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Press release from Marketwire

Inmet Announces Third Quarter Net Income From Continuing Operations of $1.68 Per Share Compared to $1.41 Per Share in the Third Quarter of 2011

Thursday, November 01, 2012

Inmet Announces Third Quarter Net Income From Continuing Operations of $1.68 Per Share Compared to $1.41 Per Share in the Third Quarter of 201117:24 EDT Thursday, November 01, 2012TORONTO, CANADA--(Marketwire - Nov. 1, 2012) -All amounts in US dollars unless indicated otherwiseInmet (TSX:IMN) announces third quarter net income from continuing operations of $1.68 per share compared to $1.41 per share in the third quarter of 2011.Third quarter highlightsStrong earnings from operations Earnings from operations were $168 million compared to $113 million in the third quarter of 2011. This increase is due to the strong performance of our operations.Las Cruces operating consistently at or above design capacityLas Cruces produced 18,800 tonnes of copper cathode in the quarter compared to 11,400 tonnes produced during the same period of 2011. Plant production exceeded 6,000 tonnes of copper cathode (design capacity) each month this quarter, marking six consecutive months that Las Cruces produced at or above design capacity. Unit costs decreased to $1.01 per pound of copper cathode produced.Construction of Cobre Panama progressingSince construction commenced in May of this year, Minera Panama S.A. (MPSA) has entered into commitments for approximately $2.4 billion, representing 39 percent of estimated capital expenditures and expects commitments of approximately $4 billion, or 65 percent of estimated capital expenditures before the end of the year. Announcement of Cobre Panama precious metals stream agreement with Franco-NevadaIn August 2012, we announced the completion of a precious metals stream agreement with Franco-Nevada Corporation (Franco-Nevada). Under the terms of the agreement, Franco-Nevada will provide a $1 billion deposit after Inmet's funding since issuing a Full Notice to Proceed reaches $1 billion (expected by Q1 2013) pro-rata on a 1:3 ratio with Inmet's subsequent funding contributions. The amount of precious metals deliverable under the stream is indexed to the copper in concentrate produced from the entire project and approximates 86 percent of the estimated payable precious metals attributable to Inmet's 80 percent ownership based on the current 31 year mine plan. Offer to acquire Petaquilla Minerals Ltd.On September 28, 2012, we filed a formal offer for all of the outstanding common shares of Petaquilla Minerals Ltd. (Petaquilla), and on October 25, 2012, we increased our offer. Under the offer, Petaquilla shareholders can elect to receive consideration in cash, shares or a combination thereof.Revisions to production guidanceWe have increased our copper production objective for Çayeli from between 27,000 to 30,000 tonnes to between 30,000 and 32,000 tonnes. Additionally, we have narrowed our copper production objective for Las Cruces from between 61,700 tonnes and 68,600 tonnes of copper cathode to between 65,000 tonnes and 68,000 tonnes. Our other production guidance for copper and zinc remains as previously disclosed.Key financial datathree months ended September 30nine months ended September 30(thousands, except per share amounts)20122011change20122011changeFINANCIAL HIGHLIGHTSSalesGross sales$327,187$253,432+29%$864,109$714,517+21%Net incomeNet income from continuing operations$116,226$97,987+19%$303,486$209,770+45%Net income from continuing operations per share$1.68$1.41+19%$4.38$3.20+37%Net income from discontinued operations----80,786-100%Net income from discontinued operations per share----$1.23-100%Net income attributable to Inmet shareholders$116,52897,987+19%$304,067$290,556+5%Net income per share$1.68$1.41+19%$4.38$4.43-1%Cash flowCash flow provided by operating activities$135,696$116,813+16%$426,541$321,208+33%Cash flow provided by operating activities per share (1)$1.96$1.68+17%$6.15$4.91+25%Capital spending (2)$168,636$55,220+205%$443,294$144,809+206%OPERATING HIGHLIGHTSProductionCopper (tonnes)29,70021,700+37%84,10058,600+44%Zinc (tonnes)15,80023,000-31%45,60062,500-27%Pyrite (tonnes)243,300210,100+16%669,200594,300+13%Copper cash cost (US $ per pound) (3)$0.78$0.69+13%$0.87$0.88-1%as at September 30as at December 31FINANCIAL CONDITION20122011Current ratio8.3 to 19.3 to 1Gross debt to total equity38%1%Net working capital balance (millions)$2,148$1,263Cash balance (including bonds and other securities: millions)$3,306$1,655Gross debt (millions)$1,508$17Shareholders' equity (millions)$3,872$3,306(1)Cash flow provided by operating activities divided by average shares outstanding for the period. (2)The nine months ended September 30, 2012 includes capital spending of $400 million at Cobre Panama. The nine months ended September 30, 2011 includes capital spending of $87 million at Cobre Panama. (3)Copper cash cost per pound is a non-GAAP financial measure - see Supplementary financial information on pages 30 to 32. Third quarter press releaseWhere to find itOur financial results5Key changes in 20125Understanding our performance6Earnings from operations8Corporate costs13Results of our operations15Çayeli16Las Cruces18Pyhäsalmi20Status of our development project22Cobre Panama22Managing Our Liquidity25Financial condition29Supplementary financial information30In this press release, Inmet means Inmet Mining Corporation and we, us and our mean Inmet and/or its subsidiaries and joint ventures. This quarter refers to the three months ended September 30, 2012. Revised objective is as of November 1, 2012.Change in Inmet's functional and presentation currencies to the US dollarThe decision to construct Cobre Panama has significantly increased Inmet's exposure to the US dollar. Effective June 1, 2012, the US dollar was adopted as Inmet's functional currency on a prospective basis. We translated Inmet's May 31, 2012 financial statement items from Canadian dollars to US dollars using the May 31, 2012 exchange rate US $0.97 per Canadian dollar (Transition Rate). Our operating entities continue to measure the items in their financial statements using their functional currencies; Çayeli and Cobre Panama use the US dollar, and Pyhäsalmi and Las Cruces use the euro.At the same time we changed our presentation currency from Canadian dollars to US dollars and now report our results in US dollars. We have restated all comparative financial statements from previously reported Canadian dollar amounts to US dollars using the Transition Rate.Caution with respect to forward-looking statements and informationSecurities regulators encourage companies to disclose forward-looking information to help investors understand a company's future prospects. This interim report contains statements about our business, results of operation and future financial condition.These statements 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 like may, expect, anticipate, believe or other similar words. Our objectives and outlook have been prepared based on our existing operations, expectations and circumstances. Actual events and results could be substantially different, however, because of the risks and uncertainties associated with our business or events that happen after the date of this interim report.You should not place undue reliance on forward-looking statements. As a general policy, we do not update forward-looking statements except if there is an offering document or where securities legislation requires us to do so.Although we have attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in the forward-looking statements or information, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Also, many of the factors are beyond the control of Inmet. Accordingly, readers should not place undue reliance on forward-looking statements or information. Inmet undertakes no obligation to update forward-looking statements or information as a result of new information after the date of this interim report except as required by law. All forward-looking statements and information herein are qualified by this cautionary statement.Our financial results three months ended September 30nine months ended September 30(thousands, except per share amounts)20122011change20122011changeEARNINGS FROM OPERATIONS (1)Çayeli$56,182$35,965+56%$146,386$119,950+22%Las Cruces89,13131,594+182%205,85381,989+151%Pyhäsalmi26,15444,993-42%78,962108,407-27%Other(3,032)--100%(7,180)--100%168,435112,552+50%424,021310,346+37%DEVELOPMENT AND EXPLORATIONCorporate development and exploration(7,905)(4,539)+74%(26,996)(21,940)+23%CORPORATE COSTSGeneral and administration(12,982)(9,669)+34%(38,626)(25,819)+50%Investment and other income13,27634,640-62%52,11633,631+55%Finance costs(2,463)(2,301)+7%(7,438)(6,868)+8%Income and capital taxes(42,135)(32,696)+29%(99,591)(79,580)+25%(44,304)(10,026)+342%(93,539)(78,636)+19%Net income from continuing operations116,22697,987+19%303,486209,770+45%Income from discontinued operation (net of taxes)----80,786-100%Non-controlling interest(302)-+100%(581)-+100%Net income attributable to Inmet shareholders$116,528$97,987+19%$304,067$290,556+5%Income from continuing operations per common share$1.68$1.41+19%$4.38$3.20+37%Diluted income from continuing operations per common share$1.67$1.41+18%$4.36$3.20+36%Basic net income per common share$1.68$1.41+19%$4.38$4.43-1%Diluted net income per common share$1.67$1.41+18%$4.36$4.43-2%Weighted average shares outstanding69,36669,331+0%69,36065,454+6%(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 2012(millions)three months ended September 30nine months ended September 30see pageEARNINGS FROM OPERATIONSSalesHigher (lower) copper prices$15$(40)8Lower zinc prices-(6)8Lower other metal prices(7)(3)8Higher copper sales volumes812358Lower zinc sales volumes(9)(25)8CostsLower processing charges and freight1310Higher operating costs(7)(20)11Charge for mine rehabilitation at closed properties(3)(7)11Higher depreciation(11)(18)12Other(4)(5)Higher earnings from operations compared to 201156114CORPORATE COSTSHigher exploration and administrative costs(7)(18)13Higher taxes from higher income(9)(20)14Foreign exchange changes(32)713Unrealized gain on prepayment rights derivative - senior unsecured notes121213Other(1)-Higher net income from continuing operations compared to 20111995Lower income from discontinued operation - Ok Tedi-(81)14Higher net income attributable to Inmet shareholders compared to 2011$19$14Understanding our performanceMetal prices The table below shows the average metal prices we realized this quarter and year to date. The prices we realize include finalization adjustments - see Gross sales on page 8.three months ended September 30nine months ended September 3020122011change20122011changeCopper (per pound)$3.57$3.54+1%$3.63$3.97-9%Zinc (per pound)$0.88$0.92-4%$0.89$0.99-10%Copper Copper prices on the London Metals Exchange (LME) averaged $3.50 per pound this quarter, in-line with prices in the second quarter of 2012 and a 14 percent decrease from the third quarter of 2011. In the third quarter of 2011, our realized copper price of US $3.54 per pound was significantly lower than the LME average price, mainly because of Çayeli. A high proportion of Çayeli's sales that quarter were not yet finalized so they were valued at the September 30, 2011 forward price of US $3.18 per pound.Zinc Zinc prices on the LME averaged $0.86 per pound this quarter, consistent with last quarter's average price of $0.87 per pound and a 15 percent decrease from the third quarter of 2011. Exchange ratesExchange rates affect our revenue and earnings. The table below shows the average exchange rates we realized this quarter and year to date compared to 2011.three months ended September 30nine months ended September 3020122011change20122011ChangeExchange rates1 C$ to US$$1.02$1.02-$1.00$1.02-2%1 euro to US$$1.25$1.38-9%$1.28$1.38-7%1 US$ to Turkish liraTL 1.80TL 1.65+9%TL 1.80TL 1.62+11%Compared to the same quarter last year, the value of the US dollar was flat relative to the Canadian dollar, and appreciated 9 percent relative to the euro. Our earnings are affected by changes in foreign currency exchange rates when we:translate the operating expenses of our euro-based operations from their functional currency to US dollars revalue US dollars that we hold in cash at our operations whose functional currency is the euro revalue Canadian dollars and euros that we hold in cash, bonds and other securities corporately at Inmet translate Çayeli's Turkish lira denominated costs into its functional currency (US dollars). Prior to the adoption of the US dollar as Inmet's functional currency effective June 1, 2012, our earnings were affected by changes in foreign currency exchange rates when we revalued our US dollar denominated cash, bonds and other securities and senior unsecured notes held corporately at Inmet. Treatment charges for zinc decreased this year Treatment charges are one component of smelter processing charges. We also pay smelters for content losses and price participation. The table below shows the average charges we realized this quarter and year to date. Treatment charges for zinc concentrates were lower this year than in 2011, reflecting agreements we have signed with customers.three months ended September 30nine months ended September 3020122011change20122011changeTreatment chargesCopper (per dry metric tonne of concentrate)$57$67-15%$58$58-Zinc (per dry metric tonne of concentrate)$182$225-19%$180$225-20%Price participationCopper (per pound)$0.00$0.02-100%$0.00$0.02-100%Zinc (per pound)$0.00$(0.01)+100%$0.00$(0.01)+100%Freight chargesCopper (per dry metric tonne of concentrate)$51$46+11%$54$49+10%Zinc (per dry metric tonne of concentrate)$21$26-19%$24$25-4%Statutory tax rates The table below shows the statutory tax rates for each of our taxable operating mines.20122011changeStatutory tax ratesÇayeli24%24%-Las Cruces30%30%-Pyhäsalmi24.5%26%-1.5%Earnings from operations three months ended September 30nine months ended September 30(thousands)20122011change20122011changeGross sales$327,187$253,432+29%$864,109$714,517+21%Smelter processing charges and freight(30,023)(35,865)-16%(87,841)(99,239)-11%Cost of sales:Direct production costs(78,192)(73,008)+7%(235,646)(216,932)+9%Inventory changes(7,332)(4,682)+57%(8,289)(6,135)+35%Other non-cash expenses(5,572)(873)+538%(11,419)(3,431)+233%Depreciation(37,633)(26,452)+42%(96,893)(78,434)+24%Earnings from operations$168,435$112,552+50%$424,021$310,346+37%Gross sales were higher three months ended September 30nine months ended September 30(thousands)20122011change20122011changeGross sales by operationÇayeli$110,689$90,204+23%$300,222$265,334+13%Las Cruces163,82783,618+96%402,072247,837+62%Pyhäsalmi52,67179,610-34%161,815201,346-20%$327,187$253,432+29%$864,109$714,517+21%Gross sales by metalCopper$272,175$171,016+59%$704,499$496,772+42%Zinc29,96746,099-35%88,829138,231-36%Other25,04536,317-31%70,78179,514-11%$327,187$253,432+29%$864,109$714,517+21%Key components of the change in gross sales: increasing sales volumes at Las Cruces, higher realized copper prices (millions)three months ended September 30nine months ended September 30Higher (lower) copper prices$15$(40)Lower zinc prices-(6)Higher copper sales volumes at Las Cruces79189Higher copper sales volumes at our other mines858Lower zinc sales volumes(16)(43)Changes in other metal sales(12)(8)Higher gross sales, compared to 2011$74$150We 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 second quarter 2012 sales. At the end of this quarter, the following sales had not been settled:32 million pounds of copper provisionally priced at $3.72 per pound 12 million pounds of zinc provisionally priced at $0.95 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)copperzincOctober 20121912November 20125-December 20126-January 2013--February 20132-Unsettled sales at September 30, 20123212Higher copper sales volumes, lower zinc 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 higher this quarter and year to date mainly because of production at Las Cruces and the mining of higher-grade areas and a continued improvement in recoveries at Çayeli. The timing of shipments resulted in copper sales volumes exceeding production volumes by a combined 4,900 tonnes for this quarter as compared to a combined excess of shipments over production of 1,400 tonnes in the third quarter of 2011. Zinc production and sales volumes were lower than in 2011 due to lower zinc grades at Çayeli and Pyhäsalmi, which production was consistent with our objectives. Sales volumesthree months ended September 30nine months ended September 3020122011change20122011changeCopper contained in concentrate (tonnes)13,70012,300+11%38,30030,900+24%Copper cathode (tonnes)20,90010,800+94%51,40029,200+76%Total copper (tonnes)34,60023,100+50%89,70060,100+49%Zinc (tonnes)15,50023,900-35%46,10067,000-31%Pyrite (tonnes)213,400269,200-21%552,800633,200-13%Productionthree months ended September 30nine months ended September 30revised objective20122011Change20122011change2012Copper (tonnes)Çayeli7,8007,100+10%24,40020,100+21%30,000 - 32,000Las Cruces18,80011,400+65%50,40028,000+80%65,000 - 68,000Pyhäsalmi3,1003,200-3%9,30010,500-11%11,300 - 12,60029,70021,700+37%84,10058,600+44%106,300 - 112,600Zinc (tonnes)Çayeli10,70013,900-23%29,60036,900-20%36,000 - 39,800Pyhäsalmi5,1009,100-44%16,00025,600-38%22,800 - 25,20015,80023,000-31%45,60062,500-27%58,800 - 65,000Pyrite (tonnes)Pyhäsalmi243,300210,100+16%669,200594,300+13%900,0002012 outlook for salesWe use our production objectives to estimate our sales target. We have increased our copper production objective for Çayeli from between 27,000 to 30,000 tonnes to between 30,000 and 32,000 tonnes. Additionally, we have narrowed our copper production objective for Las Cruces from between 61,700 tonnes and 68,600 tonnes of copper cathode to between 65,000 tonnes and 68,000 tonnes. Our other production guidance for copper and zinc remains as previously disclosed. Our revenues are also affected by the US dollar denominated metal prices we receive. Zinc smelter processing charges down, copper charges up three months ended September 30nine months ended September 30(thousands)20122011change20122011changeSmelter processing charges and freight by operationÇayeli$18,948$19,959-5%$54,492$55,051-1%Las Cruces668376+78%1,513837+81%Pyhäsalmi10,40715,530-33%31,83643,351-27%$30,023$35,865-16%$87,841$99,239-11%Smelter processing charges and freight by metalCopper$14,632$12,376+18%$41,01431,383+31%Zinc10,98618,003-39%32,81752,250-37%Other4,4055,486-20%14,01015,606-10%$30,023$35,865-16%$87,841$99,239-11%Smelter processing charges by type and freightCopper treatment and refining charges$5,249$4,726+11%$14,924$10,728+39%Zinc treatment charges5,51210,106-45%16,30128,170-42%Copper price participation-433-100%-1,125-100%Zinc price participation25(683)-104%46(1,224)-104%Content losses9,94011,439-13%28,42733,499-15%Freight8,9829,507-6%27,27026,031+5%Other315337-7%873910-4%$30,023$35,865-16%$87,841$99,239-11%Our copper treatment and refining charges were higher than they were in 2011 because we sold more copper. This was more than offset by lower zinc treatment charges than last year due to lower zinc sales volumes at Çayeli and Pyhäsalmi, and because our terms with smelters were lower.2012 outlook for smelter processing charges and freight We expect our costs for copper treatment and refining to be consistent in 2012 to those we achieved in 2011 based on agreements we have signed with our customers. We expect the global copper concentrate market will return to a balanced position for the remainder of the year from a deficit position in the first nine months of 2012. We do not expect to pay copper price participation.We expect total zinc smelter processing charges, including price participation, to be lower than in 2011 and a continued deficit to exist in the zinc concentrate market in 2012.Las Cruces sells its copper cathode production directly to buyers in the Spanish and Mediterranean markets and therefore does not incur smelting processing charges and has relatively low freight costs. We expect our ocean freight costs in the fourth quarter to be similar to rates realized year to date in 2012.Higher direct production costs and cost of sales three months ended September 30nine months ended September 30(thousands)20122011change20122011changeDirect production costs by operationÇayeli$22,303$24,450-9%$68,572$69,246-1%Las Cruces41,79234,728+20%123,636105,143+18%Pyhäsalmi14,09713,830+2%43,43842,543+2%Total direct production costs78,19273,008+7%235,646216,932+9%Inventory changes7,3324,682+57%8,2896,135+35%Charges for mine rehabilitation and other non-cash charges5,572873+538%11,4193,431+233%Total cost of sales (excluding depreciation)$91,096$78,563+16%$255,354$226,498+13%Direct production costs Direct production costs were higher this year because higher production at Las Cruces increased variable electricity, consumables and royalty costs, somewhat offset by the impact of the weaker euro relative to the US dollar. Charges for mine rehabilitation and other non-cash charges These charges include accruals for asset retirement obligations, provisions for severance and retirement and other non-cash expenses. We recorded an increase of $3 million this quarter in post-closure liabilities at our closed properties, and $7 million year to date. This increase was a result of a decrease in the discount rates and US dollar to Canadian dollar exchange rate we applied in determining the liabilities.2012 outlook for cost of sales (excluding depreciation)We expect consolidated direct production costs to be higher in 2012 because we expect higher production at Las Cruces to increase total variable costs, primarily electricity and royalties. Our budget for 2012 continues to assume our costs at Çayeli and Pyhäsalmi will be similar to those of 2011.Certain variable costs may continue to affect our earnings, depending on metal prices:royalties at Çayeli are affected by its net income royalties at Las Cruces are affected by its net sales. The total amount we report in US dollars will also be affected by the value of the euro relative to the US dollar.Additionally, changes in market risk-free interest rates could significantly increase or decrease our costs related to mine rehabilitation at our closed properties. At September 30, 2012, the interest rates we used to value our asset retirement obligations at our closed properties ranged from 1.3 percent to 2.3 percent.Higher depreciationthree months ended September 30nine months ended September 30(thousands)20122011change20122011changeDepreciation by operationÇayeli$7,362$6,018+22%$19,990$15,946+25%Las Cruces27,68118,198+52%69,70655,802+25%Pyhäsalmi2,5902,236+16%7,1976,686+8%$37,633$26,452+42%$96,893$78,434+24%Depreciation was higher this quarter and for the year to date mainly because of higher copper sales volumes at Las Cruces and Çayeli. 2012 outlook for depreciationWe expect depreciation to be higher in 2012 than 2011 because of higher sales volumes at Las Cruces. Corporate costsCorporate costs include corporate development and exploration, general and administration costs, taxes, interest and other income. General and administrationGeneral and administration costs were $13 million higher year to date, compared to 2011. As a result of the decision to construct Cobre Panama, we recognized a non-cash stock based compensation expense of $7 million in the second quarter on Long-term Incentive Plan (LTIP) units issued in previous years that relate to the project. This expense represented the cumulative impact from the units' grant dates to June 30, 2012, on a 100 percent award basis, as no value was attributed to these units prior to the construction decision for Cobre Panama. See note 22c to the 2011 annual financial statements for more details on these units.2012 outlook for general and administrationWe expect general and administration costs to be higher in 2012 due to increased human resource costs supporting construction activities for Cobre Panama. We expect to recognize $8 million for the LTIP units this year.Investment and other income three months ended September 30nine months ended September 30(thousands)2012201120122011Interest income$3,143$4,676$11,326$11,431Foreign exchange gains (losses)(2,366)29,51325,87818,773Unrealized gain on prepayment options derivative - senior unsecured notes11,631-11,631-Dividend and royalty income7694512,2291,484Other99-1,0521,943$13,276$34,640$52,116$33,631Foreign exchange gains and lossesWe have foreign exchange gains or losses when we revalue certain foreign denominated assets and liabilities.Our foreign exchange gains and losses were from:three months ended September 30nine months ended September 30(thousands)2012201120122011Translation of US dollar cash held by Corporate prior to June 2012 inclusive of proceeds of notes offering$-$(79)$27,338$(8,006)Translation of US dollar senior unsecured notes prior to June 2012--(16,884)-Translation of US dollar bonds and other securities prior to June 2012-22,3134,33019,553Translation of US dollar cash held in euro-based entities(11,626)-(1,227)-Translation of Cdn dollar cash held by Corporate subsequent to May 20121,611-2,588-Translation of Cdn dollar bonds and other securities subsequent to May 20126,937-9,979-Translation of other monetary assets and liabilities7127,279(246)7,226$(2,366)$29,513$25,878$18,773We recognized net foreign exchange gains of $15 million this year from the revaluation of US dollar denominated cash, bonds and other securities and the senior unsecured notes held in Inmet prior to the change in its functional currency from the Canadian dollar to the US dollar effective June 1, 2012. As of this date, Inmet's US dollar-denominated monetary assets and liabilities were no longer revalued. Instead we began recognizing foreign exchange impacts on the revaluation of Inmet's Canadian dollar denominated monetary assets and liabilities with a gain of $9 million in third quarter, and $13 million year to date, on Canadian dollar denominated cash, bonds and other securities due to a weakening in the US dollar relative to the Canadian dollar. Additionally, in 2012 we began holding our euro-based operations' excess cash in US dollars. We recognized $12 million in foreign exchange losses this quarter, and $1 million year to date, on the revaluation of US-denominated cash balances to euros. Unrealized gain on embedded derivative in senior unsecured notesOur senior unsecured notes include prepayment rights, as described in note 7 to the interim consolidated financial statements, that are considered to be an embedded derivative. At September 30, 2012, these prepayment rights are recognized on the balance sheet at a fair value of $55 million, based on current market interest rates for similar instruments and our credit spread. The change in the market value of this derivative asset since issuance of the senior unsecured notes in May 2012 of $12 million, primarily occurring as a result of borrowing market yield changes since the end of the second quarter, has been recognized as an unrealized gain in investment and other income. 2012 outlook for investment and other incomeInvestment and other income is affected by the extent of our cash, bonds and other securities, and by interest rates and exchange rates. We are capitalizing interest income earned on funds from the proceeds of our senior unsecured notes until they are used to construct Cobre Panama (as we are capitalizing interest costs on the senior unsecured notes). At September 30, 2012, we held Cdn $252 million in cash, bonds and other securities subject to translation in our US dollar-denominated accounts and US $535 million in cash subject to translation in our euro accounts. Additionally, changes in market borrowing rates could change the fair value of the derivative embedded in our senior unsecured notes, resulting in the recognition of potentially significant unrealized gains and losses.Income tax expensethree months ended September 30nine months ended September 30(thousands)20122011change20122011changeÇayeli$11,572$18,661$28,940$41,503Las Cruces25,6735,07354,12414,691Pyhäsalmi5,02310,15815,93824,098Corporate and other(133)(1,196)589(712)$42,135$32,696$99,591$79,580Consolidated effective tax rate27%25%+2%25%28%-3%The consolidated effective tax rate is higher this quarter compared to the same quarter of last year mainly because of the improvement in earnings at Las Cruces, combined with its lower intergroup interest expense as it repaid a portion of its intergroup debt this year. This interest expense eliminates in the consolidated financial statements. Year to date, Cayeli's taxes were lower as it recognized a foreign exchange loss from its US dollar denominated cash this year, compared to a foreign exchange gain in 2011 (Cayeli's income taxes are denominated in Turkish lira). 2012 outlook for income tax expenseOther than the decrease in the statutory tax rate at Pyhäsalmi from 26 percent to 24.5 percent, we expect the statutory tax rates at our operations to remain the same in 2012 as they were in 2011.Discontinued operation - 2011 We sold our 18 percent equity interest in Ok Tedi in January 2011, and have reported our results relating to Ok Tedi in that year as discontinued operations. After-tax income of $81 million in 2011 includes net earnings of $17 million in January 2011, before the sale, and a gain on sale of $64 million net of withholding taxes. We paid Papua New Guinea withholding taxes of $27 million on the sale.Results of our operations2012 estimatesOur financial review by operation includes estimates for our 2012 operating earnings and operating cash flows. We have based these estimates on our 2012 objectives for production (using the midpoints in our production volume ranges) and cost per tonne of ore milled (cost per pound of copper produced at Las Cruces), as well as the following assumptions for the remaining three months of the year: Copper priceUS $3.60 per poundZinc priceUS $0.90 per poundeuro to US$ exchange rate$1.25Working capitalAssume sales volumes equal production volumes for the fourth quarterÇayelithree months ended September 30nine months ended September 3020122011change20122011changeTonnes of ore milled (000's)305312-2%899880+2%Tonnes of ore milled per day3,3003,400-2%3,3003,200+2%Grades (percent)Copper3.33.1+6%3.43.1+10%Zinc5.26.5-20%5.16.2-18%Mill recoveries (percent)Copper7874+5%7974+7%Zinc6768-1%6568-4%Production (tonnes)Copper7,8007,100+10%24,40020,100+21%Zinc10,70013,900-23%29,60036,900-20%Cost per tonne of ore milled$73$78-6%$76$79-4%Higher grades and recoveries increased copper production Copper grades this quarter and year to date were higher than 2011, while zinc grades were lower, because we produced from different areas of the mine. This higher copper grade ore and lower zinc grade ore compared to last year contributed to higher copper recoveries and lower zinc recoveries, respectively. The result was higher copper production and lower zinc production compared to 2011. Due to the timing of shipments, Çayeli's copper sales volumes exceeded production volumes by approximately 2,600 tonnes this quarter and 1,000 tonnes in the third quarter of 2011. These two factors led to a 28 percent increase in copper sales for the quarter relative to the comparable quarter in 2011.Cost per tonne of ore milled was lower this quarter and year to date than in 2011 due to lower royalty costs. Çayeli's royalty is based on its Turkish lira net income, which was impacted by significant foreign exchange gains in 2011.The three-year labour agreement at Cayeli expired in May of this year. The collective labour agreement legislative proposal was accepted by parliament on October 18, 2012. The next step in the process is the formal approval of the proposal by the President of the Republic of Turkey followed by publication in the official gazette. It is expected that collective bargaining will begin in early November. Once initiated, we will make a strong effort to manage labour cost escalations to maintain our competitiveness.2012 outlook for productionIn 2012, mill throughput should remain at approximately 1.2 million tonnes. We expect slightly lower copper and zinc grades for the remainder of 2012 as we produce from lower grade areas of the mine. We continue to expect zinc grades to be lower than 2011. We increased our copper production objective from between 27,000 tonnes and 30,000 tonnes to between 30,000 tonnes and 32,000 tonnes. In 2012, lower zinc grades, as expected, account for the anticipated decline in zinc production compared to those in recent years. Financial review Higher copper sales volumes due to higher copper production volumes and timing of shipments (millions unless otherwise stated)three months ended September 30nine months ended September 30revisedobjective20122011201220112012Sales analysisCopper sales (tonnes)10,4008,10028,10020,60034,800Zinc sales (tonnes)9,90014,60029,90040,10038,200Gross copper sales$83$54$222$162$271Gross zinc sales1927588274Other metal sales99202122Gross sales$111$90$300$265$367Smelter processing charges and freight(19)(20)(54)(55)(70)Net sales$92$70$246$210$297Cost analysisTonnes of ore milled (thousands)3053128998801,200Direct production costs ($ per tonne)$73$78$76$79$79Direct production costs$22$24$69$69$95Change in inventory43636Depreciation and other non-cash costs107241834Operating costs$36$34$99$90$135Operating earnings$56$36$147$120$162Operating cash flow$44$55$106$144$158The objective for 2012 uses the assumptions listed on page 15.The table below shows what contributed to the change in operating earnings and operating cash flow between 2012 and 2011.(millions)three months ended September 30nine months ended September 30Higher copper prices$14$1Higher (lower) zinc prices1(3)Higher copper sales volumes1146Lower zinc sales volumes(4)(11)Higher depreciation(1)(4)Other(1)(2)Higher operating earnings, compared to 20112027Change in cash taxes911Changes in working capital (see note 15 on page 52)(42)(80)Change in depreciation14Other1-Lower operating cash flow, compared to 2011$(11)$(38)Lower capital spending due to timingthree months ended September 30nine months ended September 30objective(thousands)20122011change20122011change2012Capital spending$3,900$1,900+105%$9,200$9,300-1%$20,0002012 outlook for capital spending We expect to spend $20 million on capital in 2012, including $8 million to upgrade our ore pass system to address deterioration that has accumulated over time from normal abrasion, and to extend the shotcrete slickline and replace certain mobile equipment. Las Cruces three months ended September 30nine months ended September 3020122011change20122011changeTonnes of ore processed (000's)290209+39%806545+48%Copper grades (percent)7.26.5+11%7.26.3+14%Plant recoveries (percent)8887+1%8785+2%Cathode copper production (tonnes)18,80011,400+65%50,40028,000+80%Cost per pound of cathode produced$1.01$1.38-27%$1.11$1.70-35%Plant production continued to exceed design capacity Las Cruces production this quarter was significantly higher than the third quarter of 2011, increasing from 11,400 tonnes of copper cathode to 18,800 tonnes. Plant production exceeded the design capacity of 6,000 tonnes of copper cathode each month this quarter, marking six consecutive months that Las Cruces produced at or above design capacity. Overall recoveries increased to 88 percent this quarter compared to 87 percent in the same quarter of 2011, with leach recoveries at design levels. The difference from overall plant design level recoveries is mostly in copper already leached but retained in the filtration residue. Our focus remains on improving recoveries in washing and filtration. Plant feed grades were significantly higher for the quarter and year to date compared to 2011 and we expect grades to gradually decline to approximately 6.5 percent during the fourth quarter of 2012.Las Cruces' copper sales volumes exceeded production volumes by approximately 2,100 tonnes this quarter as a result of the timing of shipments.Cost per pound of copper produced was significantly lower than in 2011 due to higher production volumes.2012 outlook for productionFor 2012, we have narrowed our copper production objective for Las Cruces from between 61,700 tonnes and 68,600 tonnes of copper cathode to between 65,000 tonnes and 68,000 tonnes. No major construction projects or major shutdowns are planned for the remainder of the year. In total, we expect a minimum of 90 percent operating time throughout 2012. Financial review Higher sales volumes due to higher production(millions unless otherwise stated)three months ended September 30nine months ended September 30revised objective20122011201220112012Sales analysisCopper sales (tonnes)20,90010,80051,40029,20067,500Gross copper sales$164$83$402$248$529Freight(1)-(1)(1)(2)Net sales$163$83$401$247$527Cost analysisPounds of copper produced (millions)412511162147Direct production costs ($ per pound)$1.01$1.38$1.11$1.70$1.10Direct production costs$42$35$124$105$161Change in inventory4(1)242Depreciation and other non-cash costs2817695692Operating costs$74$51$195$165$255Operating earnings$89$32$206$82$272Operating cash flow$105$49$270$144$378The objective for 2012 uses the assumptions listed on page 15.The table below shows what contributed to the change in operating earnings and operating cash flow between 2012 and 2011.(millions)three months ended September 30nine months ended September 30Higher (lower) copper prices$1$(35)Higher copper sales volume74191Higher production costs denominated in local currencies(12)(30)Foreign exchange - decreased costs511Higher depreciation(9)(14)Other(2)1Higher operating earnings, compared to 201157124Changes in working capital (see note 15 on page 52)(14)(13)Change in depreciation914Other41Higher operating cash flow, compared to 2011$56$126Capital spending three months ended September 30nine months ended September 30objective(thousands)20122011change20122011change2012Capital spending$12,000$9,300+29%$25,200$42,300-40%$48,000Capital expenditures for the quarter were mainly for mine development and the tailings storage facility expansion.2012 outlook for capital spendingWe expect to spend $48 million on capital projects in 2012. The largest expenditures will come in the areas of mine development of $20 million, as well as tailings storage facility expansion and land purchase. Pyhäsalmithree months ended September 30nine months ended September 3020122011change20122011changeTonnes of ore milled (000's)347351-1%1,0331,038-Tonnes of ore milled per day3,8003,800-1%3,8003,800-Grades (percent)Copper1.01.0-1.01.1-9%Zinc1.62.9-45%1.72.7-37%Mill recoveries (percent)Copper9595-9596-1%Zinc9090-9291+1%Production (tonnes)Copper3,1003,200-3%9,30010,500-11%Zinc5,1009,100-44%16,00025,600-38%Pyrite243,300210,100+16%669,200594,300+13%Cost per tonne of ore milled$41$39+5%$42$41+2%Lower grades this year in-line with annual objectivesPyhäsalmi maintained its strong performance this quarter, processing at a rate in-line with its annual objective and achieving copper recoveries of 95 percent and zinc recoveries of 90 percent. Copper grades this quarter were consistent with the comparative quarter of 2011, and year to date were slightly lower than last year. Zinc grades were lower this quarter and year to date than the comparative periods of 2011, and consistent with our plan. Copper and zinc production so far this year were therefore lower than in 2011.Operating costs so far this year were slightly higher than they were in 2011 due to higher labour and consumables and contractor costs.2012 outlook for productionPyhäsalmi expects to mine 1.4 million tonnes of approximately 1 percent copper and 2 percent zinc in 2012, and produce between 11,300 tonnes and 12,600 tonnes of copper and 22,800 tonnes and 25,200 tonnes of zinc. Copper and zinc production should be lower than it was in 2011 as fewer higher grade stopes are available in the short-term mining sequence. Pyhäsalmi expects to produce 900,000 tonnes of pyrite in 2012 and expects to sell 915,000 tonnes of pyrite due to stronger demand from Asian customers this year. Financial reviewLower earnings because of lower sales volumes and realized metal prices(millions of US dollars unless otherwise stated)three months ended September 30nine months ended September 30revised objective20122011201220112012Sales analysisCopper sales (tonnes)3,3004,20010,20010,30012,700Zinc sales (tonnes)5,6009,40016,10026,90024,100Pyrite sales (tonnes)213,400269,200552,800633,200915,000Gross copper sales$25$34$80$87$102Gross zinc sales1119315647Other metal sales1727515873Gross sales$5380$162201$222Smelter processing charges and freight(11)(16)(32)(43)(46)Net sales$42$64$130$158$176Cost analysisTonnes of ore milled (thousands)3473511,0331,0381,370Direct production costs ($ per tonne)$41$39$42$41$42Direct production costs$14$14$43$43$58Change in inventory(1)3---Depreciation and other non-cash costs328710Operating costs$16$19$51$50$68Operating earnings$26$45$79$108$108Operating cash flow$17$23$69$90$92The objective for 2012 uses the assumptions listed on page 15.The table below shows what contributed to the change in operating earnings and operating cash flow between 2012 and 2011. (US$ millions)three months ended September 30nine months ended September 30Lower copper prices$(1)$(6)Lower zinc prices(1)(3)Lower other metal sales prices(6)(2)Lower zinc sales volumes(5)(14)Lower other sales volumes(7)(7)Other13Lower operating earnings, compared to 2011(19)(29)Change in cash taxes58Changes in working capital (see note 15 on page 52)92Other(1)(2)Lower operating cash flow, compared to 2011$(6)$(21)Capital spending three months ended September 30nine months ended September 30objective(US$ thousands)20122011change20122011change2012Capital spending$1,400$2,400-42%$6,000$5,100+18%$10,0002012 outlook for capital spending Capital spending of $10 million in 2012 will primarily be to replace underground mobile equipment, improve the tailings management facility, and upgrade the satellite ore grinding circuit and zinc cleaner cells. Status of our development projectCobre PanamaConstruction progressFor a visual update on our construction progress, we invite you to visit our photo gallery on Inmet's web site at www.inmetmining.com.During the quarter, we made the following advancements in the project's development: Infrastructure Our Engineering, Procurement and Construction Management (EP+CM) contractor, Joint Venture Panama (JVP), progressed with detailed engineering during the third quarter, including work on contract procurement, earthworks and ground preparation for camps and road construction. Significant progress was achieved at the port site in Punta Rincon, including the first beach landing in early July and the installation of jack-up barges, allowing safe mooring of barges at the port site. The camp platform at the port site is also ready to receive the first pre-fabricated camp units. Power plantOur Engineering, Procurement and Construction (EPC) contractor, SK Engineering and Construction, progressed with detailed engineering and procurement activities, and with planning for the start of geotechnical work in the fourth quarter and the erection of temporary facilities in early 2013. Process plantWe received and completed our evaluation of process plant bids and we expect to award the contract for the plant in the fourth quarter of 2012. OtherBy the end of the third quarter, MPSA had obtained all required permits and land usage rights for its construction activities both at the mine and the port site. We continued the process of resettling the people who will be physically and economically displaced by the project. We have made significant progress in our flora and fauna rescue program to support the ramp-up to full-scale construction, to ensure the protection of the biodiversity of the area. MPSA has finalized an agreement with ANAM to support the management of two national parks and a similar agreement for the Donoso area is in progress. These agreements are an important aspect to our commitment to have a net positive benefit to the biodiversity of the project area. MPSA and its contractors are currently employing 2,500 workers, of which more than 90 percent are local residents of the Provinces of Cocle and Colon, Panama. The combined construction workforce is expected to increase to more than 9,000 people by the end of 2014. The Ministries of Labor and Security in Panama and MPSA signed agreements this quarter to establish a special immigration and work permit office for the Cobre Panama project in Penonome. This office will support our human resource growth at Cobre Panama by helping to ensure work permits and visas for expatriate employees and contractors are processed efficiently.We have adopted a one-team approach for safety and health execution on the project to ensure that a leading safety culture is fostered. Creating alignment between the owners' team and all contractors working on the project is of prime importance as we progress with construction. This approach has led to the current lost-time injury frequency of less than 0.1 injuries per 200,000 work hours worked since Full Notice to Proceed was issued in May 2012.Capital spendingThe following table provides a breakdown of capital expenditures on a 100 percent basis. three months ended September 30nine months ended September 30objective(US$ millions)20122011201220112012Capital spending since issuance of full notice to proceed (FNTP)$147$-$351$-$780Interest paid on senior unsecured notes----70Changes in working capital3-(82)-(37)Capital spending prior to FNTP-41$13187131Capital spending in the consolidated statements of cash flows$150$41$400$87$944We expect completion to take approximately 44 months from the point we issued Full Notice to Proceed. The schedule below provides the expected timing of capital spending by year. (US$ millions)Total expenditures (100% basis)Inmet's share after StreamFranco-Nevada's Stream fundingKPMC's 20% shareCumulative spending at September 30, 2012$351$120$-$231(1)Future capital spending:Fourth quarter of 2012429343-8620132,2411,45433944820142,2711,3634544542015889504207178Total direct costs$6,181$3,784$1,000$1,397(1)Includes KPMC's $161 million payment to acquire a 20% interest in MPSA, which increased KPMC's share of total project funding to $1.4 billion and reduced Inmet's share by an equal and offsetting amount.Capital commitmentsIn October, contracts were awarded for mass earthworks and quarry development at both the mine and port sites, the tailings management facility, the coastal road joining the mine to the port, permanent and temporary camp construction and the port causeway and commodity berth. Since construction commenced in May of this year, MPSA has entered into commitments for approximately $2.4 billion, representing 39 percent of estimated capital expenditures, mainly for infrastructure and the power plant construction contract. MPSA expects to award contracts between now and the end of the year relating to the mobile mine equipment fleet, the mineral processing plant, fuel supply, coal unloading facility, construction camp catering and the mine pre-stripping. The total combined value of contracts that have already been awarded and those that are expected to be awarded by year end should be approximately $4 billion, or 65 percent of estimated capital expenditures. Sale of precious metal stream to Franco-NevadaIn August 2012, we announced the completion of a precious metals stream agreement with Franco-Nevada. Under the terms of the agreement, a wholly-owned subsidiary of Franco-Nevada will provide a $1 billion deposit which will be used to fund a portion of Cobre Panama project capital costs. The deposit will become available after Inmet's funding since issuing a Full Notice to Proceed reaches $1 billion (expected by Q1 2013) and will be provided pro-rata on a 1:3 ratio with Inmet's subsequent funding contributions. The amount of precious metals deliverable under the stream is indexed to the copper in concentrate produced from the entire project and approximates 86 percent of the estimated payable precious metals attributable to Inmet's 80 percent ownership based on the current 31 year mine plan. Beyond the currently contemplated mine life, the precious metals deliverable under the stream will be based on a fixed percentage of the precious metals in concentrate.Franco-Nevada will pay to MPSA an amount for each ounce of precious metals delivered equal to $400 per ounce for gold and $6 per ounce for silver (subject to an annual adjustment for inflation) for the first 1,341,000 ounces of gold and 21,510,000 ounces of silver (approximately the first 20 years of expected deliveries) and thereafter the greater of $400 per ounce for gold and $6 per ounce for silver (subject to an adjustment for inflation) or one half of the then prevailing market price. In all cases the amount paid is not to exceed the prevailing market price per ounce of gold and silver.Funding planThe table below outlines the total project funding plan as at September 30, 2012.(US$ millions)Total expenditures (100% basis)Total construction budget for Cobre Panama$6,181Less: Cumulative project funding at September 30, 2012Inmet's share(240)Attributable to non-controlling interest (KPMC)(221)Cumulative funding to date(461)Less: Future fundingAttributable to precious metal stream partner (Franco-Nevada)(1,000)Attributable to non-controlling interest (KPMC)(1,176)Inmet's share of future funding3,544Less: Cash on hand at September 30, 2012 (includes bonds and other securities and excludes MPSA cash)(3,173)Expenditures to be funded by other debt financing or operating cash flow$3712012 outlook for developmentWe plan to:InfrastructureContinue with mobilization of major contractors for site capture and bulk earthworks. Establish additional quarries for crushed rock to supply all aggregate required for the construction and operation of Cobre Panama. Complete additional work on resource definition, metallurgical recoveries, pit design and other engineering to allow us to include the Balboa and Brazo mineralization in our mine plan for Cobre Panama. Continue to grow the temporary camps, with 2,000 accommodation units expected to be available by the end of 2012. Award contracts for the mobile mine equipment fleet, fuel supply, coal unloading facility, construction camp catering and mine pre-stripping by the end of the year. Power PlantProgress with detailed engineering and procurement for the power plant. Process PlantAward the contract for the process plant and begin detailed engineering and procurement. OtherContinue to build our privilege to operate through intensive 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 their potential concerns. Continue to work with ANAM towards finalizing an agreement to support the management of the Donoso area. Develop and implement, with the assistance of our EP+CM contractors, our one-team, project specific health & safety and environmental and social mitigation plans that are consistent with the ESIA and Inmet's Corporate Responsibility Standards and Procedures. Continue to grow the strength of our management team and human resources dedicated to the project. The combined construction workforce, including full-time employees and contractors, is expected to increase to more than 9,000 people by the end of 2014. Managing Our LiquidityWe 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 September 30nine months ended September 30(US$ millions)2012201120122011CASH FROM OPERATING ACTIVITIESÇayeli$44$55$106$144Las Cruces10549270144Pyhäsalmi16236990Corporate development and exploration not incurred by operations(6)(3)(17)(16)General and administration(13)(10)(32)(26)Realized foreign exchange gains (losses) on cash(10)-29(8)Other-32(7)136117427321CASH FROM INVESTING AND FINANCINGPurchase of property, plant and equipment(169)(55)(443)(145)Purchase and maturity of bonds and other securities, net(1,568)7(1,496)(239)Issuance of common shares---486Sale of 20 percent interest in Cobre Panama--161-Long-term debt borrowing--1,429-Funding by non-controlling shareholder40-60-Other1017(4)19(1,687)(31)(293)121CASH FROM DISCONTINUED OPERATION (OK TEDI)---297Increase (decrease) in cash(1,551)86134739Cash and short-term investmentsBeginning of period2,7339691,048316End of period$1,182$1,055$1,182$1,055Our available liquidity also includes $2,124 million of bonds and other securities ($607 million at December 31, 2011), providing a total of $3.3 billion in capital available to finance our growth strategy as at September 30, 2012.OPERATING ACTIVITIESKey components of the change in operating cash flows (US$ millions)three months ended September 30nine months ended September 30Higher earnings from operations (see page 5)$56$114Add back higher depreciation and other non-cash charges included in earnings from operations14 25Lower cash taxes1218Changes in working capital (see note 15 on page 52)(51)(89)Realized foreign exchange changes - cash(10)37Higher exploration and administration costs(6)(7)Other47Change in operating cash flow, compared to 2011$19$105Operating cash flows this quarter and year to date were higher than in 2011 primarily due to higher earnings from operations before non-cash charges. This impact was somewhat offset by an increase this year in net working capital, mainly reflecting higher accounts receivable at Çayeli and Las Cruces due to the timing of shipments and collections from customers.2012 outlook for cash from operating activities The table below shows expected operating cash flow from our operations, based on our outlook for metal prices and production (see page 15), and the assumptions in Results of our operations (starting on page 15). 2012 estimated operating cash flow by operation (US$ millions)Çayeli$158Las Cruces378Pyhäsalmi92$628INVESTING AND FINANCINGCapital spending three months ended September 30nine months ended September 30revised objective(US$ millions)20122011201220112012Çayeli$4$2$9$9$20Las Cruces129254248Pyhäsalmi126510Cobre Panama1504140087944$167$54$440$143$1,022Please see Results of our operations and Status of our development project for a discussion of actual results and our 2012 objectives. Capital spending this quarter was mainly for Cobre Panama. Purchase and maturing of investmentsIn August 2012, we invested US cash of $1.7 billion in US dollar-denominated bonds and other securities. During the quarter, $133 million of securities matured. Issuance of $1.5 billion in senior unsecured notesOn May 18, 2012, we issued $1.5 billion in senior unsecured notes, bearing a coupon rate of interest of 8.75 percent and maturing on June 1, 2020. The notes were priced at 98.584 percent of their face value, yielding proceeds of $1.43 billion net of the discount and transaction fees. Interest is payable on the notes semi-annually on December 1 and June 1 of each year. As the proceeds will be used to fund the development of Cobre Panama, interest costs will be capitalized to project assets during the construction period.These notes are unconditionally guaranteed on a senior unsecured basis by certain Inmet subsidiaries. The notes contain certain customary covenants and restrictions for a financing instrument of this type. Sale of 20 percent interest in Cobre PanamaOn April 25, 2012, Korea Panama Mining Corporation (KPMC) completed its acquisition of a 20 percent interest in Minera Panama, owner and developer of Cobre Panama. KPMC acquired its interest for $161 million in cash, representing, together with US $30 million it already paid, its 20 percent share of development costs to closing. Together with the 20 percent of funding of the development costs of Cobre Panama it will provide, this amounts to funding of $1.4 billion.Issuance of common shares - 2011In May 2011, a subsidiary of Temasek Holdings (Private) Ltd. exchanged its subscription receipts for 7.78 million Inmet common shares and we received cash of $486 million.Cash from discontinued operation - 2011In January 2011, we sold our 18 percent equity interest in Ok Tedi for net proceeds of $297 million (after Papua New Guinea withholding taxes).2012 outlook for investing and financingCapital spendingAt our operating mines, we expect capital spending to be $78 million in 2012, most significantly $48 million at Las Cruces, including $22 million for mine development, as well as several smaller expenditures including a tailings storage facility expansion, land purchase and certain plant improvements. We expect to spend $944 million on the construction and development of Cobre Panama this year.Financing Cobre Panama construction costsWith Franco-Nevada's commitment to fund $1 billion of Inmet's share of the development costs of Cobre Panama under the precious metal stream, Inmet has almost all of its $4.8 billion required capital with the balance expected either from other sources of debt or from future operating cash flow.Offer to acquire PetaquillaOn September 28, 2012, we filed a formal offer for all of the outstanding common shares of Petaquilla Minerals Ltd. (Petaquilla), and on October 25, 2012, we increased our offer. Under the offer, Petaquilla shareholders can elect to receive consideration in cash, shares or a combination thereof. For each Petaquilla Minerals common share they own, shareholders can elect to receive:0.0118 of a common share of Inmet and $0.001 in cash; or a cash amount that is greater than $0.001 but not more than $0.60, and, if such elected cash amount is less than $0.60, that number of common shares of Inmet equal to the excess of $0.60 over the elected cash amount, divided by $50.82. Financial conditionOur 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 September 30, 2012, we had $3,306 million in total funds, including $1,182 million of cash and short-term investments and $2,124 million invested in bonds and other securities.CashAt September 30, 2012 our cash and short-term investments of $1,182 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 high 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.At September 30, 2012, 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. See note 4 on page 46 in the consolidated financial statements for more details about where our cash is invested.Bonds and other securitiesWe hold a portfolio of bonds and other securities to provide better yields while minimizing our investment risk. As at September 30, 2012, our portfolio was $2,124 million. The portfolio includes:36 percent US Treasury bonds 30 percent Canadian and provincial government bonds 30 percent corporate bonds 4 percent Supranational bonds. The securities mature between October 2012 and June 2018. Restricted cashOur restricted cash balance of $77 million as at September 30, 2012 included:$20 million in cash collateralized letters of credit for Inmet $55 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 Pyhäsalmi. COMMON SHARESCommon shares outstanding as of September 30, 201269,365,748Deferred share units outstanding as of September 30, 2012 (redeemable on a one-for-one basis for common shares)104,566Dividend declarationInmet's board of directors has declared an eligible dividend of $0.10 per common share payable on December 15, 2012 to common shareholders of record as of November 30, 2012.Additional risk factorWe have significantly increased our cash balance following the issuance of our senior unsecured notes for the construction of Cobre Panama. Based on our analysis, we do not believe that we are a "passive foreign investment company" (PFIC) for the current tax year. For U.S. federal income tax purposes a non-U.S. corporation may be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75 percent of its gross income is passive income, or (2) on average at least 50 percent of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income. If we were classified as a PFIC, U.S. taxpayers that hold our common shares could be subject to adverse U.S. federal income tax consequences, including increased tax liabilities and possible additional reporting requirements. As the determination of PFIC status is made annually at the close of each tax year and is dependent in part on factors beyond our control (such as changes in the relative values of our assets), there can be no assurance that Inmet will not become a PFIC in the current or any future tax year. U.S. taxpayers that hold our common shares are urged to consult their tax advisors concerning the potential U.S. federal income tax consequences of holding common shares if Inmet were considered a PFIC in any year.Supplementary financial informationPages 31 and 32 include 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 three wholly-owned mining operations: Çayeli (Turkey), Las Cruces (Spain) and Pyhäsalmi (Finland), and have an 80 percent interest in the Cobre Panama development project, currently in construction. This press release is also available at www.inmetmining.com.Third quarter conference callWill be held onFriday, November 2, 2012 8:30 a.m. Eastern Time webcast available at http://events.digitalmedia.telus.com/inmet/110212/index.php or www.inmetmining.comYou can also dial in by callingLocal or international: +1.416.340.8530Toll-free within North America: +1.877.240.9772Starting at approximately 10:30 a.m. (ET) Friday, November 2, 2012, a conference call replay will be availableLocal or international: +1.905.694.9451 passcode 7349975 Toll-free within North America: +1.800.408.3053 passcode 7349975 INMET MINING CORPORATIONSupplementary financial informationCash costs2012 For the nine months ended September 30per pound of copperÇAYELILAS CRUCESPYHÄSALMITOTAL(US dollars)Direct production costs$1.18$1.08$2.14$1.23Royalties and variable compensation0.120.06-0.07Smelter processing charges and freight0.930.010.870.37Metal credits(1.41)-(3.49)(0.80)Cash cost$0.82$1.15$(0.48)$0.872011 For the nine months ended September 30 per pound of copperÇAYELILAS CRUCESPYHÄSALMITOTAL(US dollars)Direct production costs$1.44$1.72$1.95$1.67Royalties and variable compensation$0.210.08-0.11Smelter processing charges and freight$1.620.011.240.78Metal credits(2.68)-(4.25)(1.68)Cash cost$0.59$1.81$(1.06)$0.88Reconciliation of cash costs to statements of earnings2012 For the nine months ended September 30 per pound of copper(millions of US dollars, except where otherwise noted)ÇAYELILAS CRUCESPYHÄSALMITOTALGAAP referencepage 17page 19page 21Direct production costs$69$124$43$236Smelter processing charges and freight5413287By product sales(78)-(82)(160)Adjust smelter processing and freight, and sales to production basis(1)-(3)(4)Operating costs net of metal credits$44$125$(10)$159Inmet's share of production (000's)53,700111,00020,600185,300Cash cost (US dollars)$0.82$1.15$(0.48)$0.872011 For the nine months ended September 30per pound of copper(millions of US dollars, except where otherwise noted)ÇAYELILAS CRUCESPYHÄSALMITOTALGAAP referencepage 17page 19page 21Direct production costs$69$105$43$217Smelter processing charges and freight5514399By product sales(103)-(114)(217)Adjust smelter processing and freight, and sales to production basis5-49Operating costs net of metal credits$26$106$(24)$108Inmet's share of production (000's)44,30061,80023,100129,200Cash cost (US dollars)$0.59$1.81$(1.06)$0.88INMET MINING CORPORATIONSupplementary financial informationCash costs2012 For the three months ended September 30per pound of copperÇAYELILAS CRUCESPYHÄSALMITOTAL(US dollars)Direct production costs$1.18$0.95$2.06$1.13Royalties and variable compensation0.120.06-0.07Smelter processing charges and freight0.970.02$0.810.35Metal credits(1.60)-$(3.36)(0.77)Cash cost$0.67$1.03$(0.49)$0.782011 For the three months ended September 30per pound of copperÇAYELILAS CRUCESPYHÄSALMITOTAL(US dollars)Direct production costs$1.35$1.39$2.06$1.48Royalties and variable compensation0.290.07-0.13Smelter processing charges and freight1.650.021.360.75Metal credits(2.72)-(5.25)(1.67)Cash cost$0.57$1.48$(1.83)$0.69Reconciliation of cash costs to statements of earnings2012 For the three months ended September 30per pound of copper(millions of US dollars, except where otherwise noted)ÇAYELILAS CRUCESPYHÄSALMITOTALGAAP referencepage 17page 19page 21Direct production costs$22$42$14$78Smelter processing charges and freight1911131By product sales(28)-(28)(56)Adjust smelter processing and freight, and sales to production basis(2)--(2)Operating costs net of metal credits$11$43$(3)$51Inmet's share of production (000's)17,10041,3006,90065,300Cash cost (US dollars)$0.67$1.03$(0.49)$0.782011 For the three months ended September 30per pound of copper(millions of US dollars, except where otherwise noted)ÇAYELILAS CRUCESPYHÄSALMITOTALGAAP referencepage 17page 19page 21Direct production costs$24$35$14$73Smelter processing charges and freight20-1636By product sales(36)-(46)(82)Adjust smelter processing and freight, and sales to production basis1-34Operating costs net of metal credits$9$35$(13)$31Inmet's share of production (000's)15,70025,2007,00047,900Cash cost (US dollars)$0.57$1.48$(1.83)$0.69INMET MINING CORPORATIONQuarterly review(unaudited)Latest Four Quarters (thousands of US dollars, except per share amounts)2012 Third quarter2012 Second quarter2012(1) First quarter2011(1) Fourth quarterSTATEMENTS OF EARNINGSGross sales$327,187$251,395$285,527$233,392Smelter processing charges and freight(30,023)(28,480)(29,338)(27,330)Cost of sales (excluding depreciation)(91,096)(84,634)(79,624)(90,176)Depreciation(37,633)(29,193)(30,067)(26,834)168,435109,088146,49889,052Corporate development and exploration(7,905)(10,290)(8,801)(6,333)General and administration(12,982)(15,899)(9,745)(7,488)Investment and other income13,27645,103(6,263)(3,883)Finance costs(2,463)(2,379)(2,596)(2,314)Income tax expense(42,135)(31,444)(26,012)(22,490)Net income$116,226$94,179$93,081$46,544Net income attributable to:Inmet equity holders$116,528$94,458$93,081$46,544Non-controlling interest(302)(279)--$116,226$94,179$93,081$46,544Net Income per shareBasic$1.68$1.36$1.35$0.67Diluted$1.67$1.35$1.34$0.67(1)Information restated from previously reported Canadian dollar amounts to US dollar amounts at May 31, 2012 exchange rate of US $0.97 per Canadian dollar.Previous Four Quarters (thousands of US dollars, except per share amounts)2011(1) Third quarter2011(1) Second quarter2011(1) First quarter2010(1) Fourth quarterSTATEMENTS OF EARNINGSGross sales$253,432$214,894$246,191$222,945Smelter processing charges and freight(35,865)(32,793)(30,581)(34,597)Cost of sales (excluding depreciation)(78,563)(71,302)(76,633)(80,328)Depreciation(26,452)(25,802)(26,180)(18,281)112,55284,997112,79789,739Corporate development and exploration(4,539)(4,417)(12,984)(5,261)General and administration(9,669)(7,995)(8,155)(4,607)Investment and other income34,6404,581(5,590)49,012Finance costs(2,301)(2,310)(2,257)(4,157)Income tax expense(32,696)(20,588)(26,296)(30,944)Income from continuing operations97,98754,26857,51593,782Income from discontinued operation (net of taxes)--80,78646,467Net income$97,987$54,268$138,301$140,249Net income attributable to:Inmet equity holders$97,987$54,268$138,301$142,259Non-controlling interest---(2,010)$97,987$54,268$138,301$140,249Income from continuing operations per shareBasic$1.41$0.83$0.94$1.67Diluted$1.41$0.83$0.93$1.67Income from discontinuing operations per shareBasic$-$-$1.32$0.81Diluted$-$-$1.31$0.81Net Income per shareBasic$1.41$0.83$2.26$2.49Diluted$1.41$0.83$2.24$2.49(1)Information restated from previously reported Canadian dollar amounts to US dollar amounts at May 31, 2012 exchange rate of US $0.97 per Canadian dollar.Consolidated financial statementsINMET MINING CORPORATIONConsolidated statements of financial position(Unaudited)(thousands of US dollars)Note referenceSeptember 30, 2012December 31, 2011(1)December 31, 2010(1)AssetsCurrent assets:Cash and short term investments4$1,181,665$1,048,457$316,045Restricted cash51,050784597Accounts receivable148,996101,867115,628Inventories83,74987,65469,860Current portion of bonds and other securities61,028,322175,92152,201Assets held for sale--308,9352,443,7821,414,683863,266Restricted cash575,68669,53867,831Property, plant and equipment2,298,3301,772,7661,680,858Bonds and other securities61,096,327430,787311,091Deferred income tax assets-3178,444Other assets1,6131,3802,261Total assets$5,915,738$3,689,471$2,933,751LiabilitiesCurrent liabilities:Accounts payable and accrued liabilities$280,439$138,596$132,009Provisions14,87413,08717,106Liabilities associated with assets held for sale--108,338295,313151,683257,453Long-term debt71,452,10616,58116,091Provisions195,831170,025157,235Other liabilities17,25217,15617,541Deferred income tax liabilities83,50428,35112,127Total liabilities2,044,006383,796460,447Commitments and contingencies16EquityShare capital1,541,7731,541,3241,054,927Contributed surplus64,77464,62964,028Share based compensation819,3668,2566,334Retained earnings2,155,9101,851,0101,527,342Accumulated other comprehensive loss9(123,163)(159,544)(179,327)Total equity attributable to Inmet equity holders3,658,6603,305,6752,473,304Non-controlling interest10213,072--Total equity3,871,7323,305,6752,473,304Total liabilities and equity$5,915,738$3,689,471$2,933,751(1)refer to note 3 for effect of change in presentation currency to the US dollar.(See accompanying notes)INMET MINING CORPORATIONSegmented statements of financial position(Unaudited)2012 As at September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMADISCONTINUED OPERATIONS - OK TEDITOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)(Papua New Guinea)AssetsCash and short-term investments$802,173$91,637$127,312$30,653$129,890$-$1,181,665Other current assets1,038,50873,67497,46150,0342,440-1,262,117Restricted cash19,937-54,1751,574--75,686Property, plant and equipment3,310130,466832,28465,3191,266,951-2,298,330Bonds and other securities995,590100,737----1,096,327Other non-current assets1,428185----1,613$2,860,946$396,699$1,111,232$147,580$1,399,281$-$5,915,738LiabilitiesCurrent liabilities$69,187$39,727$54,516$17,433$114,450$-$295,313Long-term debt1,452,106-----1,452,106Provisions73,53619,42664,02030,6338,216-195,831Other liabilities688-16,564---17,252Deferred income tax liabilities495971,45811,083--83,504$1,595,521$60,112$206,558$59,149$122,666$-$2,044,0062011 As at December 31CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMADISCONTINUED OPERATIONS - OK TEDITOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)(Papua New Guinea)AssetsCash and short-term investments$711,427$133,215$131,799$46,109$25,907$-$1,048,457Other current assets183,71544,72883,92651,8931,964-366,226Restricted cash16,306-51,6671,565--69,538Property, plant and equipment1,196137,736869,30866,103698,423-1,772,766Bonds and other securities351,08279,705----430,787Other non-current assets1,262435----1,697$1,264,988$395,819$1,136,700$165,670$726,294$-$3,689,471LiabilitiesCurrent liabilities$21,305$41,460$53,152$16,418$19,348$-$151,683Long-term debt16,581-----16,581Provisions68,82317,45053,85729,895--170,025Other liabilities655-16,501---17,156Deferred income tax liabilities--17,09511,256--28,351$107,364$58,910$140,605$57,569$19,348$-$383,7962010 As at December 31CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMADISCONTINUED OPERATIONS - OK TEDITOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)(Papua New Guinea)AssetsCash and short-term investments$51,493$104,324$57,961$93,970$8,297$-$316,045Other current assets58,85157,08457,70864,088664308,826547,221Restricted cash16,368-49,8831,580--67,831Property, plant and equipment754147,799911,49664,854555,955-1,680,858Bonds and other securities248,28862,803----311,091Other non-current assets9225,5714,212---10,705$376,676$377,581$1,081,260$224,492$564,916$308,826$2,933,751LiabilitiesCurrent liabilities$29,322$38,393$45,718$27,994$7,688$108,338$257,453Long-term debt16,091-----16,091Provisions55,70720,92054,64425,964--157,235Other liabilities655-16,886---17,541Deferred income tax liabilities171--11,956--12,127$101,946$59,313$117,248$65,914$7,688$108,338$460,447INMET MINING CORPORATIONConsolidated statements of changes in equity(unaudited)Attributable to Inmet equity holders(thousands of US dollars)Note ReferenceShare CapitalRetained earningsContributed surplusShare based compensationAccumulated other comprehensive income (loss) (note 7)TotalNon- controlling interestTotal equityBalance as at December 31, 2010(1)$1,054,927$1,527,342$64,028$6,334$(179,327)$2,473,304-$2,473,304Comprehensive income-290,556--124,096414,652-414,652Equity settled share-based compensation plans--455512-967-967Dividends-(6,713)---(6,713)-(6,713)Issuance of share capital486,199----486,199-486,199Balance as at September 30, 2011(1)$1,541,126$1,811,185$64,483$6,846$(55,231)$3,368,409$-$3,368,409Comprehensive income (loss)-46,544--(104,313)(57,769)-(57,769)Equity settled share-based compensation plans198-1461,410-1,754-1,754Dividends-(6,719)---(6,719)-(6,719)Balance as at December 31, 2011(1)$1,541,324$1,851,010$64,629$8,256$(159,544)$3,305,675$-$3,305,675Comprehensive income-304,067--30,608334,6755,413340,088Equity settled share-based compensation plans449-14511,110-11,704-11,704Dividends on common shares-(6,759)---(6,759)-(6,759)Equity funding from non-controlling shareholder------60,00060,000Sale of 20 percent interest in Cobre Panama10-7,592--5,77313,365147,659161,024Balance as at September 30, 2012$1,541,773$2,155,910$64,774$19,366$(123,163)$3,658,660$213,072$3,871,732(1)refer to note 3 for effect of change in presentation currency to the US dollar.(See accompanying notes) INMET MINING CORPORATIONConsolidated statements of earnings (unaudited)Three Months Ended September 30Nine Months Ended September 30(thousands of US dollars except per share amounts)Note reference20122011(1)20122011(1)Gross sales$327,187$253,432$864,109$714,517Smelter processing charges and freight(30,023)(35,865)(87,841)(99,239)Cost of sales (excluding depreciation)(91,096)(78,563)(255,354)(226,498)Depreciation(37,633)(26,452)(96,893)(78,434)Earnings from operations168,435112,552424,021310,346Corporate development and exploration(7,905)(4,539)(26,996)(21,940)General and administration(12,982)(9,669)(38,626)(25,819)Investment and other income1113,27634,64052,11633,631Finance costs12(2,463)(2,301)(7,438)(6,868)Income before taxation158,361130,683403,077289,350Income tax expense13(42,135)(32,696)(99,591)(79,580)Income from continuing operations$116,226$97,987$303,486$209,770Income from discontinued operation (net of taxes)---80,786Net income$116,226$97,987$303,486$290,556Net income attributable to:Inmet equity holders$116,528$97,987$304,067$290,556Non-controlling interest(302)-(581)-$116,226$97,987$303,486$290,556Earnings per common share14Income from continuing operationsBasic$1.68$1.41$4.38$3.20Diluted$1.67$1.41$4.36$3.20Income from discontinued operationBasic---$1.23Diluted---$1.23Net incomeBasic$1.68$1.41$4.38$4.43Diluted$1.67$1.41$4.36$4.43(1)refer to note 3 for effect of change in presentation currency to the US dollar.(See accompanying notes)INMET MINING CORPORATIONSegmented statements of earnings(unaudited)2012 For the nine months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMADISCONTINUED OPERATIONS - OK TEDITOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)(Papua New Guinea)Gross sales$-$300,222$402,072$161,815$-$-$864,109Smelter processing charges and freight-(54,492)(1,513)(31,836)--(87,841)Cost of sales (excluding depreciation)(7,180)(79,354)(125,000)(43,820)--(255,354)Depreciation-(19,990)(69,706)(7,197)--(96,893)Earnings from operations(7,180)146,386205,85378,962--424,021Corporate development and exploration(16,811)(992)(1,605)(3,340)(4,248)-(26,996)General and administration(38,626)-----(38,626)Investment and other income49,842(900)3,818(774)130-52,116Finance costs(2,473)(862)(3,563)(540)--(7,438)Income tax expense(589)(28,940)(54,124)(15,938)--(99,591)Net income (loss)$(15,837)$114,692$150,379$58,370$(4,118)$-$303,4862011 For the nine months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMADISCONTINUED OPERATIONS - OK TEDITOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)(Papua New Guinea)Gross sales$-$265,334$247,837$201,346$-$-$714,517Smelter processing charges and freight-(55,051)(837)(43,351)--(99,239)Cost of sales (excluding depreciation)-(74,387)(109,209)(42,902)--(226,498)Depreciation-(15,946)(55,802)(6,686)--(78,434)Earnings from operations-119,95081,989108,407--310,346Corporate development and exploration(16,124)(1,235)(6)(2,417)(2,158)-(21,940)General and administration(25,819)-----(25,819)Investment and other income25,6187,041776291(95)-33,631Finance costs(2,779)(422)(3,018)(649)--(6,868)Income tax expense712(41,503)(14,691)(24,098)--(79,580)Net income (loss) from continuing operations$(18,392)$83,831$65,050$81,534$(2,253)$-$209,770Income from discontinued operation (net of taxes)-----80,78680,786Net income (loss)$(18,392)$83,831$65,050$81,534$(2,253)$80,786$290,556INMET MINING CORPORATIONSegmented statements of earnings(unaudited)2012 For the three months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMATOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)Gross sales$-$110,689$163,827$52,671$-$327,187Smelter processing charges and freight-(18,948)(668)(10,407)-(30,023)Cost of sales (excluding depreciation)(3,032)(28,197)(46,347)(13,520)-(91,096)Depreciation-(7,362)(27,681)(2,590)-(37,633)Earnings from operations(3,032)56,18289,13126,154-168,435Corporate development and exploration(5,922)(223)(45)(1,058)(657)(7,905)General and administration(12,982)----(12,982)Investment and other income12,9151331,735(1,530)2313,276Finance costs(839)(292)(1,153)(179)-(2,463)Income tax expense133(11,572)(25,673)(5,023)-(42,135)Net income (loss)$(9,727)$44,228$63,995$18,364$(634)$116,2262011 For the three months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMATOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)Gross sales$-$90,204$83,618$79,610$-$253,432Smelter processing charges and freight-(19,959)(376)(15,530)-(35,865)Cost of sales (excluding depreciation)-(28,262)(33,450)(16,851)-(78,563)Depreciation-(6,018)(18,198)(2,236)-(26,452)Earnings from operations-35,96531,59444,993-112,552Corporate development and exploration(3,399)(334)(1)(805)-(4,539)General and administration(9,669)----(9,669)Investment and other income29,0604,779689971534,640Finance costs(936)(141)(1,007)(217)-(2,301)Income tax expense1,196(18,661)(5,073)(10,158)-(32,696)Net income (loss)$16,252$21,608$26,202$33,910$15$97,987INMET MINING CORPORATIONConsolidated statements of comprehensive income (unaudited)Three Months Ended September 30Nine Months Ended September 30(thousands of US dollars)Note reference20122011(1)20122011(1)Net income$116,226$97,987$303,486$290,556Other comprehensive income for the period:Continuing operationsChanges in fair value of bonds and other securities1,880(351)1,471(2,903)Currency translation adjustments21,86082,64234,910111,130Income tax recovery related to investments - other comprehensive income(4)12-1523,73682,30336,381108,242Other comprehensive income from discontinued operation (net of taxes)---15,854Comprehensive income$139,962$180,290$339,867$414,652Comprehensive income (loss) attributable to:Inmet equity holders$140,264$180,290$334,454$414,652Non-controlling interests(302)-5,413-$139,962$180,290$339,867$414,652(1)refer to note 3 for effect of change in presentation currency to the US dollar.(See accompanying notes)INMET MINING CORPORATIONConsolidated statements of cash flows(unaudited)Three Months Ended September 30Nine Months Ended September 30(thousands of US dollars)Note reference20122011(1)20122011(1)Cash provided by (used in) operating activities(1)Net income from continuing operations$116,226$97,987$303,486$209,770Add (deduct) items not affecting cash:Depreciation37,63326,45296,89378,434Deferred income taxes27,0805,84354,13816,271Accretion expense on provisions and capital leases2,0211,8476,1265,538Change in asset retirement obligations at closed sites3,032-7,180-Foreign exchange loss (gain)(7,355)(31,029)2,305(26,415)Gain on embedded option on high yield bond(11,631)-(11,631)-Other3,03240614,068(2,511)Settlement of asset retirement obligations(1,397)(2,959)(3,534)(6,300)Net change in non-cash working capital15(32,945)18,266(42,490)46,421135,696116,813426,541321,208Cash provided by (used in) investing activitiesPurchase of property, plant and equipment(168,636)(55,220)(443,294)(144,809)Acquisition of bonds and other securities6(1,700,074)(1,255)(1,754,168)(293,893)Maturity of bonds and other securities132,5338,036258,18550,895Funding received under Cobre Panama option agreement-3,798-12,310Sale of 20 percent interest in Cobre Panama10--160,952-Sale (purchase) of short-term investments, net-(314,608)258,459(331,687)Other-1,248-3,985(1,736,177)(358,001)(1,519,866)(703,199)Cash provided by (used in) financing activitiesIssuance of common shares---486,199Long-term debt borrowing, net of transaction costs7--1,429,031-Dividends on common shares--(6,759)(6,713)Financial assurance payments(167)-(5,226)-Funding by non-controlling shareholder40,000-60,000-Other(482)(944)(1,812)(4,536)39,351(944)1,475,234474,950Foreign exchange on cash held in foreign currencies9,73213,8229,75817,592Cash provided by discontinued operation---297,220Increase in cash:(1,551,398)(228,310)391,667407,771Cash:Beginning of period2,733,063945,062789,998308,981End of period$1,181,665$716,752$1,181,665$716,752Short term investments-338,588-338,588Cash and short-term investments$1,181,665$1,055,340$1,181,665$1,055,340(See accompanying notes)(1)Supplementary cash flow information:Cash interest paid$529$574$1,061$1,118Cash taxes paid$14,226$21,894$51,985$63,064(1)refer to note 3 for effect of change in presentation currency to the US dollar.(See accompanying notes)INMET MINING CORPORATIONSegmented statements of cash flows(unaudited)2012 For the nine months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMATOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)Cash provided by (used in) operating activitiesBefore net change in non-cash working capital$(11,862)$141,292$277,339$66,380$(4,118)$469,031Net change in non-cash working capital(3,278)(34,965)(7,364)3,117-(42,490)(15,140)106,327269,97569,497(4,118)426,541Cash provided by (used in) investing activitiesPurchase of property, plant and equipment(2,840)(9,188)(25,190)(6,030)(400,046)(443,294)Acquisition of bonds and other securities(1,734,580)(19,588)---(1,754,168)Maturing of bonds and other securities258,185----258,185Funding received under Cobre Panama option agreement----160,952160,952Sale of short-term investments258,459----258,459(1,220,776)(28,776)(25,190)(6,030)(239,094)(1,519,866)Cash provided by (used in) financing activities1,419,308-(4,074)-60,0001,475,234Foreign exchange on cash held in foreign currencies9,065(1,042)(2,054)(783)4,5729,758Intergroup funding (distributions)156,748(118,087)(243,144)(78,140)282,623-Increase (decrease) in cash349,205(41,578)(4,487)(15,456)103,983391,667Cash:Beginning of year452,968133,215131,79946,10925,907789,998End of period802,17391,637127,31230,653129,8901,181,665Short term investments------Cash and short-term investments$802,173$91,637$127,312$30,653$129,890$1,181,6652011 For the nine months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMATOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)Cash provided by (used in) operating activitiesBefore net change in non-cash working capital$(48,981)$98,410$138,586$89,025$(2,253)$274,787Net change in non-cash working capital(6,012)45,2305,7821,421-46,421(54,993)143,640144,36890,446(2,253)321,208Cash provided by (used in) investing activitiesPurchase of property, plant and equipment(710)(9,271)(42,269)(5,110)(87,449)(144,809)Acquisition of bonds and other securities(275,017)(14,870)---(289,887)Maturing of bonds and other securities50,895----50,895Funding received under Cobre Panama option agreement----12,31012,310Sale (purchase) of short-term investments, net(338,734)-7,047--(331,687)Other(961)940---(21)(564,527)(23,201)(35,222)(5,110)(75,139)(703,199)Cash provided by (used in) financing activities479,376-(4,426)--474,950Foreign exchange on cash held in foreign currencies-6,0644,8864,6162,02617,592Cash provided by discontinued operation297,220----297,220Intergroup funding (distributions)115,865(95,624)(39,173)(76,091)95,023-Increase (decrease) in cash272,94130,87970,43313,86119,657407,771Cash:Beginning of year51,492104,32450,89893,9708,297308,981End of period324,433135,203121,331107,83127,954716,752Short term investments338,588----338,588Cash and short-term investments$663,021$135,203$121,331$107,831$27,954$1,055,340INMET MINING CORPORATIONSegmented statements of cash flows(unaudited)2012 For the three months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMATOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)Cash provided by (used in) operating activitiesBefore net change in non-cash working capital$(24,460)$55,629$118,044$21,220$(1,792)$168,641Net change in non-cash working capital(3,871)(11,419)(13,119)(4,536)-(32,945)(28,331)44,210104,92516,684(1,792)135,696Cash provided by (used in) investing activitiesPurchase of property, plant and equipment(1,349)(3,949)(11,990)(1,455)(149,893)(168,636)Acquisition of bonds and other securities(1,699,438)(636)---(1,700,074)Maturing of bonds and other securities132,533----132,533(1,568,254)(4,585)(11,990)(1,455)(149,893)(1,736,177)Cash provided by (used in) financing activities(102)-(547)-40,00039,351Foreign exchange on cash held in foreign currencies10,13254(1,596)1,142-9,732Intergroup funding (distributions)(1,622)136(129,360)(29,076)159,922-Increase (decrease) in cash(1,588,177)39,815(38,568)(12,705)48,237(1,551,398)Cash:Beginning of period2,390,35051,822165,88043,35881,6532,733,063End of period802,17391,637127,31230,653129,8901,181,665Short term investments------Cash and short-term investments$802,173$91,637$127,312$30,653$129,890$1,181,6652011 For the three months ended September 30CORPORATE & OTHERÇAYELILAS CRUCESPYHÄSALMICOBRE PANAMATOTAL(thousands of US dollars)(Turkey)(Spain)(Finland)(Panama)Cash provided by (used in) operating activitiesBefore net change in non-cash working capital$(10,527)$24,869$47,785$36,405$15$98,547Net change in non-cash working capital57030,228954(13,486)-18,266(9,957)55,09748,73922,91915116,813Cash provided by (used in) investing activitiesPurchase of property, plant and equipment(346)(1,853)(9,295)(2,412)(41,314)(55,220)Acquisition of bonds and other securities(780)(475)---(1,255)Maturing of bonds and other securities8,036----8,036Funding received under Cobre Panama option agreement----3,7983,798Purchase of short-term investments(314,608)----(314,608)Other787461---1,248(306,911)(1,867)(9,295)(2,412)(37,516)(358,001)Cash provided by (used in) financing activities(116)-(828)--(944)Foreign exchange on cash held in foreign currencies-9,8961,0495532,32413,822Intergroup funding (distributions)(32,129)(74)(11,017)(5,120)48,340-Increase (decrease) in cash(349,113)63,05228,64815,94013,163(228,310)Cash:Beginning of period673,54672,15192,68391,89114,791945,062End of period324,433135,203121,331107,83127,954716,752Short term investments338,588----338,588Cash and short-term investments$663,021$135,203$121,331$107,831$27,954$1,055,340Notes to the consolidated financial statementsCorporate informationInmet Mining Corporation is a publicly traded corporation listed on the Toronto stock exchange. Our registered and head office is 330 Bay Street, Suite 1100, Toronto, Canada. Our principal activities are the exploration, development and mining of base metals.Basis of presentation and statement of complianceWe prepared these interim consolidated financial statements using the same accounting policies and methods as those described in our consolidated financial statements for the year ended December 31, 2011, except as described in note 3. These interim financial statements are in compliance with International Accounting Standard 34, Interim Financial Reporting (IAS 34). Accordingly, certain information and disclosure normally included in annual financial statements prepared in accordance with International Financial Reporting Standards have been omitted or condensed. The preparation of financial statements in accordance with IAS 34 requires us to use certain critical accounting estimates and requires us to exercise judgement in applying our accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, have been set out in note 4 to our consolidated financial statements for the year ended December 31, 2011. These interim financial statements should be read in conjunction with our consolidated financial statements for the year ended December 31, 2011, which are included in our 2011 annual report.Change in functional and presentation currencies to the US dollarPrior to June 1, 2012, Inmet's functional and presentation currencies were the Canadian dollar. The decision to proceed with full scale development of Cobre Panama has significantly increased Inmet's exposure to the US dollar considering:Inmet's share of the development costs for the project, the vast majority of which are denominated in US dollars; and our issuance of US $1.5 billion of senior unsecured notes Consequently, effective June 1, 2012, the US dollar was adopted as Inmet's functional currency. IFRS requires a change in functional currency to be accounted for prospectively. We therefore translated Inmet's May 31, 2012 financial statement items from Canadian dollars to US dollars using the May 31, 2012 exchange rate US $0.97 per Canadian dollar (Transition Rate). The resulting translated amounts for non-monetary items are treated as their historical cost. Our operating entities continue to measure the items in their financial statements using their functional currencies; Çayeli and Cobre Panama use the US dollar, and Pyhäsalmi and Las Cruces use the euro.Following the change in Inmet's functional currency, we elected to change our presentation currency from Canadian dollars to US dollars as we believe that changing the presentation currency to US dollars will provide shareholders with a more accurate reflection of our underlying financial performance and position. The change in presentation currency represents a voluntary change in accounting policy. We have restated all comparative financial statements from previously reported Canadian dollar amounts to US dollars using the Transition Rate. Cash and short-term investmentsSeptember 30, 2012December 31, 2011December 31, 2010Cash and cash equivalents:Liquidity funds$849,799$375,523$188,415Term deposits45,3316,54851,306Overnight deposits16,68370,3894,182Bankers acceptances45,168891-Money market funds24,839126,33638,774Corporate19,18811,593-Bank deposits179,15731,72226,304Provincial1,500166,996-1,181,665789,998308,981Short-term investments:Corporate-48,588-Term deposits--7,064Provincial short term notes-187,191-Bankers acceptances-22,680--258,4597,064Total cash and short-term instruments$1,181,665$1,048,457$316,045Restricted cashSeptember 30, 2012December 31, 2011December 31, 2010Collateralized cash for letter of credit facility - Inmet Mining$19,937$16,306$16,368Collateralized cash for letters of credit - Las Cruces55,22552,45150,480Collateralized cash for Pyhäsalmi reclamation1,5741,5651,58076,73670,32268,428Less current portion:Collateralized cash for letters of credit - Las Cruces(1,050)(784)(597)$75,686$69,538$67,831Bonds and other securitiesThe table below provides a breakdown of our bonds and other securities as at the balance sheet date by financial instrument classification.September 30, 2012December 31, 2011December 31, 2010Current available for sale securities (a)$895,462$-$-Current held to maturity securities132,860175,92152,201$1,028,322$175,921$52,201Available for sale securities (a)$672,001$-$-Held to maturity securities421,294427,727308,483Other3,0323,0602,608$1,096,327$430,787$311,091(a)In August 2012, we invested US cash of $1.7 billion in US dollar-denominated bonds and other securities with credit ratings of A- to AAA. These securities mature between October 2012 and March 2018 and have a weighted average yield to maturity of 0.3 percent. We designated these securities as available for sale and recognized them at fair value. Long-term debtSeptember 30, 2012December 31, 2011December 31, 2010Senior unsecured notes (a):Principal$1,500,000$-$-Transaction costs and discount, net of accretion(52,299)--Prepayment options derivatives at fair value(55,458)--Basis Adjustment, net of accretion42,649--1,434,892--Promissory note17,21416,58116,091Total long-term debt$1,452,106$16,581$16,091(a) On May 18, 2012, we issued $1,500 million aggregate principal amount of 8.75 percent senior unsecured notes (Notes) due 2020. The Notes were priced at 98.584 percent of their face value, yielding proceeds of $1,445 million net of the discount and directly attributable transaction costs. The Notes have been designated as Other liabilities and accounted for initially at fair value and subsequently at amortized cost using the effective interest rate method. Interest is payable on the notes semi-annually on December 1 and June 1 of each year. As the proceeds will be used to fund the development of Cobre Panama, interest costs will be capitalized to project assets during the construction period of this project. These notes are unconditionally guaranteed on a senior unsecured basis by Inmet and certain subsidiaries. The notes contain certain customary covenants and restrictions for a financing instrument of this type. We may redeem, prior to June 1, 2016, up to 35 percent of the Notes with the net proceeds of certain equity offerings at a redemption price equal to 108.75 percent of the principal amount plus accrued interest. Prior to June 1, 2016, we may redeem the Notes in whole or in part at 100 percent of their principal amount, plus accrued interest, plus a premium that effectively compensates the holder fully for lost interest between the redemption date and June 1, 2016. We may redeem the Notes at any time on or after June 1, 2016 at the redemption prices and periods set forth below, plus accrued and unpaid interest:June 1, 2016104.375 percent June 1, 2017102.188 percent June 1, 2018 and thereafter100.000 percentThe prepayment options on the Notes represent embedded derivatives that must be bifurcated for measurement and reporting purposes. The initial fair value as at May 18, 2012 of $43.8 million was included in the carrying amount of the notes (Basis Adjustment). This Basis Adjustment is amortized over the term of the Notes using the effective interest rate method. The prepayment option derivatives are recognized at fair value, with changes in their fair value being recognized in investment and other income as they occur. As at September 30, 2012, the fair value of the prepayment option derivatives was $55.5 million and is recognized as a component of the Notes. The increase in the fair value of the prepayment option derivatives of $11.6 million was recognized as an unrealized gain in investment and other income.Stock-based compensationDuring 2012, the following issuances were made under our equity-based compensation plans: Stock option planOn February 22, 2012, a grant of 83,084 options was made to senior management, with an exercise price of Cdn $64.17, graded vesting and an expiry date of February 21, 2019. We calculated the compensation expense for these options using the Black Scholes valuation model and assuming the following weighted average parameters, resulting in a weighted average fair value per option of Cdn $29.23 per option: 5 year expected life, 50 percent expected volatility, expected dividend rate of 0.3 percent annually and a risk free interest rate of 1.5 percent.Performance share unit (PSU) planOn February 21, 2012, the Board granted 36,580 PSUs to senior executives based on a 5 day Volume Weighted Average Price prior to the grant date of Cdn $64.17 and a 3 year vesting period from January 1, 2012 to December 31, 2014. We used a Monte Carlo simulation model to calculate the compensation expense for the PSUs assuming no forfeitures, 3 year historical average volatilities and a 3-year risk free interest rate of 1.0%, resulting in a September 30, 2012 fair value per PSU of Cdn $40.23.We recognized the following share-based compensation expense in general and administration relating to all outstanding equity-based awards:three months ended September 30nine months ended September 302012201120122011Stock option plan$1,082$1,382$4,023$2,304Performance share unit plan385112447295Long-term incentive plan (LTIP) (a)--6,759735Deferred share unit plan320217792773Share award plan50163145455$1,837$1,874$12,166$4,562(a) As a result of the decision to proceed with full construction of Cobre Panama, we recognized a stock based compensation expense of $7 million in the second quarter of 2012 on the LTIP units issued in previous years that relate to the project. This expense represents the cumulative impact from the units' grant dates to June 30, 2012 on a 100 percent award basis as no value was attributed to these units prior to a positive construction decision for Cobre Panama. Accumulated other comprehensive lossAccumulated other comprehensive loss includes:September 30, 2012December 31, 2011December 31, 2010Unrealized losses on gold forward contract sales$-$-$ (5,481)Unrealized gains (losses) on bonds and other securities (net of tax of $91) (December 31, 2011 - $94, December 31, 2010 - $76)937(534) (438)Currency translation adjustment(124,100)(159,010)(173,408)Accumulated other comprehensive income loss$(123,163)$(159,544)$(179,327)Currency translation adjustments September 30, 2012December 31, 2011December 31, 2010Pyhäsalmi (euro functional currency)$(25,751)$(27,378)$(23,580)Las Cruces (euro functional currency)(94,842)(103,071)(90,456)Çayeli (US dollar functional currency)(12,214)(15,068)(20,243)Cobre Panama (US dollar functional currency)8,707(13,493)(28,757)Ok Tedi (US dollar functional currency)--(10,372)$(124,100)$(159,010)$(173,408)Sale of 20 percent interest in Cobre PanamaOn April 25, 2012, Korea Panama Mining Corporation (KPMC) completed its acquisition of a 20 percent interest in Minera Panama, owner and developer of Cobre Panama. KPMC acquired its interest for $161 million in cash, representing, together with US $30 million it already paid, its 20 percent share of development costs to that date. As we continued to control Minera Panama after the closing of this transaction, it is treated as a capital transaction with the $8 million difference between 20 percent of our book value of Cobre Panama and the consideration received recognized in retained earnings.Investment and other income three months ended September 30nine months ended September 302012201120122011Interest income$3,143$4,676$11,326$11,431Unrealized gain on prepayment option derivative -senior unsecured notes11,631 -11,631 -Dividend and royalty income7694512,2291,484Foreign exchange gain (loss)(2,366)29,51325,87818,773Other99-1,0521,943$13,276$34,640$52,116$33,631Foreign exchange gain (loss) is a result of: three months ended September 30nine months ended September 302012201120122011Translation of US dollar cash held in euro based entities$(11,626)$-$(1,227)$-Translation of US dollar cash held by Corporate prior to June 2012-(79)27,338(8,006)Translation of US dollar senior unsecured notes prior to June 2012--(16,884)-Translation of US dollar bonds and other securities prior to June 2012-22,3134,33019,553Translation of Cdn dollar cash held by Corporate subsequent to May 20121,611-2,588-Translation of Cdn dollar bonds and other securities subsequent to May 20126,937-9,979-Translation of other monetary assets and liabilities7127,279(246)7,226$(2,366)$29,513$25,878$18,773Finance costs three months ended September 30nine months ended September 302012201120122011Interest on note payable$264$283$792$837Accretion on note payable178172520494Accretion on provisions and capital lease obligations2,0211,8466,1265,537$2,463$2,301$7,438$6,868Income tax For the three months ended September 30, 2012:Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalCurrent income taxes$(200)$9,101$1,050$5,104$15,055Deferred income taxes672,47124,623(81)27,080Income tax expense$(133)$11,572$25,673$5,023$42,135For the three months ended September 30, 2011:Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalCurrent income taxes$(1,150)$17,650$63$10,290$26,853Deferred income taxes(46)1,0115,010(132)5,843Income tax expense$(1,196)$18,661$5,073$10,158$32,696For the nine months ended September 30, 2012: Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalCurrent income taxes$528$27,698$1,050$16,177$45,453Deferred income taxes611,24253,074(239)54,138Income tax expense$589$28,940$54,124$15,938$99,591For the nine months ended September 30, 2011:Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalCurrent income taxes$(594)$38,933$525$24,445$63,309Deferred income taxes(118)2,57014,166(347)16,271Income tax expense$(712)$41,503$14,691$24,098$79,580Net income per share three months ended September 30nine months ended September 30(thousands)2012201120122011Income from continuing operations available to common shareholders$116,528$97,987$304,067$209,770Income from discontinued operations available to common shareholders- -- 80,786Net income available to common shareholders$116,528$97,987$304,067$290,556three months ended September 30nine months ended September 30(thousands)2012201120122011Weighted average common shares outstanding69,366 69,33169,360 65,454Plus incremental shares from assumed conversions:Deferred share units105117105117Long term incentive plan units312-31225Diluted weighted average common shares outstanding69,783 69,44869,777 65,596The table below shows our earnings per common share for the three months ended September 30. three months ended September 30(US dollars per share)20122011BasicDilutedBasicDilutedNet income from continuing operations per share$1.68$1.67$1.41$1.41Income from discontinued operations per share----Net income per share$1.68$1.67$1.41$1.41The table below shows our earnings per common share for the nine months ended September 30.nine months ended September 30(US dollars per share)20122011BasicDilutedBasicDilutedNet income from continuing operations per share$4.38$4.36$3.20$3.20Income from discontinued operations per share--1.231.23Net income per share$4.38$4.36$4.43$4.43Statements of cash flowsFor the three months ended September 30, 2012:Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalAccounts receivable$(2,014)$(21,723)$(10,161)$(2,043)$(35,941)Inventories-4,2654,063(725)7,603Accounts payable and accrued liabilities(1,972)5,541(8,096)(1,412)(5,939)Taxes payable1164081,075(356)1,243Other(1)90--89$(3,871)$(11,419)$(13,119)$(4,536)$(32,945)For the three months ended September 30, 2011:Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalAccounts receivable$577$10,064$2,894$(11,508)$2,027Inventories-2,744(5,808)2,835(229)Accounts payable and accrued liabilities1,9257,4984,496(67)13,852Taxes payable(1,812)9,784(628)(4,746)2,598Provisions(120)- - -(120)Other-138--138$570$30,228$954$(13,486)$18,266For the nine months ended September 30, 2012:Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalAccounts receivable$(2,825)$(36,702)$(8,865)$4,598$(43,794)Inventories-6,252(416)5206,356Accounts payable and accrued liabilities(2,027)(3,185)917915(3,380)Taxes payable1,858(1,336)1,000(2,914)(1,392)Other(284)6-(2)(280)$(3,278)$(34,965)$(7,364)$3,117$(42,490)For the nine months ended September 30, 2011:Corporate and otherÇayeli (Turkey)Las Cruces (Spain)Pyhäsalmi (Finland)TotalAccounts receivable$(522)$30,537$(4,155)$9,561$35,421Inventories-1,888(2,729)(42)(883)Accounts payable and accrued liabilities(1,111)6,79912,832(1,720)16,800Taxes payable(3,741)5,790(166)(6,378)(4,495)Provisions(638)---(638)Other-216--216$(6,012)$45,230$5,782$1,421$46,421CommitmentsCapital commitmentsAs at September 30, 2012, Cobre Panama had committed $1,167 million (net of spending to that date) on a 100 percent basis for the design and supply of a coal-fired power plant, two SAG mills, four ball mills, and the related gearless drive, engineering and other construction activities. In October 2012, Cobre Panama committed a further $921 million for mass earthworks and quarry development at both the mine and port sites, the tailings management facility, the coastal road joining the mine to the port, permanent and temporary camp construction and the port causeway and commodity berth. Sale of precious metal stream to Franco-Nevada Corporation (Franco-Nevada)In August 2012, we announced the completion of a precious metals stream agreement with Franco-Nevada. Under the terms of the agreement, a wholly-owned subsidiary of Franco-Nevada will provide a $1 billion deposit which will be used to fund a portion of Cobre Panama project capital costs. The deposit will become available after Inmet's funding since issuing a Full Notice to Proceed reaches $1 billion (expected by Q1 2013) and will be provided pro-rata on a 1:3 ratio with Inmet's subsequent funding contributions. The amount of precious metals deliverable under the stream is indexed to the copper in concentrate produced from the entire project and approximates 86 percent of the estimated payable precious metals attributable to Inmet's 80 percent ownership based on the current 31 year mine plan. Beyond the currently contemplated mine life, the precious metals deliverable under the stream will be based on a fixed percentage of the precious metals in concentrate.Franco-Nevada will pay to MPSA an amount for each ounce of precious metals delivered equal to $400 per ounce for gold and $6 per ounce for silver (subject to an annual adjustment for inflation) for the first 1,341,000 ounces of gold and 21,510,000 ounces of silver (approximately the first 20 years of expected deliveries) and thereafter the greater of $400 per ounce for gold and $6 per ounce for silver (subject to an adjustment for inflation) or one half of the then prevailing market price. In all cases the amount paid is not to exceed the prevailing market price per ounce of gold and silver.FOR FURTHER INFORMATION PLEASE CONTACT: Contact Information: Inmet Mining CorporationJochen TilkPresident and Chief Executive Officer+1.416.860.3972Inmet Mining CorporationFlora WoodDirector, Investor Relations+1.416.361.4808www.inmetmining.com