      (270,528)        (2,893)        (7,556)          (326)
                ------------------------------------------------------------
Cash provided by                                                            
 (used in)                                                                  
 financing                                                                  
 activities                139              -         (2,975)             - 
                ------------------------------------------------------------
Foreign exchange                                                            
 on cash held in                                                            
 foreign                                                                    
 currencies                  -         (3,520)         2,433          4,320 
                ------------------------------------------------------------
Cash provided by                                                            
 discontinued                                                               
 operation                   -              -              -              - 
                ------------------------------------------------------------
Intergroup                                                                  
 funding                                                                    
 (distributions)       302,598            (79)       (14,590)         1,910 
                ------------------------------------------------------------
Increase                                                                    
 (decrease) in                                                              
 cash                      988         47,505         35,002         45,843 
Cash:                                                                       
 Beginning of                                                               
  year                  53,184        107,750         52,570         97,056 
                ------------------------------------------------------------
 End of period          54,172        155,255         87,572        142,899 
Short term                                                                  
 investments                 -              -              -              - 
                ------------------------------------------------------------
Cash and short-                                                             
 term                                                                       
 investments      $     54,172   $    155,255   $     87,572   $    142,899 
                ------------------------------------------------------------
                ------------------------------------------------------------
2011 For the                  DISCONTINUED                
 three months        COBRE OPERATIONS - OK                
 ended March 31     PANAMA           TEDI           TOTAL 
----------------------------------------------------------
(thousands of                                             
 Canadian         (Panama)      (Papua New                
 dollars)                         Guinea)                 
Cash provided by                                          
 (used in)                                                
 operating                                                
 activities                                               
Before net                                                
 change in non-                                           
 cash working                                             
 capital           ($2,229)  $           -   $     98,356 
Net change in                                             
 non-cash                                                 
 working capital         -               -         19,820 
                ----------------------------------------- 
                    (2,229)              -        118,176 
                ----------------------------------------- 
Cash provided by                                          
 (used in)                                                
 investing                                                
 activities                                               
Purchase of                                               
 property, plant                                          
 and equipment     (22,972)              -        (40,730)
Funding received                                          
 under Cobre                                              
 Panama option                                            
 agreement           3,944               -          3,944 
Purchase of                                               
 held-to-                                                 
 maturity                                                 
 investments             -               -       (275,456)
Maturity of                                               
 held-to-                                                 
 maturity                                                 
 investments             -               -          8,000 
Purchase of                                               
 equity                                                   
 securities              -               -         (3,493)
Sale of short-                                            
 term                                                     
 investments             -               -          7,278 
Other                    -               -            126 
                ----------------------------------------- 
                   (19,028)              -       (300,331)
                ----------------------------------------- 
Cash provided by                                          
 (used in)                                                
 financing                                                
 activities              -               -         (2,836)
                ----------------------------------------- 
Foreign exchange                                          
 on cash held in                                          
 foreign                                                  
 currencies            (93)              -          3,140 
                ----------------------------------------- 
Cash provided by                                          
 discontinued                                             
 operation               -         306,982        306,982 
                ----------------------------------------- 
Intergroup                                                
 funding                                                  
 (distributions)    17,143        (306,982)             - 
                ----------------------------------------- 
Increase                                                  
 (decrease) in                                            
 cash               (4,207)              -        125,131 
Cash:                                                     
 Beginning of                                             
  year               8,569               -        319,129 
                ----------------------------------------- 
 End of period       4,362               -        444,260 
Short term                                                
 investments             -               -              - 
                ----------------------------------------- 
Cash and short-                                           
 term                                                     
 investments    $    4,362   $           -   $    444,260 
                ----------------------------------------- 
2010 For the         CORPORATE                                              
 three months                &                                              
 ended March 31          OTHER         CAYELI     LAS CRUCES      PYHASALMI 
----------------------------------------------------------------------------
                                     (Turkey)        (Spain)      (Finland) 
(thousands of                                                               
 Canadian                                                                   
 dollars)                                                                   
Cash provided by                                                            
 (used in)                                                                  
 operating                                                                  
 activities                                                                 
Before net                                                                  
 change in non-                                                             
 cash working                                                               
 capital          $      7,643   $     26,139        ($6,753)  $     19,283 
Net change in                                                               
 non-cash                                                                   
 working capital          (524)         3,605              -         (4,266)
                ------------------------------------------------------------
                         7,119         29,744         (6,753)        15,017 
                ------------------------------------------------------------
Cash provided by                                                            
 (used in)                                                                  
 investing                                                                  
 activities                                                                 
Purchase of                                                                 
 property, plant                                                            
 and equipment              (8)        (1,819)         2,652           (457)
Acquisition of                                                              
 long term                                                                  
 investments          (102,380)             -              -              - 
Funding received                                                            
 under Cobre                                                                
 Panama option                                                              
 agreement                   -              -              -              - 
Sale of short-                                                              
 term                                                                       
 investments            26,996              -              -              - 
                ------------------------------------------------------------
                       (75,392)        (1,819)         2,652           (457)
                ------------------------------------------------------------
Cash provided by                                                            
 (used in)                                                                  
 financing                                                                  
 activities                (55)             -          2,692              - 
                ------------------------------------------------------------
Foreign exchange                                                            
 on cash held in                                                            
 foreign                                                                    
 currencies                  -         (6,026)        (1,335)        (6,392)
                ------------------------------------------------------------
Cash provided by                                                            
 discontinued                                                               
 operation                   -              -              -              - 
                ------------------------------------------------------------
Intergroup                                                                  
 funding                                                                    
 (distributions)        15,983            (19)         4,175         (4,122)
                ------------------------------------------------------------
Increase                                                                    
 (decrease) in                                                              
 cash                  (52,345)        21,880          1,431          4,046 
Cash:                                                                       
 Beginning of                                                               
  year                 224,574        158,631         10,039         66,314 
                ------------------------------------------------------------
 End of period         172,229        180,511         11,470         70,360 
Short term                                                                  
 investments                 -              -              -              - 
                ------------------------------------------------------------
Cash and short-                                                             
 term                                                                       
 investments      $    172,229   $    180,511   $     11,470   $     70,360 
                ------------------------------------------------------------
2010 For the                    DISCONTINUED                
 three months                OPERATIONS - OK                
 ended March 31  COBRE PANAMA           TEDI          TOTAL 
----------------------------------------------------------- 
                                  (Papua New                
                     (Panama)        Guinea)                
(thousands of                                               
 Canadian                                                   
 dollars)                                                   
Cash provided by                                            
 (used in)                                                  
 operating                                                  
 activities                                                 
Before net                                                  
 change in non-                                             
 cash working                                               
 capital           $        -  $            -  $     46,312 
Net change in                                               
 non-cash                                                   
 working capital            -               -        (1,185)
                ------------------------------------------- 
                            -               -        45,127 
                ------------------------------------------- 
Cash provided by                                            
 (used in)                                                  
 investing                                                  
 activities                                                 
Purchase of                                                 
 property, plant                                            
 and equipment       (17,909)               -       (17,541)
Acquisition of                                              
 long term                                                  
 investments                -               -      (102,380)
Funding received                                            
 under Cobre                                                
 Panama option                                              
 agreement              2,139               -         2,139 
Sale of short-                                              
 term                                                       
 investments                -               -        26,996 
                ------------------------------------------- 
                     (15,770)               -       (90,786)
                ------------------------------------------- 
Cash provided by                                            
 (used in)                                                  
 financing                                                  
 activities                 -               -         2,637 
                ------------------------------------------- 
Foreign exchange                                            
 on cash held in                                            
 foreign                                                    
 currencies             (204)               -       (13,957)
                ------------------------------------------- 
Cash provided by                                            
 discontinued                                               
 operation                  -         39,342         39,342 
                ------------------------------------------- 
Intergroup                                                  
 funding                                                   
 (distributions)       17,149        (33,166)             - 
                ------------------------------------------- 
Increase                                                    
 (decrease) in                                              
 cash                   1,175          6,176        (17,637)
Cash:                                                       
 Beginning of                                               
  year                 10,728         36,631        506,917 
                ------------------------------------------- 
 End of period         11,903         42,807        489,280 
Short term                                                  
 investments                -              -              - 
                ------------------------------------------- 
Cash and short-                                             
 term                                                       
 investments          $11,903  $      42,807   $    489,280 
                ------------------------------------------- 

Notes to the consolidated financial statements

1. Corporate information

Inmet Mining Corporation is a publicly traded corporation listed on the Toronto stock exchange. Our registered and head office is in Toronto, Canada. Our principal activities are the exploration, development and mining of base metals.

2. Basis of presentation and statement of compliance

International Financial Reporting Standards (IFRS) require us to make an explicit and unreserved statement that our financial statements are in compliance with IFRS. We will make this statement when we issue our 2011 annual financial statements. These condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and using the accounting policies we expect to adopt in our consolidated financial statements for the year ending December 31, 2011.

This is the first year we have prepared our financial statements in accordance with IFRS. See note 6, First time adoption of IFRS, for information about our transition from Canadian GAAP. You should read our interim statements in conjunction with our annual statements which you can find in our 2010 Annual Report.

We have prepared the consolidated financial statements under the historical cost convention, modified by the revaluation of certain financial instruments we have measured in accordance with IFRS. The financial statements are in Canadian dollars and all values are rounded to the nearest thousand except where otherwise indicated. These statements have been approved by Inmet's board of directors and have been reviewed by our external auditors.

Our segmented statements reflect the management structure of our company, where each operation retains its own management team and compiles its own financial information, following the accounting policies outlined here.

--  Cayeli - a mine in Turkey that produces copper and zinc concentrates.
    Cayeli is a wholly-owned subsidiary. 
--  Las Cruces - a high grade copper mine and plant operation in Spain that
    produces cathode copper. Las Cruces is a wholly-owned subsidiary. 
--  Pyhasalmi - a mine in Finland that produces copper and zinc
    concentrates. Pyhasalmi is a wholly-owned subsidiary. 
--  Cobre Panama - a copper, gold and molybdenum deposit currently under
    development in Panama. We have a 100 percent interest in Cobre Panama.
    Korea Panama Mining Corp owns an option to acquire a 20 percent interest
    in Cobre Panama. 
--  Corporate and other - our head office and closed properties. As a result
    of the closure of Troilus, we no longer consider it to be a separate
    reportable operating segment and included its results in Corporate and
    other retroactively. 

3. Summary of significant accounting policies

Basis of consolidation

Entities we control

We have control of an entity when we have the right to govern its operating and financial policies (usually when we have more than 50 percent voting power through ownership or agreements), unless a non-controlling interest is able to prevent us from exercising control.

We consolidate the results of entities we control and eliminate all intercompany balances and transactions. When we acquire a new entity, we consolidate from the day that control passes to us. We consolidate those we sell until the day control passes to the acquirer.

Interests in jointly controlled entities

We jointly control an entity when we hold a long-term interest in it, and share joint control over its operating and financial decisions with one or more other parties under a contractual arrangement.

We proportionately consolidate our share of any entity we jointly control, combining its line-by-line results with similar line items in our financial statements.

Foreign exchange

Functional and presentation currency

Inmet Mining's functional currency is the Canadian dollar. We report our consolidated financial statements in Canadian dollars.

Our entities measure the items in their financial statements in their functional currency (the currency of the primary economic environment they operate in). Cayeli, Ok Tedi and Cobre Panama use the US dollar and Pyhasalmi and Las Cruces use the euro.

Foreign currency transactions

Monetary items denominated in foreign currencies are translated into each entity's functional currency at the rate of exchange on the balance sheet date, and gains and losses on translation are recognized in the statement of earnings for the period. We recognize all other transactions in foreign currencies at the exchange rate at the time of the transaction.

Financial statements of foreign operations

For operations that have a functional currency other than the Canadian dollar, we translate the statement of earnings and balance sheet as follows:

--  assets and liabilities: translated at the closing rate at the end of the
    financial period. 
--  revenues and expenses: translated for each statement of earnings at
    rates approximating the exchange rates at the time of the transactions 
--  resulting differences: recognized as a separate component of accumulated
    other comprehensive income. 

We also recognize exchange differences relating to long-term intercompany loan balances with foreign operations that form part of the net investment in the foreign operation in this separate component of accumulated other comprehensive income.

When we sell all or part of a foreign operation, or repay its share capital or intercompany debt considered part of the net investment, we recognize exchange differences arising from the translation of the net investment in the statement of earnings.

Business combinations

When we acquire a subsidiary, we account for it using the purchase method.

The cost of the business combination is the fair value at the date of exchange of:

--  the assets we gave 
--  the liabilities we incurred or assumed, and 
--  the equity instruments we issued in exchange for control. 

We allocate total consideration paid to the identifiable assets, liabilities and contingent liabilities (identifiable net assets) we acquired, at their fair value on the date of the acquisition, including mineral reserves and resources that can be reliably valued.

We expense transaction costs related to an acquisition as incurred.

If the fair value of our share of the identifiable net assets acquired is greater than the fair value of the consideration paid, we recognize the difference in the statement of earnings on the acquisition date.

Non controlling interest is the portion of an entity that we do not own (the profit or loss and net assets we are not entitled to). We record non controlling interests in equity, separate from our shareholders' equity.

Revenue

Gross sales includes the sale of all concentrate, cathode copper and gold dore. It does not include smelter processing charges and freight, which are presented as a separate line item in the statement of earnings.

We recognize revenue when all significant risks and rewards of ownership of our products have been transferred to the customer - usually when the customer takes on the insurance risk and the goods have been delivered to the shipping agent.

Most of our sales contracts set the sales price at the commodity's market price on a specified future date. To calculate our revenue from the sale of our products, we use the forward price of the commodity for the day we expect the contract to settle. Variations between the price we record on the date of initial revenue recognition and the final price we receive due to changes in market prices represents an embedded derivative in our sales contracts. We adjust our revenue every period for any change in the value of the contract using the period end forward price for the day the contract is expected to settle. When it settles, we record the difference between the forward price and the final price we receive in revenue.

We recognize interest income in investment and other income, based on the principal outstanding and the effective interest rate.

We recognize dividends and royalties in investment and other income when we have established the right to receive payment.

Inventories

Inventories include:

--  stockpiled ore, materials and supplies: ore, goods and supplies that
    will be consumed directly or indirectly in the production process 
--  work in process: inventory in an intermediate state that has not yet
    passed through all stages of the production process 
--  finished goods: concentrate, cathode copper and gold dore that are ready
    for sale. 

We measure inventory at the lower of cost or net realizable value, as follows:

--  cost: a weighted average that includes all costs directly related to
    bringing the inventory to its current location and condition, such as
    mining and milling costs and an allocation of production overheads and
    depreciation based on normal capacity 
--  net realizable value: the estimated selling price less any additional
    costs we expect to incur for completion and sale of the related
    inventory. 

We classify inventories of stockpiled ore that we do not expect to process in the next year as Other assets.

Property, plant and equipment

On initial acquisition, we recognize property, plant and equipment at cost. Cost includes the purchase price, costs that can be directly attributed to acquiring it, and the cost required to bring the asset to the location and the condition necessary to operate in the way we intended it to.

In subsequent periods, we recognize it at cost less accumulated depreciation and any impairment in value.

We depreciate the cost, less estimated residual values of property, plant and equipment, as follows:

--  property: depreciated in proportion to the depletion of proven and
    probable reserves on a unit of production basis. 
--  plant and equipment: depreciated using a straight-line method based on
    estimated useful life. The expected useful lives of plant and equipment
    range from 5 to 15 years, but do not exceed the life of mine. 

When different parts (or components) of an asset are significant and have different useful lives, we depreciate the individual components separately, considering both a component's physical life, and the present estimated mineral reserves at the mine where the component is located.

We review estimates in remaining useful lives and residual values at least annually and account for any changes prospectively.

When we carry out a major maintenance refit, we may replace or overhaul assets or parts of assets. When we replace an asset or a component that we have been depreciating separately, we capitalize these costs if this extends its useful life and it is probable that this will result in future economic benefits to the operation. In addition, we write off the asset or component that has been replaced. If we replace part of an asset that was not considered a component, we use the replacement value to estimate the carrying amount of the replaced asset and immediately write that off. We expense all other regular maintenance costs as incurred.

Exploration and evaluation expenditures

We expense the costs of exploration and evaluation as incurred, except for the following:

--  in areas currently under development 
--  where we can reasonably expect to convert existing mineral resources
    into mineral reserves or add additional mineral resources with further
    drilling and evaluations 
--  the cost to acquire an early stage entity conducting primarily
    exploration and evaluation activities. 

In the first two instances, we capitalize costs as development expenditures. In the third instance, we capitalize costs as exploration and evaluation assets.

Development expenditures

We capitalize the costs of acquiring and developing mineral reserves and resources on the balance sheet as we incur them. These costs include accessing the ore body, designing and constructing the production infrastructure, interest and financing relating to construction, and costs that can be directly attributed to bringing the assets to the condition necessary for their intended use. This includes costs during the commissioning period when required before the asset can operate at normal levels.

Development expenditures are not depreciated. When production begins, we reclassify these costs to the appropriate category of property, plant and equipment and depreciate them according to our accounting policy.

Capitalized stripping

In open pit mining operations, we remove overburden and other waste in order to access the ore body (stripping). During development, we capitalize the cost of stripping as part of the cost of mine development and reclassify it to property when production begins.

During the production phase, we capitalize these costs to property when stripping activity gives us access to reserves that would not otherwise have been accessible, and that we expect will be mined in the future. We amortize production phase stripping costs over the reserves that are directly affected by the stripping activity on a units-of-production basis.

Leasing

We determine whether an arrangement is, or contains, a lease based on the substance of the arrangement, considering whether the arrangement is dependent on the use of a specific asset or whether the arrangement conveys a right to use the asset.

We classify a lease as financial when we carry substantially all of the risks and rewards of owning the asset. We capitalize assets under financial leases at either the fair value of the leased asset or the present value of the minimum lease payments over the lease term using the interest rate in the lease agreement - whichever is lower. We determine these amounts at the inception of the lease and depreciate the corresponding asset over its estimated useful life or the lease term - whichever is shorter. We recognize a corresponding amount representing our future obligation for finance leases in Other liabilities in the balance sheet, and recognize the associated accretion expense over time in finance costs in the statement of earnings.

We classify a lease as operating when we do not have substantially all the risks and rewards of ownership. We recognize rentals payable under operating leases in the statement of earnings on a straight line basis over the term of the lease.

Impairment of assets

At each reporting date, we look for indications of impairment of our non-current assets. If there are indicators of impairment, we carry out a formal test to see whether the asset's carrying amount exceeds its recoverable amount.

An asset's recoverable amount is its fair value less costs to sell or its value-in-use - whichever is higher.

--  Fair value less costs to sell is the amount we would receive from the
    sale of the asset in an arm's-length transaction between knowledgeable
    and willing parties. For our mining assets, we generally use the present
    value of future cash flows we expect from their continued use, including
    any expansion prospects, and from their eventual disposal. When
    assessing cash flows and discounting them to present value, we use
    assumptions that we believe an arm's length party would consider
    appropriate. 
--  We calculate the value-in-use of an asset by using the present value of
    cash flows we expect from its continued use in its present form, and
    from its disposal, without taking into account any future development.
    Value-in-use is likely to be different from fair value because we use
    different assumptions. 

If the carrying amount of the asset exceeds its recoverable amount, we recognize an impairment loss in the statement of earnings to reflect the lower amount of the asset. We recognize impairment losses related to continuing operations in the statement of earnings in the expense category that relates to the asset's function.

We carry out these reviews for each asset, unless the asset does not generate cash flows on its own. In this case, we will carry out the review at the cash-generating unit level. Cash generating units are the smallest identifiable group of assets and liabilities that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. This generally results in an evaluation of assets at the mine entity level.

We reverse an impairment loss in the statement of earnings if the estimates we used to calculate the recoverable amount have changed since we recognized the impairment. We increase the carrying amount to the recoverable amount, net of the depreciation or amortization that would have arisen if we had not recognized the original impairment loss.

After a reversal, we recognize depreciation over the asset's remaining useful life based on its revised carrying amount, less any residual value.

Government subsidies

We recognize government subsidies when there is reasonable assurance we will receive the subsidy and will comply with all of the associated conditions. We credit government subsidies related to a capital expenditure against the carrying amount of the related asset, and amortize the subsidy over the expected useful life of the asset. We credit subsidies that are not associated with an asset to income, to match them with the expenses they relate to.

Provisions for asset retirement obligations

Our mines, closed properties and joint ventures are subject to environmental laws and regulations in Canada and the other countries we operate in. Mining companies are legally obligated to rehabilitate land and other property that has been damaged or contaminated in the course of their business activities. While rehabilitation activities usually happen after the site has been closed, companies are required to estimate reclamation costs from both operating sites and closed sites.

We incur obligations to restore and rehabilitate land and the environment as we carry out the regular construction and operation of our mines. Costs can include, among other things, the dismantling and demolition of infrastructure, removal of residual materials and remediation of disturbed areas. We recognize a provision for these costs as the related disturbances occur, using our best estimate of future costs based on information available at the balance sheet date, including an adjustment for risk when there is significant variability in possible outcomes. We discount the provision using a current inflation adjusted pre-tax risk free interest rate and include the accretion of the discounted amount over time in finance costs in the statement of earnings.

When we recognize a provision, we record a corresponding increase in the carrying amount of the related asset (where we can identify one) and recognize depreciation following our accounting policies for property, plant and equipment.

We review these provisions annually for changes to our obligations, legislation or discount rates that affect our cost estimates or lives of operations. We adjust the provision and the cost of the related asset (where we can identify one) when there is a change in the estimated cash flows or discount rate, and depreciate the adjusted cost of the asset prospectively.

When we do not identify an asset, such as at our closed sites, we record a provision or a change in provision in cost of sales.

Other provisions

We recognize a provision when we have a legal or constructive obligation because of past events, and it is probable that, to settle the obligation, we will be required to make a payment that we can reliably estimate. If its effect is material, we discount the provision to net present value using a pre-tax risk free interest rate. We recognize the accretion of discounted provisions over the time of the obligation in finance costs in the statement of earnings.

Income taxes

We calculate current income tax expense for each of our taxable entities based on the local taxable income at the local statutory tax rate enacted or substantively enacted at the balance sheet date, and include adjustments to income taxes payable or recoverable for previous periods.

We calculate deferred tax assets and liabilities based on temporary differences between the carrying amounts in our balance sheet and their tax bases, using income tax rates we expect to be in effect when the temporary differences are likely to be settled. We present all deferred taxes as non-current assets and liabilities on the balance sheet.

We only recognize deferred tax assets when it is probable that we will have enough taxable income in the future to recover them. We include the effects of changes in tax rates in income when the change is enacted or substantively enacted.

We recognize deferred tax assets or liabilities for all temporary differences, except for:

--  a deferred tax liability on the initial recognition of goodwill 
--  a deferred tax asset or liability arising from the initial recognition
    of an asset or liability in a transaction that is not a business
    combination and that, at the time of the transaction, does not affect
    accounting profit or loss, or taxable profit or loss 
--  a deferred tax liability related to investments in subsidiaries,
    branches, associates and interests in joint ventures, when we can
    control the timing of the reversal of the temporary difference and when
    it is probable that the temporary difference will not reverse in the
    foreseeable future. 

We review the carrying amount of deferred income tax assets at each balance sheet date and adjust it if:

--  an asset not previously recognized meets the criteria for recognition 
--  our estimate of future taxable income available to recover them changes.

We recognize current and deferred tax that relates to equity items in equity, and not in the statement of earnings.

Assets held for sale and discontinued operations

Assets held for sale

We classify assets and disposal groups as held for sale if we will recover their carrying amounts through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the assets or disposal groups are available for immediate sale in their present condition. We must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year of the date of classification.

We carry assets (or disposal groups) held for sale at the lower of the carrying amount before being classified as held for sale, and the fair value less costs to sell. We present the assets and liabilities of a disposal group classified as held for sale separately as one line in the assets and liabilities sections on the statement of financial position.

Discontinued operations

A discontinued operation is a component of an entity that has been disposed of or classified as held for sale, with operations and cash flows that are clearly distinguished both operationally and for financial reporting purposes from the rest of the entity. To be classified as a discontinued operation, an operation must:

--  represent a separate major line of business or geographical area of
    operations 
--  be part of a single coordinated plan to dispose of a separate major line
    of business or geographical area of operations, or 
--  be a subsidiary acquired only for resale. 

When the operation is discontinued at the balance sheet date, the results are presented in one line on the statement of earnings, and prior period results are represented as discontinued.

See note 10 for a breakdown of our results from discontinued operations.

Cash and short-term investments

Cash includes cash and money market instruments that mature in 90 days or less from the date of acquisition. Short-term investments mature in 91 days to a year.

In the consolidated statements of cash flows, we disclose:

--  short-term investments we buy with cash during the year as cash used in
    investing activities 
--  short-term investments we sell to generate cash as a source of cash from
    investing activities 

See note 7 for a breakdown of our cash and short-term investments.

Restricted cash

Restricted cash includes cash that has been pledged for other uses, such as reclamation, and is not available for immediate disbursement.

See note 8 for a breakdown of our restricted cash.

Financial instruments

Financial instruments include cash, as well as any contract that gives rise to a financial asset to one party and a financial liability or equity instrument to another party. We classify financial instruments at their initial recognition. We initially recognize financial instruments at their fair value.

Fair value is the value a financial instrument can be closed out or sold at, in a transaction with a willing and knowledgeable counterparty. It is usually the instrument's quoted market price. If a quoted market price is not available, we determine fair value with models using market-based or independent information and assumptions.

Cash and short-term investments, accounts receivable from metal sales, restricted cash and accounts payable and accrued liabilities

These financial instruments have been designated as fair value through profit and loss and are recorded at fair value. We record any changes in their fair value in net income. We record interest and dividends earned on cash, short-term investments and restricted cash in Investment and other income. For cash, we calculate fair value using published price quotations in an active market where there is one. Otherwise fair value represents cost plus accrued interest, which is reasonable given its short-term nature. We record accounts receivable related to metal sales at fair value based on forward market metal prices on the date of the balance sheet (see our Revenue policy above). We record accounts payable and accrued liabilities at amortized cost, which approximates fair value because of their short-term nature.

Investments

Our investments in equity securities are designated as available-for-sale and recorded at fair value. We calculate fair value using the bid price of the investment as quoted in an active market. We record changes in the fair value of our investments in Other comprehensive income. The change in fair value of an investment in an equity security appears in Investment and other income only when it is sold or impaired.

Our investments in long-term government and corporate bonds are designated as held to maturity. We initially recognize these investments at fair value and subsequently at amortized cost with the related interest income recorded in Investment and other income. We only designate investments as held to maturity when we intend, and have the ability, to hold them to maturity.

We capitalize transaction costs related to investments we make and include these in the investment's initial carrying value.

Loans and receivables

All non-metal receivables are designated as loans and receivables. We initially measure these assets at fair value. In subsequent periods, we measure them at amortized cost using the effective interest rate method.

Long-term debt

Our long-term debt is designated as other liabilities and is accounted for at amortized cost. We record interest expense on long-term debt in finance costs in the statement of earnings unless it relates specifically to a development project, and has been accounted for using our accounting policy for borrowing costs.

Derecognition of financial instruments

We will derecognize a financial asset when:

--  our rights to receive cash flows from the asset have expired 
--  our right to receive cash flows has been retained, but we have assumed
    an obligation to pay them in full to a third party without material
    delay, or 
--  our right to receive cash flows has been transferred, together with
    substantially all the risks and rewards of ownership. 

We derecognize financial liabilities when the associated obligation is discharged, cancelled or has expired.

Impairment of financial assets

We review our investments for impairment at the end of each reporting period based on both quantitative and qualitative criteria, including the extent that cost exceeds market value, the length of a market decline and the financial health of the issuer.

For loans and receivables and our investments in long-term bonds, we measure the amount of the loss as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the asset's original effective interest rate. We reduce the carrying amount of the asset and recognize the amount of the loss in the income statement in investment and other income. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, we reverse the previously recognized impairment loss. We recognize any subsequent reversal of an impairment loss in the income statement, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date.

If our investments in equity securities are impaired, we transfer the difference between its cost and its current fair value, less any impairment loss previously recognized in the income statement, from accumulated other comprehensive income to the income statement in investment and other income.

Embedded derivatives

When we enter into a contract, we determine whether it contains an embedded derivative. We separate an embedded derivative from its host contract if the derivative is not measured at fair value through profit and loss, and when its economic characteristics and risks are not closely related to the host contract. In these circumstances, we recognize the embedded derivative according to our accounting policy for derivatives.

Derivatives and hedging

We designate non-financial derivative contracts as held-for-trading and record them at fair value on the balance sheet. We include mark-to-market adjustments on these instruments in net income, unless the instruments are designated as part of a hedge relationship.

We record derivatives on the balance sheet at fair value. On the date we enter into a derivative, we designate it as a hedging instrument or a non-hedge derivative. A hedging instrument is designated in either:

--  a fair value hedge relationship with a recognized asset or liability, or
--  a cash flow hedge relationship with either a forecasted transaction, the
    variable future cash flows arising from a recognized asset or liability,
    or a foreign currency risk in an unrecognized firm commitment. 

When we enter into a hedging contract, we formally document the relationship between the hedging instrument and the items it hedges, and the related risk-management strategy. This documentation:

--  links the hedging instrument to a specific asset or liability, specific
    forecasted transaction, firm commitment or variable future cash flows 
--  defines how we assess retrospective and prospective hedge effectiveness.

At the end of every quarter, we determine whether we expect a hedging instrument to be highly effective in offsetting risk in the future. If we do not expect it to be highly effective, we stop hedge accounting prospectively, and keep accumulated gains or losses in other comprehensive income until the hedged item affects earnings.

We also stop hedge accounting prospectively if:

--  a derivative is settled 
--  it is no longer highly probable that a forecasted transaction will occur
--  we de-designate a hedging relationship. 

If we conclude that it is probable that a forecasted transaction will not happen within the documented time frame, we immediately transfer all gains and losses accumulated in other comprehensive income to earnings. When hedge accounting stops, we reclassify the derivative as a non-hedge derivative prospectively.

We classify cash flows from a derivative in the same category as the cash flows from the item it hedges. We record cash flows from non-hedge derivatives as operating cash flows.

We record derivatives on the balance sheet at fair value and record changes in the fair value of derivatives at the end of every period:

--  fair value hedges: we record the change in the fair value of the
    derivative and the item it hedges in earnings 
--  cash flow hedges: we record the change in the fair value of the
    derivative in other comprehensive income until earnings are affected by
    the item it hedges, except for any hedge ineffectiveness which we
    immediately record in earnings 
--  non-hedge derivatives: we record the change in the fair value of the
    derivative in investment and other income. 

Gold forward sales contracts

We use the dollar offset method to assess the prospective and retrospective effectiveness of a hedging relationship:

--  prospective effectiveness: we compare the effect of theoretical shifts
    in forward gold prices on the fair value of the actual derivative and a
    hypothetical derivative. 
--  retrospective effectiveness: we compare the effect of historical changes
    in gold prices each period on the fair value of the actual and the
    hypothetical derivative. 

We record the effective portion of a change in a gold contract's fair value in other comprehensive income until forecasted gold sales affect earnings.

Borrowing costs

When we can attribute borrowing costs directly to the acquisition, construction or production of an asset that takes a substantial period of time to get ready for its intended use, we capitalize these costs as part of the asset's carrying value and amortize them over its useful life. Otherwise, we capitalize borrowing costs related to the establishment of a loan facility as long-term debt, and amortize them over the life of the loan facility.

We recognize other borrowing costs as an expense when we incur them.

Share capital

When we issue common shares, we recognize them in share capital at the net proceeds received (the fair value of the consideration we received, less costs we incurred to issue the shares).

Share based compensation plans

We currently have only equity settled awards. We recognize an expense for the fair value of an award in general and administration on a straight line basis over the applicable vesting period. This expense reflects the estimated number of awards we expect to vest based on management performance to date.

Fair value is determined based on the closing trading price of our common shares on the grant date. We calculate the cumulative expense at each balance sheet date before vesting, basing it on the vesting period remaining and our best estimate of the awards that we ultimately expect to vest, and recognize any change in the statement of earnings.

Net income per share

We calculate basic net income per share by dividing net income available to the common shareholders of Inmet Mining by the weighted average number of common shares outstanding for the year.

We calculate diluted net income per share by taking into consideration the dilutive effects of Deferred Share Units (DSU's) and Long Term Incentive Plan (LTIP) units. We adjust the weighted average number of common shares by the number of DSU's outstanding and the number of LTIP units that are expected to vest.

See note 16 for our calculation of basic and diluted net income per share.

Employee future benefits

We provide a defined contribution retirement benefit to employees in Canada.

Employees in the other jurisdictions where we operate either have state pension arrangements or do not receive pension benefits.

Certain employees take part in the defined contribution employee benefit plans. Our cost for these plans is the required contributions based on specified percentages of salaries we are required to make.

For certain executives, our total contribution to the defined contribution component of the registered plan, including the annual cash payment in lieu of a supplementary pension plan, is equivalent to 9 to 12 percent of their salary and bonus.

We expense contributions as they come due.

4. Application of critical accounting judgements and estimates

Preparing our consolidated financial statements in conformity with IFRS requires us to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements, and reported amounts of revenues and expenses during the reporting period. Our estimates and assumptions are based on our experience and other factors, including expectations of future events that we believe to be reasonable under the circumstances. We continuously evaluate these estimates, but actual outcomes could be different.

The most critical judgements, estimates and assumptions are described below.

Estimated mineral reserves

Our mineral reserves are estimates of the amount of ore that can be economically and legally extracted from our mining properties. To calculate reserves, we use estimates and assumptions about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production and freight costs, commodity prices and exchange rates. Our reserves for all operations are estimated based on information compiled by or under the supervision of a qualified person as defined under National Instrument 43-101.

Changes in our reserve estimates can affect:

--  asset carrying values due to changes in estimated future cash flows and
    impairment analysis 
--  depreciation in the statement of earnings, when depreciation is based on
    units of production, or when the useful economic life of an asset
    changes 
--  asset retirement obligations where changes in estimated reserves affect
    expectations about the timing or cost of these activities. 

Provision for asset retirement obligations

Our closed mines, operations and joint ventures are subject to environmental laws and regulations in Canada, the United States and the other countries in which we operate.

Our provision for asset retirement obligations is our best estimate of the present value of the future costs of mine closure, and involves a significant number of technical issues, estimates and assumptions, with many uncertainties, including changes to the relevant legal and regulatory framework, the magnitude of possible contamination and the timing and extent of the cost of required restoration activities. We will record any changes that arise prospectively, as follows:

--  operating mines: we record changes in the balance sheet by adjusting the
    reclamation asset and provision, which affects both future depreciation
    and finance costs 
--  closed properties: we immediately recognize changes to estimated costs
    in the statement of earnings as finance costs. 

Impairment of assets

If we believe an asset may be impaired, we calculate its recoverable amount as either its fair value less costs to sell, or its value in use (whichever is higher), following our Impairment of assets accounting policy described in note 3.

When following this policy, we make estimates and assumptions about future production and sales volumes, future commodity prices, recoverable mineral reserves, discount rates, foreign exchange rates, future operating and capital costs. We may also make assumptions about our ability to obtain financing for a project or to recover costs by selling an asset. Actual outcomes could be different.

Income taxes

We operate in a number of countries around the world and are subject to, and pay annual income taxes under the regimes in countries in which we operate. These tax regimes are determined under general corporate income tax laws in those countries. We file all required income tax returns and pay the taxes reasonably determined to be due.

The tax laws in many countries can be complex and subject to interpretation. From time to time, there may be disagreement with the taxing authorities over our interpretation of the country's income tax rules. The final outcome of these disputes could be materially different from our estimated tax liabilities.

We have significant Canadian tax benefits from capital losses, capital cost allowances and mining resource pools. We only recognize deferred tax assets arising from tax loss carry forwards, capital losses and temporary differences when it is probable that we will have enough taxable income in the future to recover them, therefore this is dependent on the generation of sufficient future taxable income.

Our estimates of future taxable income include assumptions about interest rates, foreign currency exchange rates and other factors. Our future income tax asset could be reduced if future taxable income is reduced resulting in a corresponding charge to income tax expense in the statement of earnings.

Plant construction

In the construction of plant and equipment, we capitalize costs that can be directly attributed to bringing the asset into working condition for its intended use, including costs during a commissioning period, before the asset is able to operate at normal levels.

We use several criteria to determine when an asset is able to operate at normal levels. These are complex, and depend on each development property's plan and its economic, political and environmental condition. Criteria can include:

--  producing saleable material 
--  completing a reasonable period of testing of the plant and equipment in
    the mine, mill and/or plant 
--  achieving certain level of recoveries from the ore mined and processed 
--  sustaining ongoing production and reaching a certain level of
    production. 

Once these criteria are met, we stop capitalizing the costs related to the commissioning period, and begin to recognize production costs in the statement of earnings.

5. Standards issued but not yet effective

The IASB has issued the following standard. This standard is not yet effective at March 31, 2011, and could have an impact in future periods:

IFRS 9  Financial   January 1,  IFRS 9 simplifies the current measurement   
        instruments 2013        model for financial instruments under IFRS  
                                and establishes two measurement categories  
                                for financial assets: amortized cost and    
                                fair value. Existing IAS 39 categories of   
                                loans and receivables, held-to-maturity     
                                investments, and available- for-sale        
                                financial assets will be eliminated.        
                                A financial asset can be measured at        
                                amortized cost when:                        
                                - the objective of the business model is to 
                                hold assets in order to collect contractual 
                                cash flows, and                             
                                - the contractual terms give rise, on       
                                contractual dates, to cash flows that are   
                                solely payments of principal and interest on
                                principal outstanding.                      
                                All other financial assets are measured at  
                                fair value.                                 

We are currently assessing the impact these changes in accounting will have on our consolidated financial statements.

6. First time adoption of IFRS

We have adopted IFRS from January 1, 2011, as required for publicly accountable enterprises in Canada.

Our transition date is January 1, 2010 and we have adjusted 2010 comparative information from what was previously reported under Canadian GAAP to conform to IFRS.

Under IFRS 1 - First time adoption of International Financial Reporting Standards, we must apply IFRS retrospectively at the transition date, changing retained earnings to incorporate all adjustments to assets and liabilities as stated previously under Canadian GAAP, except where we apply any exemptions that are available. We have applied the following significant exemptions:

--  we did not restate acquisitions we made before January 1, 2010 in
    accordance with IFRS 3 - Business combinations 
--  we reset the cumulative translation gains and losses in accumulated
    other comprehensive income to nil at January 1, 2010 and made the
    corresponding adjustment to retained earnings 
--  we applied IFRS 2 - Share based payments only to equity settled share
    based payment awards we granted after November 7, 2002 and that had not
    vested by January 1, 2010 
--  for certain mines, we used a transitional calculation to determine the
    property, plant and equipment associated with our provision for asset
    retirement obligations. Under this calculation, we measured the
    provision at the transition date and discounted to the date the
    liability first arose. The result became the initial asset value we
    applied depreciation to. 

Balance sheet reconciliations

The schedule below reconciles our Canadian GAAP and IFRS balance sheets as at January 1, 2010 (our transition date to IFRS).

                                 Canadian                                   
                                     GAAP Reclassifications        Subtotal 
----------------------------------------- ----------------- --------------- 
Assets                                                                      
Current assets:                                                             
 Cash and short-term                                                        
 investments               $      533,913  $              -  $      533,913 
 Restricted cash                   15,130                 -          15,130 
 Accounts receivable              129,987                 -         129,987 
 Inventories                      103,108                 -         103,108 
 Current portion of held                                                    
 to maturity investments            9,993                 -           9,993 
 Deferred income tax asset          8,466            (8,466)              - 
----------------------------------------------------------------------------
                                  800,597            (8,466)        792,131 
Restricted cash                   101,589                 -         101,589 
Property, plant and                                                         
 equipment                      1,860,616                 -       1,860,616 
Investments in equity                                                       
 securities                        42,411                 -          42,411 
Held to maturity                                                            
 investments                       89,891                 -          89,891 
Deferred income tax assets          6,151             5,076          11,227 
Other assets                        2,894                 -           2,894 
----------------------------------------------------------------------------
                           $    2,904,149           ($3,390) $    2,900,759 
----------------------------------------------------------------------------
Liabilities                                                                 
Current liabilities:                                                        
 Accounts payable and                                                       
 accrued liabilities       $      185,145          ($15,047) $      170,098 
 Provisions                             -            17,417          17,417 
 Derivatives                        1,543                 -           1,543 
 Deferred income tax                                                        
 liabilities                        4,612            (4,612)              - 
----------------------------------------------------------------------------
                                  191,300            (2,242)        189,058 
Long-term debt                    200,026                 -         200,026 
Asset retirement                                                            
 obligations                      145,038          (145,038)              - 
Provisions                              -           156,456         156,456 
Other liabilities                  32,113           (11,418)         20,695 
Derivatives                         3,165                 -           3,165 
Deferred income tax                                                         
 liabilities                       16,357            (1,148)         15,209 
Non-controlling interest           78,005           (78,005)              - 
----------------------------------------------------------------------------
                                  666,004           (81,395)        584,609 
Equity                                                                      
Share capital                     669,952                 -         669,952 
Contributed surplus                63,296                 -          63,296 
Stock based compensation            5,170                 -           5,170 
Retained earnings               1,541,803                 -       1,541,803 
Accumulated other                                                           
 comprehensive income                                                       
 (loss)                           (42,076)                -         (42,076)
----------------------------------------------------------------------------
Total equity attributable                                                   
 to Inmet equity holders        2,238,145                 -       2,238,145 
----------------------------------------------------------------------------
Non-controlling interest                -            78,005          78,005 
----------------------------------------------------------------------------
Total equity                    2,238,145            78,005       2,316,150 
----------------------------------------------------------------------------
Total liabilities and                                                       
 equity                    $    2,904,149           ($3,390) $    2,900,759 
----------------------------------------------------------------------------
                              Adjustments           Notes            IFRS
----------------------------------------- -------------------------------
Assets                                                                   
Current assets:                                                          
 Cash and short-term                                                     
 investments               $            -                 $       533,913
 Restricted cash                        -                          15,130
 Accounts receivable               25,774               i         155,761
 Inventories                       (4,784)          i, ii          98,324
 Current portion of held                                                 
  to maturity investments               -                           9,993
 Deferred income tax asset              -                               -
-------------------------------------------------------------------------
                                   20,990                         813,121
Restricted cash                         -                         101,589
Property, plant and                                                      
 equipment                         85,053  ii, iii, iv, v       1,945,669
Investments in equity                                                    
 securities                             -                          42,411
Held to maturity                                                         
 investments                            -                          89,891
Deferred income tax assets         (8,867)      vii, viii           2,360
Other assets                         (991)                          1,903
-------------------------------------------------------------------------
                           $       96,185                 $     2,996,944
-------------------------------------------------------------------------
Liabilities                                                              
Current liabilities:                                                     
 Accounts payable and                                                    
 accrued liabilities       $          426                 $       170,524
 Provisions                             -                          17,417
 Derivatives                            -                           1,543
 Deferred income tax                                                     
 liabilities                            -                               -
-------------------------------------------------------------------------
                                      426                         189,484
Long-term debt                          -                         200,026
Asset retirement                                                         
 obligations                            -                               -
Provisions                         39,974              vi         196,430
Other liabilities                       -                          20,695
Derivatives                             -                           3,165
Deferred income tax                                                      
 liabilities                       10,523       vii, viii          25,732
Non-controlling interest                -                               -
-------------------------------------------------------------------------
                                   50,923                         635,532
Equity                                                                   
Share capital                           -                         669,952
Contributed surplus                 1,513                          64,809
Stock based compensation                -                           5,170
Retained earnings                 (14,694)                      1,527,109
Accumulated other                                                        
 comprehensive income                                                    
 (loss)                            61,169              ix          19,093
-------------------------------------------------------------------------
Total equity attributable                                                
 to Inmet equity holders           47,988                       2,286,133
-------------------------------------------------------------------------
Non-controlling interest           (2,726)                         75,279
-------------------------------------------------------------------------
Total equity                       45,262                       2,361,412
-------------------------------------------------------------------------
Total liabilities and                                                    
 equity                    $       96,185                 $     2,996,944
-------------------------------------------------------------------------

The schedule below reconciles our Canadian GAAP and IFRS balance sheets as at March 31, 2010.

                                 Canadian                                   
                                      GAAP Reclassifications       Subtotal 
----------------------------------------------------------------------------
Assets                                                                      
Current assets:                                                             
  Cash and short-term                                                       
   investments                $    489,280   $             -   $    489,280 
  Restricted cash                   12,225                 -         12,225 
  Accounts receivable              125,386                 -        125,386 
  Inventories                       80,879                 -         80,879 
  Current portion of held to                                                
   maturity investments             25,952                 -         25,952 
  Deferred income tax assets         9,325            (9,325)             - 
----------------------------------------------------------------------------
                                   743,047            (9,325)       733,722 
Restricted cash                     97,975                 -         97,975 
Property, plant and                                                         
 equipment                       1,750,566                 -      1,750,566 
Investments in equity                                                       
 securities                         42,583                 -         42,583 
Held to maturity investments       177,812                 -        177,812 
Deferred income tax assets          13,961             6,064         20,025 
Other assets                         2,801                 -          2,801 
----------------------------------------------------------------------------
                              $  2,828,745           ($3,261)  $  2,825,484 
----------------------------------------------------------------------------
Liabilities                                                                 
Current liabilities:                                                        
  Accounts payable and                                                      
   accrued liabilities        $    182,770          ($16,610)  $    166,160 
  Provisions                             -            17,558         17,558 
  Derivatives                        1,300                 -          1,300 
  Deferred income tax                                                       
   liabilities                       1,281            (1,281)             - 
----------------------------------------------------------------------------
                                   185,351              (333)       185,018 
Long-term debt                     187,986                 -        187,986 
Asset retirement obligations       139,611          (139,611)             - 
Provisions                               -           150,997        150,997 
Other liabilities                   30,128           (11,386)        18,742 
Derivatives                          2,766                 -          2,766 
Deferred income tax                                                         
 liabilities                         9,316            (2,928)         6,388 
Non-controlling interest            66,758           (66,758)             - 
----------------------------------------------------------------------------
                                   621,916           (70,019)       551,897 
Equity                                                                      
Share capital                      669,952                 -        669,952 
Contributed surplus                 63,709                 -         63,709 
Stock based compensation             5,828                 -          5,828 
Retained earnings                1,621,674                 -      1,621,674 
Accumulated                                                                 
 Other comprehensive income                                                 
 (loss)                           (154,334)                -       (154,334)
----------------------------------------------------------------------------
Total equity attributable                                                   
 to Inmet equity holders         2,206,829                 -      2,206,829 
----------------------------------------------------------------------------
Non-controlling interest                 -            66,758         66,758 
----------------------------------------------------------------------------
Total equity                     2,206,829            66,758      2,273,587 
----------------------------------------------------------------------------
Total liabilities and equity  $  2,828,745           ($3,261)  $  2,825,484 
----------------------------------------------------------------------------
                               Adjustments           Notes          IFRS 
-------------------------------------------------------------------------
Assets                                                                   
Current assets:                                                          
  Cash and short-term                                                    
   investments                $          -                  $    489,280 
  Restricted cash                        -                        12,225 
  Accounts receivable               29,314               i       154,700 
  Inventories                       (5,210)          i, ii        75,669 
  Current portion of held to                                             
  maturity investments                   -                        25,952 
  Deferred income tax assets             -                             - 
-------------------------------------------------------------------------
                                    24,104                       757,826 
Restricted cash                          -                        97,975 
Property, plant and                                                      
 equipment                          80,882  ii, iii, iv, v     1,831,448 
Investments in equity                                                    
 securities                              -                        42,583 
Held to maturity investments             -                       177,812 
Deferred income tax assets          (7,655)      vii, viii        12,370 
Other assets                          (991)                        1,810 
-------------------------------------------------------------------------
                              $     96,340                  $  2,921,824 
-------------------------------------------------------------------------
Liabilities                                                              
Current liabilities:                                                     
  Accounts payable and                                                   
   accrued liabilities        $          -                  $    166,610 
  Provisions                             -                        17,558 
  Derivatives                            -                         1,300 
  Deferred income tax                                                    
   liabilities                           -                             - 
-------------------------------------------------------------------------
                                         -                       185,018 
Long-term debt                           -                       187,986 
Asset retirement obligations             -                             - 
Provisions                          37,882              vi       188,879 
Other liabilities                        -                        18,742 
Derivatives                              -                         2,766 
Deferred income tax                                                      
 liabilities                        12,391       vii, viii        18,779 
Non-controlling interest                 -                             - 
-------------------------------------------------------------------------
                                    50,273                       602,170 
Equity                                                                   
Share capital                            -                       669,952 
Contributed surplus                  1,424                        65,133 
Stock based compensation                 -                         5,828 
Retained earnings                   (9,794)                    1,611,880 
Accumulated                                                              
 other comprehensive income                                              
 (loss)                             55,852              ix       (98,482)
-------------------------------------------------------------------------
Total equity attributable                                                
 to Inmet equity holders            47,482                     2,254,311 
-------------------------------------------------------------------------
Non-controlling interest            (1,415)                       65,343 
-------------------------------------------------------------------------
Total equity                        46,067                     2,319,654 
-------------------------------------------------------------------------
Total liabilities and equity  $     96,340                  $  2,921,824 
-------------------------------------------------------------------------

The schedule below reconciles our Canadian GAAP and IFRS balance sheets as at December 31, 2010.

                                 Canadian                                   
                                      GAAP Reclassifications       Subtotal 
----------------------------------------------------------------------------
Assets                                                                      
Current assets:                                                             
 Cash and short-term                                                        
  investments             $        326,425   $             -   $    326,425 
 Restricted cash                       617                 -            617 
 Accounts receivable                91,893                 -         91,893 
 Inventories                        84,077                 -         84,077 
 Current portion of held                                                    
  to maturity                                                               
  investments                       53,915                 -         53,915 
 Deferred income tax                                                        
  assets                            27,614           (27,614)             - 
 Assets held for sale              282,255                 -        282,255 
----------------------------------------------------------------------------
                                   866,796           (27,614)       839,182 
Restricted cash                     70,059                 -         70,059 
Property, plant and                                                         
 equipment                       1,921,843                 -      1,921,843 
Investments in equity                                                       
 securities                          2,694                 -          2,694 
Held to maturity                                                            
 investments                       318,615                 -        318,615 
Deferred income tax                                                         
 assets                              1,336            12,782         14,118 
Goodwill                            76,368                 -         76,368 
Other assets                         4,865                 -          4,865 
----------------------------------------------------------------------------
                          $      3,262,576          ($14,832)  $  3,247,744 
----------------------------------------------------------------------------
Liabilities                                                                 
Current liabilities:                                                        
 Accounts payable and                                                       
  accrued liabilities     $        153,111          ($17,668)  $    135,443 
 Provisions                              -            17,668         17,668 
 Liabilities associated                                                     
  with assets held for                                                      
  sale                             102,447                 -        102,447 
----------------------------------------------------------------------------
                                   255,558                 -        255,558 
Long-term debt                      16,619                 -         16,619 
Asset retirement                                                            
 obligations                       108,592          (108,592)             - 
Provisions                               -           118,598        118,598 
Other liabilities                   28,123           (10,006)        18,117 
Deferred income tax                                                         
 liabilities                        95,200           (14,832)        80,368 
----------------------------------------------------------------------------
                                   504,092           (14,832)       489,260 
Equity                                                                      
Share capital                    1,015,698                 -      1,015,698 
Contributed surplus                 64,972                 -         64,972 
Stock based compensation             6,542                 -          6,542 
Retained earnings                1,889,491                 -      1,889,491 
Accumulated other                                                           
 comprehensive income                                                       
 (loss)                           (218,219)                -       (218,219)
----------------------------------------------------------------------------
Total equity                     2,758,484                 -      2,758,484 
----------------------------------------------------------------------------
Total liabilities and                                                       
 equity                   $      3,262,576          ($14,832)  $  3,247,744 
----------------------------------------------------------------------------
                           Adjustments           Notes          IFRS 
---------------------------------------------------------------------
Assets                                                               
Current assets:                                                      
 Cash and short-term                                                 
  investments             $          -                  $    326,425 
 Restricted cash                     -                           617 
 Accounts receivable            27,533               i       119,426 
 Inventories                   (11,923)           i, x        72,154 
 Current portion of held                                             
  to maturity                                                        
  investments                        -                        53,915 
 Deferred income tax                                                 
  assets                             -                             - 
 Assets held for sale           36,827              xi       319,082 
-------------------------------------------------------------------- 
                                52,437                       891,619 
Restricted cash                      -                        70,059 
Property, plant and                           ii, iii,              
 equipment                    (185,778)       iv, v, x     1,736,065 
Investments in equity                                                
 securities                          -                         2,694 
Held to maturity                                                     
 investments                         -                       318,615 
Deferred income tax                                                  
 assets                         (5,397)      vii, viii         8,721 
Goodwill                       (76,368)              x             - 
Other assets                    (2,530)                        2,335 
---------------------------------------------------------------------
                             ($217,636)                 $  3,030,108 
---------------------------------------------------------------------
Liabilities                                                          
Current liabilities:                                                 
 Accounts payable and                                                
  accrued liabilities     $        902               i  $    136,345 
 Provisions                          -                        17,668 
 Liabilities associated                                              
  with assets held for                                               
  sale                           9,449                       111,896 
---------------------------------------------------------------------
                                10,351                       265,909 
Long-term debt                       -                        16,619 
Asset retirement                                                     
 obligations                         -                             - 
Provisions                      43,801              vi       162,399 
Other liabilities                    -                        18,117 
Deferred income tax                                                  
 liabilities                   (67,843)      vii, viii        12,525 
---------------------------------------------------------------------
                               (13,691)                      475,569 
Equity                                                               
Share capital                   73,878               x     1,089,576 
Contributed surplus              1,159                        66,131 
Stock based compensation             -                         6,542 
Retained earnings             (311,984)                    1,577,507 
Accumulated other                                                    
 comprehensive income                                                
 (loss)                         33,002              ix      (185,217)
---------------------------------------------------------------------
Total equity                  (203,945)                    2,544,539 
-------------------------------------- ------------------------------
Total liabilities and                                                
 equity                      ($217,636)                 $  3,030,108 
---------------------------------------------------------------------

Notes to the balance sheet reconciliations as at January 1, 2010, March 31, 2010 and December 31, 2010:

Reclassifications

We reclassified several items to conform to IFRS. The following are the most significant:

--  non-controlling interests are under a separate component of equity.
    Under Canadian GAAP, we reported these as a liability. 
--  current deferred income tax assets and liabilities are under long term
    assets and liabilities. Under IFRS, all deferred income taxes assets and
    liabilities must be classified as long term. 
--  asset retirement obligations are under provisions. We previously
    reported these as a separate long term liability. 
--  certain employee compensation obligations are under current and long
    term provisions. Under Canadian GAAP, we reported them in accounts
    payable if they were current obligations, or as other liabilities if
    they were long term obligations. 

Adjustments

(i) Revenue recognition - at January 1, 2010 we increased accounts receivable by $25.8 million (March 31, 2010 - $29.3 million, December 31, 2010 - $27.5 million) and reduced inventory by $5.6 million (March 31, 2010 - $6.2 million, December 31, 2010 - $6.3 million).

Under IFRS, we recognize revenue when all significant risks and rewards of ownership of our products are transferred to the purchaser. Under Canadian GAAP, title also had to legally transfer to the purchaser before revenue was recognized. For certain shipments at Cayeli, Pyhasalmi and Ok Tedi, we transfer title when we receive the first provisional payment, which is later than the transfer point for risks and rewards of ownership.

(ii) Reversal of impairment of assets - at January 1, 2010, we increased property plant and equipment by $51.9 million (March 31, 2010 - $48.0 million, December 31, 2010 - $41.1 million) to reverse an impairment charge we recognized for Cayeli in 1996. The increase is the IFRS carrying amount we would have calculated, net of depreciation, if we had not recognized the original impairment.

Canadian GAAP did not allow for reversal of impairment charges after they were initially recognized. Under IFRS, we must reverse an impairment loss if there is a change in the estimates we used to determine the recoverable amount. In 1996, after Cayeli's first two years of operations, we recognized an impairment charge of $128 million against property, plant and equipment. At the time, zinc and copper recoveries were significantly lower than feasibility levels, and were continuing to deteriorate. The complex mineralogy of the Cayeli ore body, continuing poor metallurgical results and the possibility that no improvements may have been achievable were the main reasons for the impairment. After many initiatives and capital improvements, and many years of significantly improved production performance since that time, we concluded that the extensive uncertainties underlying the original impairment no longer apply, and that Cayeli's recoverable amount exceeded its carrying value on our transition to IFRS.

(iii) Plant and equipment at Ok Tedi - at January 1, 2010, we increased property, plant and equipment by $14.5 million (March 31, 2010 - $14.0 million). For plant and equipment that was purchased after our initial proportionate consolidation of Ok Tedi, we used Ok Tedi's accumulated depreciation, which Ok Tedi has used historically under IFRS.

(iv) Property, plant and equipment associated with asset retirement obligations - at January 1, 2010, we increased property, plant and equipment by $8.8 million (March 31, 2010 - $10.5 million, December 31, 2010 - $12.1 million).

Under both IFRS and Canadian GAAP, we recognize a corresponding change in the provision for asset retirement obligations in the carrying value of the related property, plant and equipment and depreciate this amount prospectively. The amount of our asset retirement obligations under IFRS is different from the amount under Canadian GAAP as described in (vi) below, and therefore has an impact on our related assets.

(v) Foreign exchange forward contract - at January 1, 2010, we increased property, plant and equipment by $13.4 million on our transition to IFRS (March 31, 2010 - $12.2 million, December 31, 2010 - $11.5 million).

To fix the amount of euros under its credit facility upon conversion to a US dollar denominated loan, Las Cruces entered into a forward contract to exchange US $215 million for EUR171.1 million. In 2008, this derivative settled on a net basis with Las Cruces receiving cash of EUR32.6 million ($52.3 million).

Under Canadian GAAP, we applied hedge accounting for this contract. While the credit facility was outstanding, Las Cruces capitalized the related interest under its credit facility as a cost of deferred development. We amortized the gain in property, plant and equipment, as a reduction of this capitalized interest. Under IFRS, this instrument does not qualify as a hedge for accounting purposes, and we reclassified the amount we had recognized against property, plant and equipment to retained earnings.

(vi) Provision for asset retirement obligations - at January 1, 2010, we increased our provision for asset retirement obligations by $39.8 million (March 31, 2010 - $37.7 million, December 31, 2010 - $43.6 million).

Under IFRS, we measure asset retirement obligations using a risk free interest rate, and revalue for changes in market risk free interest rates. Under Canadian GAAP, we used a credit adjusted risk free interest rate and were not required to remeasure for changes in market rates.

(vii) Deferred income taxes - translation of non-monetary items - at January 1, 2010, we increased deferred income tax assets by $3.3 million (March 31, 2010 - $2.6 million, December 31, 2010 - $1.0 million).

Under IFRS, when an entity's taxes are denominated in a currency that is not its functional currency (Cayeli and Ok Tedi), we are required to recognize deferred income taxes and liabilities related to the foreign exchange gains and losses for foreign non-monetary assets and liabilities that are re-measured into the functional currency, using historical foreign exchange rates. This was not allowed under Canadian GAAP.

(viii) Deferred income taxes - as a result of the tax effect of changes to our opening balances under IFRS, we decreased deferred income tax assets by $12.2 million at January 1, 2010 (March 31, 2010 - $10.2 million, December 31, 2010 - $6.4 million) and increased deferred income tax liabilities by $10.7 million (March 31, 2010 - $12.9 million, December 31, 2010 - decrease of $65.9 million).

(ix) Cumulative translation adjustment - at January 1, 2010, we reset the cumulative translation gains and losses in accumulated other comprehensive income to nil, and recognized a corresponding decrease of $61.2 million in retained earnings, using an election under IFRS 1.

(x) Acquisition of non-controlling interest in Las Cruces - at December 31, 2010, we decreased inventory by $6.8 million, deceased property, plant and equipment by $247.0 million, decreased goodwill by $76.4 million and increased share capital by $73.9 million.

Under Canadian GAAP, companies that acquire an additional interest in an entity they already control must account for it as a step acquisition. Under IFRS, acquiring a non-controlling interest is not considered a business combination, and is instead accounted for as an equity transaction. Under IFRS, we have accounted for our acquisition of the remaining 30 percent interest in Las Cruces which closed in December 2010, as an equity transaction, because we already controlled it.

(xi) Assets and liabilities held for sale for Ok Tedi - on January 29, 2011, Ok Tedi Mining Limited repurchased our 18 percent equity interest in Ok Tedi for US $335 million, and we classified it as held for sale at December 31, 2010 (consistent to our Canadian GAAP presentation). Our share of Ok Tedi's assets and liabilities classified as held for sale under IFRS were $36.8 million and $9.4 million higher respectively than they were under Canadian GAAP because of the adjustments outlined above.

(xii) Equity reconciliation - The table below reconciles total equity under Canadian GAAP to total equity under IFRS, and illustrates the after-tax effect of each of the most significant adjustments had on equity.

                                  January 1,      March 31,   December 31,  
                         Notes          2010           2010           2010  
----------------------------------------------------------------------------
Canadian GAAP equity          $    2,238,145 $    2,206,829 $    2,758,484  
IFRS adjustments:                                                           
Reclassification of                                                         
 non-controlling                                                            
 interest to equity                   78,005         66,758              -  
Revenue recognition          i        14,210         16,164         30,023  
Reversal of impairment                                                      
 of assets - Cayeli         ii        42,395         39,357         34,005  
Plant and equipment -                                                       
 Ok Tedi                   iii        10,184          9,819         11,179  
Property, plant and                                                         
 equipment associated                                                       
 with asset retirement                                                      
 obligations                iv         8,304          9,853         12,175  
Foreign exchange                                                            
 forward contract -                                                         
 Las Cruces                  v         9,386          8,558          8,034  
Provision for asset                                                         
 retirement                                                                 
 obligations                vi       (38,349)       (36,334)       (41,310) 
Deferred income taxes      vii         3,481          3,107          2,870  
Acquisition of the                                                          
 non-controlling                                                            
 interest in Las                                                            
  Cruces                     x             -              -       (254,056) 
Other                                 (4,349)        (4,457)        (6,865) 
----------------------------------------------------------------------------
IFRS equity                   $    2,361,412 $    2,319,654 $    2,554,539  
----------------------------------------------------------------------------

The schedule below reconciles our Canadian GAAP and IFRS net income for the three months ended March 31, 2010. The Canadian GAAP statement of earnings is presented in an IFRS format.(1)

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                             Canadian                                       
                                  GAAP   Reclassifications          Ok Tedi 
----------------------------------------------------------------------------
  Gross sales           $      251,559   $               -         ($94,626)
  Smelter processing                                                        
   charges                                                                  
    and freight                (44,329)                  -           10,523 
  Cost of sales                                                             
   (excluding                                                               
    depreciation)              (80,980)              1,119           27,963 
    Depreciation               (15,224)                               6,789 
----------------------------------------------------------------------------
  Earnings from                                                             
   operations                  111,026               1,119          (49,351)
  Corporate                                                                 
   development and                                                          
    exploration                 (2,779)                  -                - 
  General and                                                               
   administration               (5,510)                  -                - 
  Investment and other                                                      
   income                          (78)                  -              (77)
  Stand-by costs                (6,753)                  -                - 
  Finance costs                   (452)             (1,330)             254 
----------------------------------------------------------------------------
  Income before                                                             
   taxation                     95,454                (211)         (49,174)
  Capital tax expense              (82)                  -                - 
  Income tax expense           (20,063)                211           18,456 
----------------------------------------------------------------------------
  Income from                                                               
   continuing                   75,309                   -         ($30,718)
   operations           $                $                                  
  Income from                                                               
   discontinued                                                             
   operation (net of                 -                               30,718 
   taxes)                                                                   
----------------------------------------------------------------------------
  Net income            $       75,309   $               -   $            - 
----------------------------------------------------------------------------
  Attributable to:                                                          
  Inmet equity holders  $       79,871   $               -   $            - 
  Non-controlling                                                           
   interest                     (4,562)                  -                - 
----------------------------------------------------------------------------
                        $       75,309   $               -   $            - 
----------------------------------------------------------------------------
                           Adjustments      Notes            IFRS 
------------------------------------------------------------------
  Gross sales           $        4,229          i  $      161,162 
  Smelter processing                                              
   charges                                                        
    and freight                    705          i         (33,101)
  Cost of sales                                                   
   (excluding                                                     
    depreciation)                 (368)         i         (52,266)
    Depreciation                   719 i, iii, iv          (7,716)
------------------------------------------------------------------
  Earnings from                                                   
   operations                    5,285                     68,079 
  Corporate                                                       
   development and                                                
    exploration                      -                     (2,779)
  General and                                                     
   administration                   89                     (5,421)
  Investment and other                                            
   income                        1,359         ii           1,204 
  Stand-by costs                     -                     (6,753)
  Finance costs                   (345)                    (1,873)
------------------------------------------------------------------
  Income before                                                   
   taxation                      6,388                     52,457 
  Capital tax expense                -                        (82)
  Income tax expense            (1,608)        vi          (3,004)
------------------------------------------------------------------
  Income from                                                     
   continuing                    4,780                     49,371 
   operations           $                          $              
  Income from                                                     
   discontinued                                                   
   operation (net of                 -                     30,718 
   taxes)                                          $              
----------------------------------------------------------------- 
  Net income            $        4,780             $       80,089 
----------------------------------------------------------------- 
  Attributable to:                                                
  Inmet equity holders  $        4,900             $       84,771 
  Non-controlling                                                 
   interest                       (120)                    (4,682)
----------------------------------------------------------------- 
                        $        4,780             $       80,089 
----------------------------------------------------------------- 

(1) Under Canadian GAAP, we deducted the non-controlling interest's share of Las Cruces' income when calculating net income. Under IFRS, no deduction for this is made and net income is presented as separately attributable to the equity holders of Inmet Mining and to the non-controlling interest.

The schedule below reconciles our Canadian GAAP and IFRS net income for the year ended December 31, 2010. The Canadian GAAP statement of earnings is presented in an IFRS format.(1)

                              Canadian                                      
                                  GAAP   Reclassifications          Ok Tedi 
 ---------------------------------------------------------------------------
 Gross sales            $    1,098,087   $               -        ($356,629)
 Smelter processing                                                         
  charges                                                                   
 and freight                  (166,754)                  -           36,448 
 Cost of sales                                                              
  (excluding                                                                
 depreciation)                (345,764)              6,343           95,871 
 Depreciation                  (81,844)                  -           27,513 
 ---------------------------------------------------------------------------
 Earnings from                                                              
  operations                   503,725               6,343         (196,797)
 Corporate development                                                      
  and                                                                       
 exploration                   (12,036)                  -                - 
 General and                                                                
  administration               (20,638)                  -                - 
 Investment and other                                                       
  income                        35,416                   -              (32)
 Stand-by costs                 (6,753)                  -                - 
 Finance costs                  (6,873)             (7,148)             910 
 ---------------------------------------------------------------------------
 Income before                                                              
  taxation                     492,841                (805)        (195,919)
 Capital tax expense              (373)                  -                - 
 Income tax expense           (134,682)                805           71,164 
 ---------------------------------------------------------------------------
 Income from                                                                
  continuing                                                                
 operations             $      357,786   $               -        ($124,755)
 Income from                                                                
  discontinued                                                              
 operation                           -                   -          124,755 
 ---------------------------------------------------------------------------
 Net income             $      357,786   $               -   $            - 
 ---------------------------------------------------------------------------
 Net income                                                                 
  attributable to:                                                          
 Inmet equity holders   $      358,898   $               -   $            - 
 Non-controlling                                                            
  interest                      (1,112)                  -                - 
 ---------------------------------------------------------------------------
                        $      357,786   $               -   $            - 
                           Adjustments      Notes          IFRS 
 --------------------------------------------------------------- 
 Gross sales            $       37,098          i  $    778,556 
 Smelter processing                                              
  charges                                                        
 and freight                    (8,158)         i      (138,464)
 Cost of sales                                                   
  (excluding                                                     
 depreciation)                 (10,309)      i, v      (253,859)
 Depreciation                   (1,657) i, iii,iv       (55,988)
 --------------------------------------------------------------- 
 Earnings from                                                   
  operations                    16,974                  330,245 
 Corporate development                                           
  and                                                            
 exploration                    (1,459)                 (13,495)
 General and                                                     
  administration                   274                  (20,364)
 Investment and other                                            
  income                        22,960                   58,344 
 Stand-by costs                      -                   (6,753) 
 Finance costs                     (65)                 (13,176)
 --------------------------------------------------------------- 
 Income before                                                   
  taxation                      38,684                  334,801 
 Capital tax expense                 -                     (373)
 Income tax expense             (6,001)                 (68,714)
 --------------------------------------------------------------- 
 Income from                                                     
  continuing                                                     
 operations             $       32,683                  265,714 
 Income from                                                     
  discontinued                                                   
 operation                           -             $    124,755 
 --------------------------------------------------------------- 
 Net income             $       32,683             $    390,469 
 --------------------------------------------------------------- 
 Net income                                                      
  attributable to:                                               
 Inmet equity holders   $       32,978             $    391,876 
 Non-controlling                                                 
  interest                        (295)                  (1,407)
 --------------------------------------------------------------- 
                        $       32,683             $    390,469 
(1)Under Canadian GAAP, we deducted the non-controlling interest's share of
   Las Cruces' income when calculating net income. Under IFRS, no deduction 
   for this is made and net income is presented as separately attributable 
   to the equity holders of Inmet Mining and to the non-controlling 
   interest.

Notes to the reconciliation of the statement of earnings for three months ended March 31, 2010 and the year ended December 31, 2010:

Reclassifications

When we adopted IFRS, we reclassified accretion of asset retirement obligations and capital lease obligations to finance costs. We recognized it as part of cost of sales under Canadian GAAP.

Ok Tedi

In January 2011, we sold our 18 percent equity interest in Ok Tedi. As the operations and cash flows for Ok Tedi have been eliminated as a result of this disposal and we have no continuing involvement with this operation, we have presented our proportionately consolidated results from Ok Tedi as discontinued operations retroactively. The sale of our investment in Ok Tedi did not qualify for treatment as discontinued operations under Canadian GAAP. This change affects our entire income statement so we have disclosed it separately.

Adjustments

(i) Revenue - for the three months ended March 31, 2010 we increased revenue by $4.2 million (year ended December 31, 2010 - $37.1 million) and made associated adjustments to smelter processing charges and freight, cost of sales and depreciation.

Under IFRS, we recognize revenue when all significant risks and rewards of ownership of our products are transferred to the purchaser. Under Canadian GAAP, title also had to legally transfer to the purchaser before revenue was recognized. For certain shipments at Cayeli, Pyhasalmi and Ok Tedi, we transfer title when we receive the first provisional payment, which is later than the transfer point for risks and rewards of ownership.

(ii) Foreign exchange gains and losses - for the three months ended March 31, 2010, we reversed foreign exchange losses recognized under Canadian GAAP, which increased investment and other income by $1.3 million (year ended December 31, 2010 - $22.7 million).

Under IFRS, only dividends that represent a return on capital invested in a foreign operation require recognition of previously deferred foreign exchange gains or losses. Under Canadian GAAP, dividends, including those related to the accumulation of earnings are considered a return on investment, and we recognized the deferred foreign exchange gains or losses on these amounts in investment and other income.

(iii) Depreciation - we increased property, plant and equipment relating to the reversal of an impairment charge recognized for Cayeli, and made an associated increase in depreciation of $2.0 million for the three months ended March 31, 2010 (year ended December 31, 2010 - $7.9 million).

(iv) Depreciation of property, plant and equipment associated with asset retirement obligations - we recognized a $3.2 million decrease in depreciation for the three months ended March 31, 2010 (year ended December 31, 2010 - $6.3 million).

Under both IFRS and Canadian GAAP, we recognize a corresponding change in the provision for asset retirement obligations in the carrying value of the related property, plant and equipment and depreciate this amount prospectively. The amount of our asset retirement obligations under IFRS is different from the amount under Canadian GAAP, and therefore has an impact on our related assets and depreciation expense.

(v) Provision for asset retirement obligations - we increased cost of sales by $6.5 million for the year ended December 31, 2010 to increase our asset retirement obligations at our closed properties as a result of changes in discount rates.

Under IFRS, we measure asset retirement obligations using a risk free interest rate, and revalue for changes in market risk free interest rates. Under Canadian GAAP, we used a credit adjusted risk free interest rate and were not required to remeasure for changes in market rates.

(vi) Deferred income taxes - as a result of the tax effect of changes recognized in our income statement under IFRS, we increased income tax expense by $1.6 million for the three months ended March 31, 2010 (year ended December 31, 2010 - $4.8 million).

The schedule below reconciles our Canadian GAAP and IFRS comprehensive income for the three months ended March 31, 2010 and the year ended December 31, 2010. The Canadian GAAP statement of comprehensive income is presented in an IFRS format.

                                                   March 31,   December 31, 
                                         Notes          2010           2010 
----------------------------------------------------------------------------
Comprehensive income (loss) reported                                        
 under Canadian GAAP                                ($36,949)   $   181,643 
Total adjustments to net income                        4,780         32,683 
Adjustments to other comprehensive                                          
 income (loss):                                                             
  Currency translation adjustments       i, ii       (10,542)       (28,167)
----------------------------------------------------------------------------
Comprehensive income (loss) under IFRS              ($42,711)   $   186,159 
----------------------------------------------------------------------------

Notes to the reconciliation of the statement of comprehensive income for the three months ended March 31, 2010 and the year ended December 31, 2010

Adjustments

(i) Currency translation adjustments - for the three months ended March 31, 2010, we reversed foreign exchange losses previously recognized in the statement of earnings under Canadian GAAP, which decreased other comprehensive income by $1.3 million (year ended December 31, 2010 - $22.7 million).

Under IFRS, only dividends that represent a return on capital invested in a foreign operation require recognition of previously deferred foreign exchange gains or losses. Under Canadian GAAP, dividends, including those related to the accumulation of earnings and repayment of intercompany debt, are considered a return on investment, and we recognized the deferred foreign exchange gains or losses on these amounts in investment and other income.

(ii) Currency translation adjustments - as a result of the currency translation impact of recognizing changes to our balance sheet under IFRS, we decreased other comprehensive income by $9.2 million for the three months ended March 31, 2010 (year ended December 31, 2010 - $5.5 million).

Cash flow statement

The IFRS transition adjustments above did not have an impact on our cash and short-term investments. Differences in our cash flow statements between Canadian GAAP and IFRS are the result of non-cash adjustments to items in the statements of earnings outlined above and the presentation of Ok Tedi cash flows as discontinued operations (note 10).

7. Cash and short-term investments

                               March 31,      December 31,        January 1,
                                    2011              2010              2010
----------------------------------------------------------------------------
Cash and cash                                                               
 equivalents:                                                               
  Liquidity funds          $     294,186     $     194,603     $     205,190
  Term deposits                   77,459            52,991            40,140
  Overnight deposits              60,150             4,319            54,435
  Bankers acceptances                  -                 -            92,200
  Money market funds                   7            40,048            19,951
  Bank deposits                   12,458            27,168            95,001
----------------------------------------------------------------------------
                                 444,260           319,129           506,917
----------------------------------------------------------------------------
  Short-term                                                                
   investments:                                                             
  Corporate                            -                 -            26,996
  Term deposits                        -             7,296                 -
----------------------------------------------------------------------------
                                       -             7,296            26,996
----------------------------------------------------------------------------
  Total cash and                                                            
   short-term                                                               
   instruments             $     444,260     $     326,425     $     533,913
----------------------------------------------------------------------------
8.  Restricted cash 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                      March 31,  December 31,    January 1, 
                                           2011          2010          2010 
----------------------------------------------------------------------------
Collateralized cash for letter of                                           
 credit facility - Inmet Mining     $    16,692   $    16,906   $    16,492 
In trust for Ok Tedi reclamation              -             -        26,365 
Collateralized cash for letters of                                          
 credit - Las Cruces                     56,163        52,138        72,008 
Collateralized cash for Pyhasalmi                                           
 reclamation                              1,688         1,632         1,854 
                                  ------------------------------------------
                                         74,543        70,676       116,719 
Less current portion:                                                       
  Collateralized cash for letters                                           
   of credit - Las Cruces                  (695)         (617)      (15,130)
----------------------------------------------------------------------------
                                    $    73,848   $    70,059   $   101,589 
----------------------------------------------------------------------------
9.  Held to maturity investments 

This quarter, we purchased US $274 million of US Treasury bonds with credit ratings of AAA. The bonds mature between March 2012 and January 2016 and have a weighted average annual yield to maturity of 1.2 percent. Additionally, we purchased a Provincial Government bond for $8 million with a credit rating of AA, maturity of June 2011 and an annual yield to maturity of 1.08 percent.

We have designated these bonds as held to maturity, measuring them initially at fair value and subsequently at amortized cost.

10. Sale of our interest in Ok Tedi 

On January 29, 2011, Ok Tedi Mining Limited repurchased our 18 percent equity interest in Ok Tedi for US $335 million. Our interest in Ok Tedi met the criteria of an asset held for sale, so we presented our share of the results of operations of Ok Tedi as discontinued operations in the consolidated statements of earnings and the consolidated statements of cash flow retroactively. In 2011, after-tax income of $83 million from this discontinued operation includes net earnings of $17 million in January, before the sale, and a gain on sale of $66 million net of withholding taxes. Papua New Guinea withholding taxes of $28 million were paid on the sale and no Canadian taxes were payable, but we expect to reduce our tax-effected Canadian tax loss pools by about $2 million. The following tables provide a breakdown of our share of the earnings and cash flows at Ok Tedi for the three months ended March 31, 2010 and 2011.

Statements of earnings                                                      
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                               three months ended March 31 
                                                       2011           2010 
---------------------------------------------------------------------------
Gross sales                                   $      44,865   $     94,626 
Smelter processing charges and freight               (4,051)       (10,523)
Cost of sales (excluding depreciation)              (12,116)       (27,963)
  Depreciation                                       (2,272)        (6,789)
                                            -------------------------------
                                                     26,426         49,351 
Investment and other income                             (80)            72 
Finance costs                                           (33)          (254)
Income tax expense                                   (9,670)       (18,456)
                                            -------------------------------
                                                     16,643         30,718 
Gain on sale of our interest                         79,029              - 
Income tax expense on sale of our interest          (12,233)             - 
---------------------------------------------------------------------------
Net income from discontinued operation        $      83,439   $     30,718 
---------------------------------------------------------------------------
Statements of cash flow                                                     
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                three months ended March 31 
                                                        2011           2010 
----------------------------------------------------------------------------
Cash provided by operating activities                                       
Before net change in non-cash working capital  $           -  $      34,949 
Net change in non-cash working capital                     -         11,501 
                                             -------------------------------
                                                           -         46,450 
Cash provided by (used in) investing                                        
 activities                                                                 
Cash proceeds on sale, net of withholding tax        306,982              - 
Purchase of property, plant and equipment                  -         (4,280)
                                             -------------------------------
                                                     306,982         (4,280)
Cash used in financing activities                          -           (648)
                                             -------------------------------
Foreign exchange change on cash held in                                     
 foreign currency                                          -         (2,180)
----------------------------------------------------------------------------
Net cash from discontinued operation           $     306,982  $      39,342 
----------------------------------------------------------------------------
11. Provisions 

The table below shows the significant components of our provisions.

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                December 31,     January 1, 
                               March 31, 2011           2010           2010 
----------------------------------------------------------------------------
Asset retirement obligations    $     171,994  $     168,589  $     198,291 
Employee benefits and other            11,069         11,478         15,556 
                               ---------------------------------------------
                                      183,063        180,067        213,847 
Less current portion:                                                       
  Asset retirement obligations        (16,847)       (16,417)       (13,500)
  Employee benefits and other            (741)        (1,251)        (3,917)
                               ---------------------------------------------
                                      (17,588)       (17,668)       (17,417)
----------------------------------------------------------------------------
                                $     165,475  $     162,399  $     196,430 
----------------------------------------------------------------------------
12.  Accumulated other comprehensive income (loss) 

Accumulated other comprehensive income (loss) includes:

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                       March 31,    December     January 1, 
                                            2011    31, 2010           2010 
----------------------------------------------------------------------------
Unrealized losses on gold forward                                           
 sales contracts (net of tax of nil                                         
 (December 31, 2010 - $2,427,                                               
 January 1, 2010 - $2,015))          $         -     ($5,661)       ($4,701)
Unrealized gains (losses) on                                                
 investments (net of tax of $155                                            
 (December 31, 2010 - $78, January                                          
 1, 2010 - $4,788))                         (915)       (452)        23,794 
Currency translation adjustment         (150,434)   (179,104)             - 
----------------------------------------------------------------------------
Accumulated other comprehensive                                             
 income (loss)                         ($151,349)  ($185,217)   $    19,093 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Currency translation adjustments

The table below is breakdown of our currency translation adjustments.

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                     March 31,  December 31,                
                                          2011          2010 January 1, 2010
----------------------------------------------------------------------------
Pyhasalmi (euro functional                                                  
 currency)                            ($17,084)     ($24,354)  $           -
Las Cruces (euro functional                                                 
 currency)                             (59,807)      (93,427)              -
Cayeli (US dollar functional                                                
 currency)                             (29,914)      (20,908)              -
Cobre Panama (US dollar functional                                          
 currency)                             (43,629)      (29,701)              -
Ok Tedi (US dollar functional                                               
 currency)                                   -       (10,714)              -
----------------------------------------------------------------------------
                                     ($150,434)    ($179,104)  $           -
----------------------------------------------------------------------------
----------------------------------------------------------------------------

The Canadian dollar to US dollar exchange rate was $0.97 at March 31, 2011, $0.99 at December 31, 2010 and $1.05 at January 1, 2010. The Canadian dollar to euro exchange rate was $1.38 at March 31, 2011, $1.33 at December 31, 2010 and $1.50 at January 1, 2010.

13. Investment and other income 
------------------------------------------------------------------
------------------------------------------------------------------
                                      three months ended March 31 
                                          2011               2010 
------------------------------------------------------------------
Interest income               $          2,772   $          1,597 
Dividend and royalty income                600                714 
Foreign exchange loss                  (10,826)            (1,061)
Other                                    1,681                (46)
------------------------------------------------------------------
                                       ($5,773)  $          1,204 
------------------------------------------------------------------
------------------------------------------------------------------

Foreign exchange loss is a result of:

------------------------------------------------------------
------------------------------------------------------------
                                three months ended March 31 
                                       2011            2010 
------------------------------------------------------------
Translation of foreign-                                     
 denominated cash                   ($8,732)          ($771)
Revaluation of US dollar                                    
 held-to-maturity                                           
 investments                         (1,452)              - 
Translation of other-                                       
 monetary assets and                                        
 liabilities                           (642)           (290)
------------------------------------------------------------
                                   ($10,826)        ($1,061)
------------------------------------------------------------
------------------------------------------------------------
14. Finance costs 
----------------------------------------------------------------
----------------------------------------------------------------
                                     three months ended March 31
                                          2011              2010
----------------------------------------------------------------
Interest on note payable      $            279  $            298
Accretion on note payable                  161               154
Accretion on provisions and                                     
 capital lease obligations               1,891             1,421
----------------------------------------------------------------
                              $          2,331  $          1,873
----------------------------------------------------------------
----------------------------------------------------------------
15. Income tax 

For the three months ended March 31, 2011:

---------------------------------------------------------------------------
---------------------------------------------------------------------------
               Corporate                 Las               Cobre           
                     and     Cayeli    Cruces Pyhasalmi    Panama          
                    other  (Turkey)   (Spain) (Finland)  (Panama)     Total
---------------------------------------------------------------------------
Current income                                                             
 taxes               $249   $10,590        $-    $7,932        $-   $18,771
Deferred income                                                            
 taxes               (45)     1,066     7,497     (129)         -     8,389
---------------------------------------------------------------------------
Income tax                                                                 
 expense             $204   $11,656    $7,497    $7,803        $-   $27,160
---------------------------------------------------------------------------
---------------------------------------------------------------------------

For the three months ended March 31, 2010:

---------------------------------------------------------------------------
---------------------------------------------------------------------------
               Corporate                 Las               Cobre           
                     and     Cayeli   Cruces  Pyhasalmi    Panama          
                    other  (Turkey)   (Spain) (Finland)  (Panama)     Total
---------------------------------------------------------------------------
Current income                                                             
 taxes             $1,160    $9,808        $-    $4,942        $-   $15,910
Deferred income                                                            
 taxes            (2,347)   (2,942)   (7,634)        17         -  (12,906)
---------------------------------------------------------------------------
Income tax                                                                 
 expense         ($1,187)    $6,866  ($7,634)    $4,959        $-    $3,004
---------------------------------------------------------------------------
---------------------------------------------------------------------------
16. Net income per share 
----------------------------------------------------------------------------
                                                 three months ended March 31
(thousands)                                             2011            2010
----------------------------------------------------------------------------
Income from continuing operations available                                 
 to common shareholders                       $       59,405  $       54,053
Income from discontinued operations                                         
 available to common shareholders                     83,439          30,718
Net income available to common shareholders          142,844          84,711
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                 three months ended March 31
(thousands)                                              2011           2010
----------------------------------------------------------------------------
Weighted average common shares outstanding             61,549         56,107
Plus incremental shares from assumed                                        
 conversions:                                                               
  Deferred share units                                    112             96
  Long term incentive plan units                           52             43
----------------------------------------------------------------------------
Diluted weighted average common shares                                      
 outstanding                                           61,713         56,246
----------------------------------------------------------------------------

The table below shows our earnings per common share for the three months ended March 31.

----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                 three months ended March 31
(Canadian dollars per share)                            2011           2010 
----------------------------------------------------------------------------
                                                Basic Diluted  Basic Diluted
  Net income from continuing operations 
   per share                                    $0.97   $0.96  $0.96   $0.96
  Income from discontinued operations per share  1.36    1.35   0.55    0.55
----------------------------------------------------------------------------
Net income per share                            $2.33   $2.31  $1.51   $1.51
----------------------------------------------------------------------------
----------------------------------------------------------------------------

17. Statements of cash flows

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

For the three months ended March 31, 2011:

---------------------------------------------------------------------------
---------------------------------------------------------------------------
               Corporate                 Las               Cobre           
                     and     Cayeli   Cruces  Pyhasalmi    Panama          
                    other  (Turkey)   (Spain) (Finland)  (Panama)     Total
---------------------------------------------------------------------------
Accounts                                                                   
 receivable        ($760)    $7,585  ($5,246)    $9,077        $-   $10,656
Inventories             -       711     5,971      (66)         -     6,616
Accounts                                                                   
 payable and                                                               
 accrued                                                                   
 liabilities      (2,169)       812     4,701   (2,400)         -       944
Taxes payable     (1,402)   (1,990)         -     4,999         -     1,607
Provisions          (510)         -         -         -         -     (510)
Other                   -       (3)         -         -         -       (3)
---------------------------------------------------------------------------
                 ($4,841)    $7,115    $5,426   $11,610        $-   $19,310
---------------------------------------------------------------------------
---------------------------------------------------------------------------

For the three months ended March 31, 2010:

---------------------------------------------------------------------------
---------------------------------------------------------------------------
               Corporate                 Las               Cobre           
                     and     Cayeli   Cruces  Pyhasalmi    Panama          
                    other  (Turkey)   (Spain) (Finland)  (Panama)     Total
---------------------------------------------------------------------------
Accounts                                                                   
 receivable        ($337)    $5,897       $ -      $925        $-    $6,485
Inventories         4,153   (1,442)         -       582         -     3,293
Accounts                                                                   
 payable and                                                               
 accrued                                                                   
 liabilities      (4,695)       521         -   (6,539)         -  (10,713)
Taxes payable         576   (1,448)         -       766         -     (106)
Provisions          (216)         -         -         -         -     (216)
Other                 (5)        77         -         -         -        72
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                   ($524)    $3,605       $ -  ($4,266)        $-  ($1,185)
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18. Capital commitments 

Our operations had the following capital commitments as at March 31, 2011:

--  Las Cruces committed $3.4 million for the purchase of plant equipment. 
--  Cobre Panama committed $130.0 million for the design and supply of two
    SAG mills, four ball mills and the related gearless drives, and for
    basic engineering. 

Additional annual disclosures under IFRS

As a result of the transition adjustments discussed in note 6 to the interim financial statements, we have included the following IFRS annual disclosures for the year ended December 31, 2010 to help you understand our interim financial information.

1.  Property, plant and equipment 
---------------------------------------------------------------------------
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                                      Plant and  Development               
                         Property     equipment expenditures         Total 
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January 1, 2010, net                                                       
 of accumulated                                                            
 depreciation            $135,127      $238,344   $1,572,198    $1,945,669 
Additions                  39,666        47,982       96,298       183,946 
Depreciation              (21,534)      (82,532)           -      (104,066)
Reclassification to                                                        
 property, plant and                                                       
 equipment                269,058       639,293     (908,351)            -  
Reclassification to                                                        
 assets held for                                                           
 sale (note 10)           (11,822)      (92,100)           -      (103,922)
Asset retirement obligations                                                
 adjustments                4,968         7,247            -        12,215
Disposals                       -        (8,887)           -        (8,887)
Funding received under Cobre
 Panama option agreement        -             -      (14,127)      (14,127)
Other                           -           (75)           -           (75)
Foreign exchange           (3,441)          556     (171,503)     (174,388)
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December 31, 2010,                                                         
 net of accumulated                                                        
 depreciation            $412,022      $749,828     $574,215    $1,736,065 
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---------------------------------------------------------------------------
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                                      Plant and   Development              
                         Property     equipment  expenditures        Total 
---------------------------------------------------------------------------
January 1, 2010                                                            
Cost                     $293,542      $502,562    $1,572,198   $2,368,302 
Accumulated                                                                
 depreciation            (158,415)     (264,218)            -     (422,633)
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Net carrying value       $135,127      $238,344    $1,572,198   $1,945,669 
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December 31, 2010                                                          
Cost                     $591,971    $1,096,578      $574,215   $2,262,764 
Accumulated                                                                
 depreciation            (179,949)     (346,750)            -     (526,699)
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Net carrying value       $412,022      $749,828      $574,215   $1,736,065 
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---------------------------------------------------------------------------
2.  Accounts receivable 
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----------------------------------------------------------------------------
                                         December 31, 2010   January 1, 2010
----------------------------------------------------------------------------
Accounts receivable from sale of metal    $         89,917  $        112,435
Value-added and other taxes receivable               9,619            22,132
Advances and prepaid expenses                       12,940            13,948
Other amounts receivable                             6,950             7,246
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                                          $        119,426  $        155,761
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3.  Inventories 
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                                          December 31, 2010  January 1, 2010
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Stockpiled ore                            $          22,077  $        16,812
Work in progress                                      7,407           14,253
Finished goods inventory                             23,327           28,668
Materials and supplies                               19,343           38,591
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                                          $          72,154  $        98,324
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4.  Accounts payable and accrued liabilities 
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----------------------------------------------------------------------------
                                          December 31, 2010  January 1, 2010
----------------------------------------------------------------------------
Accounts payables and accrued                                               
 liabilities                              $          94,792  $       106,701
Amounts payable related to metal sales                                      
 (note 29(a))                                           592              103
Income taxes payable                                 40,961           63,720
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                                          $         136,345  $       170,524
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5.  Other liabilities 
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                                          December, 31 2010  January 1, 2010
----------------------------------------------------------------------------
Las Cruces capital lease obligation       $          17,441           20,019
Other                                                   676              676
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                                          $          18,117  $        20,695
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6.  Asset retirement obligations 
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                                        December 31, 2010   January 1, 2010 
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Present value of future water                                               
 treatment costs                        $          34,722   $        30,032 
Obligations at closed properties                   35,209            35,490 
Obligations at operating and                                                
 developing mines                                  98,658           132,769 
                                      --------------------------------------
                                                  168,589           198,291 
Less current portion                              (16,417)          (13,500)
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                                        $         152,172   $       184,791 
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The table below shows how our asset retirement obligations changed in 2010.

2010

----------------------------------------------------------------------------
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                                Las                  Ok    Closed           
                    Cayeli    Cruces Pyhasalmi      Tedi     sites     Total
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Opening balance                                                             
 at January 1,                                                              
 2010              $15,673   $55,929   $21,522   $39,645   $65,522  $198,291
Liabilities                                                                 
 settled                 -         -         -         -   (9,719)   (9,719)
Accretion                                                                   
 expense charged                                                            
 through finance                                                            
 costs                 590     2,160       708       910     2,066     6,434
Liabilities                                                                 
 incurred                -     4,953         -         -         -     4,953
Revisions in                                                                
 timing and                                                                 
 amount of                                                                  
 estimated cash                                                             
 flows                   -         -     7,263     1,585    14,298    23,146
Reclassification                                                            
 to held for                                                                
 sale (note 10)          -         -         -  (39,981)         -  (39,981)
Foreign exchange                                                            
 and other           (861)   (6,603)   (2,676)   (2,159)   (2,236)  (14,535)
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Closing balance                                                             
 at December 31,                                                            
 2010              $15,402   $56,439   $26,817       $ -   $69,931  $168,589
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At December 31, 2010, we estimate that we need $213 million in undiscounted cash flows to settle these liabilities, payable over approximately 15 years. We discount cash flows at interest rates that range from one percent to five percent.

Contact Information

  • Inmet Mining Corporation
    Jochen Tilk
    President and Chief Executive Officer
    +1.416.860.3972

    Inmet Mining Corporation
    Flora Wood
    Director, Investor Relations
    +1.416.361.4808
    www.inmetmining.com