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Article Excerpt
OPERATOR: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Inmet Mining Corporation fourth-quarter results conference call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. (Operator Instructions). I would like to remind everyone that this conference call is being recorded on Wednesday, February 11, 2009 at 8:30 AM Eastern time. I will now turn the meeting over to Mr. Richard Ross, Chairman and Chief Executive Officer. Please go ahead, sir.
RICHARD ROSS, CHAIRMAN AND CEO, INMET MINING CORP.: Good morning, everybody, and welcome to Inmet's fourth-quarter conference call and webcast. Joining me today are members of Inmet's management team and I will give a brief overview of the quarter and then Jochen Tilk, our President and Chief Operating Officer, will bring you up to date on the operations and development properties. Jim Slattery, our Vice President and Chief Financial Officer will then review our financial position.
As you will have seen, we reported a net loss of CAD32.5 million in the fourth quarter or a loss of CAD0.67 a share. Included in this loss were asset impairment charges totaling CAD36 million, which pertains, for the most part, to a write-down of substantially all of our investment in the Cerattepe property in Turkey. The decision to write off our investment follows the court ruling canceling our operating licenses.
Before taking into consideration the asset impairment charges, we reported a small profit for the quarter. The substantial decline in earnings this quarter was due to lower metal prices and significant finalization adjustments in relation to our third-quarter sales. Factoring both of these items, our realized copper price for the quarter was CAD0.50 a pound. In spite of this remarkably low copper price realized, we essentially broke even, which should give you some indication of the level of copper prices in relation to our break even earnings position.
Although we are experiencing extremely adverse market conditions based on the strength of our balance sheet entering into this downturn, and our relatively low operating costs, we do not expect these conditions to have any impact on our ability to meet our production forecasts in 2009. In addition, copper prices would have to drop substantially further from their current levels of around CAD1.50 a pound for us to significantly curtail our capital plans at our operations or at Petaquilla.
We, of course, will also complete the final project construction capital at Las Cruces this quarter and would anticipate capitalizing some of our startup expenditures prior to reaching commercial production levels mid this year.
We will continue to monitor market conditions and react as necessary to ensure we maintain our financial strength throughout this downturn. We currently anticipate that we will be able to finance any capital requirements from our operating cash flow. You'll note that in our release this quarter, we have provided estimates of our operating earnings and operating cash flow for 2009 in order to give you a better sense of the strength of our cash flow and ability to meet our capital requirements. Jim will comment on this a little later in the call.
My final comment pertains to the Spanish Water Authority, who has recommended to the Provincial Mining Authority that Las Cruces be allowed to resume mining in the pit and to commence operations of its process plant. Although there is one condition outstanding, we believe that we will be able to start mining shortly in our estimates for production and cash flow for 2009, which are consistent with the forecast we published in December, they are achievable.
I will now turn the call over to Jochen to elaborate more on this and to comment on our other operating activities and development properties.
JOCHEN TILK, PRESIDENT AND COO, INMET MINING CORP.: Thank you, Richard. Good morning. There are a few issues that I would like to highlight today. Firstly, I would like to make a few comments regarding our operations, particularly on the context of the current metal price environment. Secondly, I would like to update you on where we stand at Las Cruces. And finally, I will comment on activities in Panama to advance the Petaquilla project.
Before I get to the operations, I would just like to say a few words about Cerattepe. As we indicated in our quarter update, we decided not to proceed with the Cerattepe project in Turkey, and as a result, have written down our investment in the project. We have remediated the site and permanently closed off the ramp access. All employees of the subsidiary holding the project have either been laid off or transferred to our Cayeli operations. We canceled equipment orders, and there is no further outstanding liabilities associated with the Cerattepe project.
We will pursue the appeal in the Supreme Court as the cost associated with that is small. However, we don't expect that the outcome of the appeal would have an impact on our decision not to proceed with the project, as we feel that it would be more productive for us to focus our resources on our other growth opportunities.
Now, moving on to our operations. As stated in our press release, we are proud to have achieved record productions at each of our Cayeli and Pyhasalmi operations. Cayeli has been on a steady path of improvement and it is reassuring to see the result of all the projects that have been implemented over the past two years....
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