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Inmet Announces Fourth Quarter Earnings from Operations of $112 Million Compared to $89 Million in the Fourth Quarter of 2011

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TORONTO, CANADA -- (Marketwire) -- 02/21/13 -- Inmet Mining Corporation (TSX: IMN) -

All amounts in US dollars unless indicated otherwise

Fourth quarter highlights

-- Strong earnings from operations Earnings from operations were $112 million compared to $89 million in the fourth quarter of 2011. This increase is due to the strong performance of our operations. Earnings were negatively affected by the timing of shipments at Cayeli and finalization adjustments, together totalling $11 million for the quarter or $0.15 per share.-- Copper and zinc production exceeded expectations Our operations produced 111,700 tonnes of copper and 66,300 tonnes of zinc in 2012, exceeding our target ranges for the year. Las Cruces has consistently achieved monthly design capacity of 6,000 tonnes of copper cathode since first crossing this threshold in April 2012.-- Increase in closure liabilities for closed properties We recognized a charge of $10 million in earnings from operations, or $0.14 per share, for an increase in estimated costs for post-closure obligations at our closed properties this quarter. This compares to a charge of $16 million recognized in the fourth quarter of 2011 primarily as a result of a decrease in the discount rates we applied in determining the liabilities at period end.-- Net income reduced by foreign exchange losses Net income of $38 million this quarter reflects after-tax foreign exchange losses of $19 million, or $0.27 per share, mainly on US dollar cash held in our euro-based entities. Our excess cash balances are held in US dollar funds as we plan to use these funds for the construction of Cobre Panama.-- Construction of Cobre Panama progressing By the end of the year, Minera Panama S.A. had entered into commitments for approximately $4.1 billion, representing 67 percent of estimated capital expenditures for the Cobre Panama project.-- Issuance of $500 million in senior unsecured notes On December 18, 2012, we issued $500 million in senior unsecured notes, the proceeds of which will be used to fund development of Cobre Panama. The notes bear a coupon rate of interest of 7.5 percent and mature on June 1, 2021.-- First Quantum offer On January 9, 2013, First Quantum Minerals Ltd. (First Quantum) commenced an unsolicited offer to acquire all of Inmet Mining's issued and outstanding common shares for consideration of cash or First Quantum shares or a combination of cash and First Quantum shares. Inmet's Board of Directors, on the recommendation of its Special Committee of the independent directors and with input from its, and the Special Committee's, financial and legal advisors, has recommended that Inmet shareholders reject this offer for reasons as set out in the Directors' Circular mailed to shareholders.Key financial data---------------------------------------------------------------------------- three months ended December 31(thousands, except per share amounts) 2012 2011 change----------------------------------------------------------------------------FINANCIAL HIGHLIGHTSSalesGross sales $259,868 $233,394 +11%Net incomeNet income from continuing operations $38,221 $46,544 -18%Net income from continuing operations per share $0.56 $0.67 -16%Net income from discontinued operations - - -Net income from discontinued operations per share - - -Net income attributable to Inmet shareholders $38,775 46,544 -17%Net income per share $0.56 $0.67 -16%Cash flowCash flow provided by operating activities $116,851 $70,768 +65%Cash flow provided by operating activities per share(1) $1.68 $1.02 +65%Capital spending(2) $342,467 $57,100 +500%----------------------------------------------------------------------------OPERATING HIGHLIGHTSProduction Copper (tonnes) 27,600 26,200 +5% Zinc (tonnes) 20,700 17,900 +16% Pyrite (tonnes) 222,500 210,500 +6%Copper cash cost (US $ per pound)(3) $0.85 $0.82 +4%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands, except per share amounts) 2012 2011 change----------------------------------------------------------------------------FINANCIAL HIGHLIGHTSSalesGross sales $1,123,977 $947,911 +19%Net incomeNet income from continuing operations $330,076 $256,314 +29%Net income from continuing operations per share $4.78 $3.86 +24%Net income from discontinued operations - 80,786 -100%Net income from discontinued operations per share - $1.22 -100%Net income attributable to Inmet shareholders $331,211 $337,100 -2%Net income per share $4.78 $5.08 -6%Cash flowCash flow provided by operating activities $543,392 $391,976 +39%Cash flow provided by operating activities per share(1) $7.83 $5.90 +33%Capital spending(2) $785,761 $201,909 +289%----------------------------------------------------------------------------OPERATING HIGHLIGHTSProduction Copper (tonnes) 111,700 84,800 +32% Zinc (tonnes) 66,300 80,400 -18% Pyrite (tonnes) 891,700 804,900 +11%Copper cash cost (US $ per pound)(3) $0.88 $0.86 +2%---------------------------------------------------------------------------- as at December 31 as at December 31FINANCIAL CONDITION 2012 2011(US millions, except ratio)Current ratio 8.4 to 1 9.3 to 1Net working capital balance $2,358 $1,263Cash balance (including bonds and other securities; millions) $3,618 $1,655Gross debt(4) $1,960 $17Net debt (net cash)(5) ($1,658) ($1,639)Shareholders' equity attributable to Inmet shareholders $3,972 $3,306----------------------------------------------------------------------------(1) Cash flow provided by operating activities divided by average shares outstanding for the period.(2) The year ended December 31, 2012 includes capital spending of $713 million at Cobre Panama. The year ended December 31, 2011 includes capital spending of $129 million at Cobre Panama.(3) Copper cash cost per pound is a non-GAAP financial measure - see Supplementary financial information on pages 31 to 33.(4) Gross debt includes long-term debt and the current portion of long-term debt(5) Net debt (net cash) is a non-GAAP measure defined as long-term debt less cash and short-term investments, including bonds and other securities.



Fourth quarter press release

Where to find it

Our financial results 5Key changes in 2012 5Understanding our performance 5 Earnings from operations 8 Corporate costs 13Results of our operations 15 Cayeli 16 Las Cruces 19 Pyhasalmi 21Status of our development project 23 Cobre Panama 23Managing our liquidity 26Financial condition 30Supplementary financial information 31



In this press release, Inmet means Inmet Mining Corporation and we, us and our mean Inmet and/or its subsidiaries and joint ventures. This quarter refers to the three months ended December 31, 2012.

Change in Inmet's functional and presentation currencies to the US dollar

The 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; Cayeli and Cobre Panama use the US dollar, and Pyhasalmi 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 information

Securities 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 December 31(thousands, except per share amounts) 2012 2011 change----------------------------------------------------------------------------EARNINGS FROM OPERATIONS(1)Cayeli $16,493 $34,668 -52%Las Cruces 73,397 40,384 +82%Pyhasalmi 32,395 30,190 +7%Other (9,924) (16,190) -39%---------------------------------------------------------------------------- 112,361 89,052 +26%----------------------------------------------------------------------------DEVELOPMENT AND EXPLORATIONCorporate development and exploration (8,620) (6,333) +36%----------------------------------------------------------------------------CORPORATE COSTSGeneral and administration (14,896) (7,487) +99%Investment and other income (16,279) (3,883) +319%Finance costs (2,632) (2,314) +14%Income and capital taxes (31,713) (22,491) +41%---------------------------------------------------------------------------- (65,520) (36,175) +81%----------------------------------------------------------------------------Net income from continuing operations 38,221 46,544 -18%Income from discontinued operation (net of taxes) - - -Non-controlling interest 554 - +100%----------------------------------------------------------------------------Net income attributable to Inmet shareholders $38,775 $46,544 -17%----------------------------------------------------------------------------Income from continuing operations per common share $0.56 $0.67 -16%----------------------------------------------------------------------------Diluted income from continuing operations per common share $0.56 $0.67 -16%----------------------------------------------------------------------------Basic net income per common share $0.56 $0.67 -16%----------------------------------------------------------------------------Diluted net income per common share $0.56 $0.67 -16%----------------------------------------------------------------------------Weighted average shares outstanding 69,366 69,332 --------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands, except per share amounts) 2012 2011 change----------------------------------------------------------------------------EARNINGS FROM OPERATIONS(1)Cayeli $162,879 $154,618 +5%Las Cruces 279,250 122,373 +128%Pyhasalmi 111,357 138,597 -20%Other (17,104) (16,190) +6%---------------------------------------------------------------------------- 536,382 399,398 +34%----------------------------------------------------------------------------DEVELOPMENT AND EXPLORATIONCorporate development and exploration (35,616) (28,273) +26%----------------------------------------------------------------------------CORPORATE COSTSGeneral and administration (53,522) (33,306) +61%Investment and other income 24,206 29,748 -19%Finance costs (10,070) (9,182) +10%Income and capital taxes (131,304) (102,071) +29%---------------------------------------------------------------------------- (170,690) (114,811) +49%----------------------------------------------------------------------------Net income from continuing operations 330,076 256,314 +29%Income from discontinued operation (net of taxes) - 80,786 -100%Non-controlling interest 1,135 - +100%----------------------------------------------------------------------------Net income attributable to Inmet shareholders $331,211 $337,100 -2%----------------------------------------------------------------------------Income from continuing operations per common share $4.78 $3.86 +24%----------------------------------------------------------------------------Diluted income from continuing operations per common share $4.75 $3.85 +23%----------------------------------------------------------------------------Basic net income per common share $4.78 $5.08 -6%----------------------------------------------------------------------------Diluted net income per common share $4.75 $5.06 -6%----------------------------------------------------------------------------Weighted average shares outstanding 69,362 66,432 +4%----------------------------------------------------------------------------(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---------------------------------------------------------------------------- three months ended year ended(millions) December 31 December 31 see page----------------------------------------------------------------------------EARNINGS FROM OPERATIONSMarket FactorsHigher (lower) copper prices $1 ($35) 8Lower zinc prices - (7) 8Lower other metal prices (6) (9) 8Lower smelter processing charges - 4 10Foreign exchange - decreased operating costs 1 5 11Operational FactorsHigher sales volume at Las Cruces, net of production costs 27 196 20Higher (lower) sales volumes at our other mines (2) 11 8Higher operating costs at our other mines (5) (9) 11Higher depreciation due to Las Cruces production (3) (17) 12Lower (higher) charge for mine rehabilitation at closed properties 6 (1) 11Other 4 (1)----------------------------------------------------------------------------Increase in operating earnings, compared to 2011 23 137Higher taxes from higher income (9) (29) 14Higher corporate development, exploration and administrative costs (10) (28) 13Foreign exchange changes (11) (4) 13Other (1) (2)----------------------------------------------------------------------------Higher (lower) net income from continuing operations compared to 2011 (8) 74Lower income from discontinued operation - Ok Tedi - (81) 14Non-controlling interest - 1----------------------------------------------------------------------------Lower net income attributable to Inmet shareholders compared to 2011 ($8) ($6)----------------------------------------------------------------------------



Understanding our performance

Metal 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 December 31 year ended December 31 2012 2011 change 2012 2011 change----------------------------------------------------------------------------Copper (per pound) $3.48 $3.51 -1% $3.59 $3.84 -7%Zinc (per pound) $0.88 $0.87 +1% $0.88 $0.97 -9%----------------------------------------------------------------------------



Copper

Copper prices on the London Metals Exchange (LME) averaged $3.61 per pound this year, or 10 percent lower than the average in 2011 of $4.00 per pound. Although average copper prices were lower in 2012, prices recovered substantially from the sharp decline that occurred in the fourth quarter of 2011. LME copper prices averaged $3.59 per pound in the fourth quarter, an increase of 6 percent over the comparative quarter of 2011.

Zinc

LME zinc prices averaged $0.89 per pound this quarter, an increase of 3 percent over the fourth quarter of 2011. For the year, LME zinc prices averaged $0.88 per pound, 11 percent lower than the average 2011 zinc price of $0.99 per pound.

Exchange rates

Exchange rates affect our revenue and earnings. The table below shows the average exchange rates we realized this quarter and year to date compared to 2011.

---------------------------------------------------------------------------- three months ended year ended December 31 December 31 2012 2011 change 2012 2011 change----------------------------------------------------------------------------Exchange rates 1 C$ to US$ $1.01 $0.98 +3% $1.00 $1.01 -1% 1 euro to US$ $1.30 $1.35 -4% $1.29 $1.39 -7% 1 US$ to Turkish lira TL 1.79 TL 1.83 -2% TL 1.80 TL 1.65 +9%----------------------------------------------------------------------------



Compared to the same quarter last year, the value of the US dollar depreciated 3 percent relative to the Canadian dollar, and appreciated 4 percent relative to the euro and 2 percent relative to the Turkish lira.

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-- translate Cayeli'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 December 31 year ended December 31(US$) 2012 2011 change 2012 2011 change----------------------------------------------------------------------------Treatment charges Copper (per dry metric tonne of concentrate) $54 $55 -2% $58 $57 +2% Zinc (per dry metric tonne of concentrate) $193 $184 +5% $184 $216 -15%----------------------------------------------------------------------------Price participation Copper (per pound) $0.00 $0.02 -100% $0.00 $0.02 -100% Zinc (per pound) $0.00 ($0.02) +100% $0.00 ($0.01) +100%----------------------------------------------------------------------------Freight charges Copper (per dry metric tonne of concentrate) $47 $58 -19% $53 $51 +4% Zinc (per dry metric tonne of concentrate) $26 $11 +136% $25 $22 +14%----------------------------------------------------------------------------



Statutory tax rates

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

---------------------------------------------------------------------------- 2012 2011 change----------------------------------------------------------------------------Statutory tax rates Cayeli 24% 24% - Las Cruces 30% 30% - Pyhasalmi 24.5% 26% -1.5%----------------------------------------------------------------------------



Earnings from operations

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Gross sales $259,868 $233,394 +11%Smelter processing charges and freight (26,155) (27,330) -4%Cost of sales: Direct production costs (85,739) (75,962) +13% Inventory changes 4,549 6,780 -33% Other non-cash expenses (10,083) (20,995) -52% Depreciation (30,079) (26,835) +12%----------------------------------------------------------------------------Earnings from operations $112,361 $89,052 +26%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Gross sales $1,123,977 $947,911 +19%Smelter processing charges and freight (113,996) (126,569) -10%Cost of sales: Direct production costs (321,385) (292,893) +10% Inventory changes (3,740) 645 -680% Other non-cash expenses (21,502) (24,427) -12% Depreciation (126,972) (105,269) +21%----------------------------------------------------------------------------Earnings from operations $536,382 $399,398 +34%----------------------------------------------------------------------------



Significantly higher gross sales this year

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Gross sales by operation Cayeli $58,742 $77,124 -24% Las Cruces 136,909 97,731 +40% Pyhasalmi 64,217 58,539 +10%---------------------------------------------------------------------------- $259,868 $233,394 +11%----------------------------------------------------------------------------Gross sales by metal Copper $198,076 $177,344 +12% Zinc 36,533 33,307 +10% Other 25,259 22,743 +11%---------------------------------------------------------------------------- $259,868 $233,394 +11%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Gross sales by operation Cayeli $358,964 $342,458 +5% Las Cruces 538,981 345,568 +56% Pyhasalmi 226,032 259,885 -13%---------------------------------------------------------------------------- $1,123,977 $947,911 +19%----------------------------------------------------------------------------Gross sales by metal Copper $902,575 $674,116 +34% Zinc 125,362 171,538 -27% Other 96,040 102,257 -6%---------------------------------------------------------------------------- $1,123,977 $947,911 +19%----------------------------------------------------------------------------



Key components of the change in gross sales: increasing sales volumes at Las Cruces, lower realized copper prices for the year

---------------------------------------------------------------------------- three months ended year ended(millions) December 31 December 31----------------------------------------------------------------------------Higher (lower) copper prices $1 ($35)Lower zinc prices - (7)Lower other metal prices (6) (9)Higher sales volumes at Las Cruces 35 221Higher (lower) copper sales volumes at Cayeli (14) 44Higher (lower) zinc sales volumes 3 (39)Higher other sales volumes 7 -Other - 1----------------------------------------------------------------------------Higher gross sales, compared to 2011 $26 $176----------------------------------------------------------------------------



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

This quarter, we recorded $5 million in negative finalization adjustments from third quarter shipments.

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

-- 20 million pounds of copper provisionally priced at US $3.59 per pound-- 19 million pounds of zinc provisionally priced at US $0.94 per pound.



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

----------------------------------------------------------------------------(millions of pounds) copper zinc----------------------------------------------------------------------------January 2013 16 19February 2013 4 -----------------------------------------------------------------------------Unsettled sales at December 31, 2012 20 19----------------------------------------------------------------------------



Higher copper sales volumes, lower zinc sales volumes this year

Our sales volumes are directly affected by the amount of production from our mines and our ability to ship to our customers. This quarter, timing of shipments resulted in copper sales volumes lagging production volumes by a combined 1,900 tonnes as compared to 3,100 tonnes in the fourth quarter of 2011.

Sales volumes

---------------------------------------------------------------------------- three months ended December 31 2012 2011 change----------------------------------------------------------------------------Copper contained in concentrate 8,300 10,300 -19%Copper cathode (tonnes) 17,400 12,800 +36%----------------------------------------------------------------------------Total copper (tonnes) 25,700 23,100 +11%Zinc (tonnes) 19,000 17,300 +10%Pyrite (tonnes) 299,700 175,900 +70%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31 2012 2011 change----------------------------------------------------------------------------Copper contained in concentrate 46,600 41,200 +13%Copper cathode (tonnes) 68,800 42,000 +64%----------------------------------------------------------------------------Total copper (tonnes) 115,400 83,200 +39%Zinc (tonnes) 65,100 84,400 -23%Pyrite (tonnes) 852,500 809,200 +5%----------------------------------------------------------------------------



Production

---------------------------------------------------------------------------- three months ended December 31Inmet's share 2012 2011 change----------------------------------------------------------------------------Copper (tonnes) Cayeli 7,000 8,600 -19% Las Cruces 17,300 14,100 +23% Pyhasalmi 3,300 3,500 -6%---------------------------------------------------------------------------- 27,600 26,200 +5%----------------------------------------------------------------------------Zinc (tonnes) Cayeli 11,100 11,300 -2% Pyhasalmi 9,700 6,600 +47%---------------------------------------------------------------------------- 20,800 17,900 +16%----------------------------------------------------------------------------Pyrite (tonnes) Pyhasalmi 222,500 210,500 +6%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31Inmet's share 2012 2011 change----------------------------------------------------------------------------Copper (tonnes) Cayeli 31,400 28,700 +9% Las Cruces 67,700 42,100 +61% Pyhasalmi 12,600 14,000 -10%---------------------------------------------------------------------------- 111,700 84,800 +32%----------------------------------------------------------------------------Zinc (tonnes) Cayeli 40,700 48,100 -15% Pyhasalmi 25,600 32,300 -21%---------------------------------------------------------------------------- 66,300 80,400 -18%----------------------------------------------------------------------------Pyrite (tonnes) Pyhasalmi 891,700 804,900 +11%---------------------------------------------------------------------------------------------------------------------------Inmet's share objective 2013-----------------------------------------------Copper (tonnes) Cayeli 27,800 - 30,900 Las Cruces 68,500 - 72,000 Pyhasalmi 12,000 - 13,400----------------------------------------------- 108,300 - 116,300-----------------------------------------------Zinc (tonnes) Cayeli 35,900 - 39,900 Pyhasalmi 20,300 - 22,500----------------------------------------------- 56,200 - 62,400-----------------------------------------------Pyrite (tonnes) Pyhasalmi 820,000-----------------------------------------------



2012 production compared to target

Copper production slightly exceeded our target range as copper grades and recoveries at Cayeli exceeded expectations. Zinc production also exceeded our target range as zinc grades and recoveries at both Cayeli and Pyhasalmi were higher than expected. We produced more pyrite at Pyhasalmi than our target to meet the increased customer demand in China.

2012 production compared to 2011

Copper production was higher than in 2011 mainly because of higher production at Las Cruces. Zinc production was lower than in 2011 due to lower zinc grades at Cayeli and Pyhasalmi. This quarter, zinc production was higher than the fourth quarter of 2011 due to higher grades and recoveries at Pyhasalmi. Pyhasalmi increased pyrite production this year to meet higher customer demand.

2013 outlook for sales

We use our production objectives to estimate our sales target.

We expect overall copper production in 2013 of between 108,300 tonnes and 116,300 tonnes, in line with 2012.

We expect zinc production volumes in 2013 to decrease by approximately 10 percent as zinc grades trend more towards overall reserve grades at Cayeli and Pyhasalmi.

Our revenues are also affected by the metal prices we receive.

According to international research, copper supply should grow modestly in 2013. Production from the start-up of new operations and improvements at existing mines could be somewhat offset by the risk of mine underperformance, delays to existing or new development projects and possible labour disruptions. Continued strong demand is expected in China, coupled with continued economic recovery in Europe and the United States. The small expected market surplus should support copper prices in 2013 at a level similar to 2012.

For zinc, modest increases are expected in both market supply and demand with a contracting market surplus. These market trends should support average prices in 2013 above those of 2012.

Zinc smelter processing charges down, copper charges up this year

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Smelter processing charges and freight by operation Cayeli $12,856 $14,373 -11% Las Cruces 861 351 +145% Pyhasalmi 12,438 12,606 -1%---------------------------------------------------------------------------- $26,155 $27,330 -4%----------------------------------------------------------------------------Smelter processing charges and freight by metal Copper $8,425 $10,986 -23% Zinc 13,479 11,251 +20% Other 4,251 5,093 -17%---------------------------------------------------------------------------- $26,155 $27,330 -4%----------------------------------------------------------------------------Smelter processing charges by type, and freight Copper treatment and refining charges $2,923 $3,683 -21% Zinc treatment charges 7,101 6,199 +15% Copper price participation - 416 -100% Zinc price participation (56) (648) -91% Content losses 8,199 8,930 -8% Freight 7,796 8,449 -8% Other 192 301 -37%---------------------------------------------------------------------------- $26,155 $27,330 -4%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Smelter processing charges and freight by operation Cayeli $67,348 $69,424 -3% Las Cruces 2,374 1,188 +100% Pyhasalmi 44,274 55,957 -21%---------------------------------------------------------------------------- $113,996 $126,569 -10%----------------------------------------------------------------------------Smelter processing charges and freight by metal Copper $49,439 $42,368 +17% Zinc 46,296 63,500 -27% Other 18,261 20,701 -12%---------------------------------------------------------------------------- $113,996 $126,569 -10%----------------------------------------------------------------------------Smelter processing charges by type, and freight Copper treatment and refining charges $17,847 $14,410 +24% Zinc treatment charges 23,402 34,368 -32% Copper price participation - 1,542 -100% Zinc price participation (10) (1,872) -99% Content losses 36,626 42,427 -14% Freight 35,066 34,477 +2% Other 1,065 1,217 -12%---------------------------------------------------------------------------- $113,996 $126,569 -10%----------------------------------------------------------------------------



For the year, and the quarter, changes in our copper treatment and refining charges are due to changes in copper-in concentrate sales volumes. Sales volumes also drove variations in zinc treatment charges at Cayeli and Pyhasalmi, in addition to more favorable terms with smelters, reflecting a deficit in the zinc concentrate market at the time our 2012 contracts were negotiated.

2013 outlook for smelter processing charges and freight

We expect our costs for copper treatment and refining to be higher in 2013 than in 2012 as the global copper concentrate supply is expected to narrowly exceed smelter capacity in 2013, shifting the market to a slight surplus position towards the end of the year. We do not expect to pay copper price participation in 2013.

We expect total zinc smelter processing charges, including price participation, to be slightly higher than 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 to be similar to rates realized in 2012.

Higher direct production costs and cost of sales

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Direct production costs by operation Cayeli $25,758 $23,991 +7% Las Cruces 43,506 37,798 +15% Pyhasalmi 16,475 14,173 +16%----------------------------------------------------------------------------Total direct production costs 85,739 75,962 +13%Inventory changes (4,549) (6,780) -33%Charges for mine rehabilitation and other non-cash charges 10,083 20,995 -52%----------------------------------------------------------------------------Total cost of sales (excluding depreciation) $91,273 $90,177 +1%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Direct production costs by operation Cayeli $94,330 $93,237 +1% Las Cruces 167,142 142,941 +17% Pyhasalmi 59,913 56,715 +6%----------------------------------------------------------------------------Total direct production costs 321,385 292,893 +10%Inventory changes 3,740 (645) -680%Charges for mine rehabilitation and other non-cash charges 21,502 24,427 -12%----------------------------------------------------------------------------Total cost of sales (excluding depreciation) $346,627 $316,675 +9%----------------------------------------------------------------------------



Direct production costs

Direct production costs were $28 million higher this year ($10 million higher this quarter) mainly 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 additional $17 million this year for post-closure liabilities at our closed properties, including $10 million in the fourth quarter. $7 million of these costs related to the decrease in discount rates and the US dollar to Canadian dollar exchange rate we applied in determining the liabilities in the first nine months of 2012. Under IFRS, we are required to revalue our asset retirement obligations for changes in market risk-free interest rates - this discount rate decrease reflects the current low interest rate environment. Additionally, this quarter we recognized a $4 million increase in our estimated closure obligations at Troilus for ongoing treatment of tailings effluent for suspended solids and associated labour costs, as well as increased estimated cash flows required to remediate our other closed properties. In 2011, we recorded increased asset retirement obligations of $16 million: $5 million for closure liabilities at Troilus related to an increase in our estimated closure obligations for ongoing treatment of tailings effluent for suspended solids and associated labour costs and $11 million from a decrease in the discount rates we applied.

2013 outlook for cost of sales (excluding depreciation)

We expect consolidated direct production costs to be slightly higher in 2013 because higher production at Las Cruces will increase total variable costs, primarily electricity, consumables and royalties. We also expect slightly higher direct production costs at Cayeli in 2013 due to increased labour and electricity costs, and increased costs associated with higher expected tonnes processed in 2013 than in 2012.

Our budget for 2013 assumes our costs at Pyhasalmi will be similar to 2012.

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

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



The total amount we report in US dollars will also be affected by the value of the euro and the Turkish lira 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 December 31, 2012, the interest rates we used to value our asset retirement obligations at our closed properties ranged from 1.1 percent to 2.4 percent.

Higher depreciation

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Depreciation by operation Cayeli $4,702 $5,391 -13% Las Cruces 22,331 19,129 +17% Pyhasalmi 3,046 2,315 +32%---------------------------------------------------------------------------- $30,079 $26,835 +12%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Depreciation by operation Cayeli $24,692 $21,337 +16% Las Cruces 92,037 74,931 +23% Pyhasalmi 10,243 9,001 +14%---------------------------------------------------------------------------- $126,972 $105,269 +21%----------------------------------------------------------------------------



Depreciation was higher this year than last mainly because of higher copper sales volumes at Las Cruces and Cayeli.

2013 outlook for depreciation

We expect depreciation to be higher in 2013 because of higher sales volumes at Las Cruces.

Corporate costs

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

Spending on corporate development and exploration

Corporate development and exploration costs were approximately $8 million higher than 2011, which mainly reflects our higher budget for 2012 to explore for world class deposits.

2013 outlook for corporate development and exploration

We expect spending on exploration in 2013 to be slightly higher than 2012, focusing on Mexico, Chile and Peru, where we have established field offices, the United States and on Cobre Panama to drill more exploration targets on the concession there. We will also continue exploring in areas around our existing operations.

General and administration

General and administration costs are largely for management remuneration, governance and strategy. Costs in 2012 were $19 million higher than 2011 mainly because stock-based compensation expense was $10 million higher. As a result of the decision to proceed with full construction of Cobre Panama, we recognized a non-cash stock-based compensation expense of $8 million this year on Long-Term Incentive Plan (LTIP) units issued in previous years that relate to the project. This expense represents the cumulative impact from the units' grant dates to December 31, 2012, on a 100 percent award basis, as no value was attributed to these units prior to a positive construction decision for Cobre Panama. See note 22c to our 2011 annual financial statements for more details on these units. The increase in general and administration expense also reflects increased human resources and other costs supporting the growth of the business and construction activities for Cobre Panama.

2013 outlook for general and administration

We expect general and administration costs in 2013 to be similar to those in 2012.

Investment and other income

---------------------------------------------------------------------------- three months ended year ended December 31 December 31(thousands) 2012 2011 2012 2011----------------------------------------------------------------------------Interest income $3,818 $4,668 $15,144 $16,099Foreign exchange gain (loss) (19,608) (8,327) 6,270 10,446Dividend and royalty income 759 1,460 2,988 2,944Other (1,248) (1,684) (196) 259---------------------------------------------------------------------------- ($16,279) ($3,883) $24,206 $29,748----------------------------------------------------------------------------



Foreign exchange gains and losses

We 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 year ended December 31 December 31(thousands) 2012 2011 2012 2011----------------------------------------------------------------------------Translation of US dollar cash held by Corporate prior to June 2012 inclusive of proceeds of notes offering - 5 27,338 (8,001)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 - (8,321) 4,330 11,232Translation of US dollar cash held in euro-based entities (14,771) - (15,998) -Translation of Cdn dollar cash held by Corporate subsequent to May 2012 (357) - 2,231 -Translation of Cdn dollar bonds and other securities subsequent to May 2012 (2,067) - 7,912 -Translation of other monetary assets and liabilities (2,413) (11) (2,659) 7,215---------------------------------------------------------------------------- ($19,608) ($8,327) $6,270 $10,446----------------------------------------------------------------------------



We 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 $10 million in 2012 on Canadian dollar denominated cash, bonds and other securities due to a weakening in the US dollar relative to the Canadian dollar. We recognized a foreign exchange loss of $2 million this quarter on these Canadian dollar denominated holdings.

Additionally, in 2012 we began holding our euro-based operations' excess cash in US dollars. We recognized $16 million in foreign exchange losses this year, including $15 million this quarter, on the revaluation of US denominated cash balances to euros due to a depreciation in the US dollar relative to the euro.

2013 outlook for investment and other income

Investment and other income is affected by the balance 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 (as we are capitalizing interest costs on the senior unsecured notes). At December 31, 2012, we held Cdn $218 million in cash, bonds and other securities subject to translation in our US dollar denominated accounts and US $599 million in cash subject to translation in our euro accounts.

Income tax expense

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Cayeli $3,983 $9,444Las Cruces 18,371 8,097Pyhasalmi 8,013 6,612Corporate and other 1,346 (1,662)---------------------------------------------------------------------------- $31,713 $22,491----------------------------------------------------------------------------Consolidated effective tax rate 45% 33% +8%------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change---------------------------------------------------------------------------Cayeli $32,923 $50,947Las Cruces 72,495 22,788Pyhasalmi 23,951 30,710Corporate and other 1,935 (2,374)--------------------------------------------------------------------------- $131,304 $102,071---------------------------------------------------------------------------Consolidated effective tax rate 28% 28% ----------------------------------------------------------------------------



Our tax expense changes as our earnings change.

The consolidated effective tax rate was higher this quarter compared to the same quarter of 2011 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 earlier this year. Additionally, we realized higher foreign exchange losses and other corporate costs this quarter for which there is no tax recovery.

2013 outlook for income tax expense

We expect the statutory tax rates at our operations in 2013 to remain the same as they were in 2012, unless a statutory tax rate change is enacted. We expect income tax expense to increase in 2013 due to higher income from operations mainly from higher sales volumes as Las Cruces, offset partly by lower expected copper sales volumes at Cayeli.

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 operations

2013 estimates

Our financial review by operation includes estimates for our 2013 operating earnings and operating cash flows. We have based these estimates on our 2013 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 year:

------------------------------------------------------------Copper price US $3.60 per poundZinc price US $1.00 per poundeuro to C$ exchange rate $1.25Working capital Assume no changes------------------------------------------------------------



Cayeli

---------------------------------------------------------------------------- three months ended December 31 2012 2011 change----------------------------------------------------------------------------Tonnes of ore milled (000's) 319 316 +1%Tonnes of ore milled per day 3,500 3,400 +1%----------------------------------------------------------------------------Grades (percent) copper 3.0 3.5 -14% zinc 5.0 5.3 -6%----------------------------------------------------------------------------Mill recoveries (percent) copper 74 79 -6% zinc 69 67 +3%----------------------------------------------------------------------------Production (tonnes) copper 7,000 8,600 -19% zinc 11,100 11,300 -2%----------------------------------------------------------------------------Cost per tonne of ore milled $81 $76 +7%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31 2012 2011 change----------------------------------------------------------------------------Tonnes of ore milled (000's) 1,218 1,195 +2%Tonnes of ore milled per day 3,300 3,300 +2%----------------------------------------------------------------------------Grades (percent) copper 3.3 3.2 +3% zinc 5.0 6.0 -17%----------------------------------------------------------------------------Mill recoveries (percent) copper 78 75 +4% zinc 66 68 -3%----------------------------------------------------------------------------Production (tonnes) copper 31,400 28,700 +9% zinc 40,700 48,100 -15%----------------------------------------------------------------------------Cost per tonne of ore milled $77 $78 -1%----------------------------------------------------------------------------



Copper production exceeded target this year

Cayeli's mine production reached a record 1.21 million tonnes this year. The increase in mine production is the result of consistent ground support and rehabilitation performance, improved mine planning processes, including new scheduling software capable of quick scenario reviews, and capturing further benefits from the mine control system implemented in 2011.

Mill production this year reached a record of 1.22 million tonnes. Managing tailings density and coordination with the mine's pastefill requirements were key in achieving the higher throughput level this year. Copper production in 2012, at 31,400 tonnes, was better than in 2011 and exceeded the high end of our guidance range due to higher copper grades and recoveries. Zinc production was significantly lower than in 2011, consistent with our expectations, due to the lower zinc grade and associated lower recoveries.

Cost per tonne of ore milled was slightly lower than 2011 mainly because we processed more ore this year. Higher cost per tonne of ore milled this quarter reflects higher costs for electricity and a study Cayeli has undertaken to further increase its productivity.

The three-year labour agreement at Cayeli expired in May 2012. The negotiation of a new labour agreement, initially delayed due to changes to government labour regulations, is proceeding in early 2013 and we will make a strong effort to manage labour cost escalations to retain our cost competitiveness.

Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. In 2012 Cayeli became the subject of an audit of its 2008 to 2011 taxation years. On February 4, 2013, Cayeli received an assessment from the Turkish tax authorities adjusting the amount of withholding taxes to be remitted on dividends paid by Cayeli to its direct shareholder. The shares of Cayeli are owned by an indirect wholly-owned Spanish subsidiary of Inmet. The Turkish tax authorities have taken the position that Inmet and not the Spanish subsidiary is the beneficial owner of the dividends. The Turkish tax authorities are therefore taking the position that the withholding tax on the dividends should be the 15 percent domestic rate and not the reduced rate of 5 percent under the Turkey-Spain tax treaty. The dividends paid during the period assessed total TL 628 million. The assessed tax liability is TL 63 million (US $35 million) plus interest and penalties. Our view is that the relevant facts and circumstances support the position that Cayeli fulfilled its tax remittance obligations and Cayeli intends to vigorously dispute the assessment.

2013 outlook for production

In 2013, the production level should increase from 1.2 million tonnes to 1.25 million tonnes. The mine should benefit from the commissioning of the two new ore passes by the third quarter of 2013, the extension of a shotcrete slickline to the lower levels of the mine, improved lower mine infrastructure and the addition of stope production from a new mining block, all of which should ease pressure on existing production areas. Cayeli's ground conditions require constant monitoring and reinforcement, including the need to minimize any underground void area. Continued progress in meeting the challenges of poor ground conditions and planned operational efficiencies is aimed at reducing the risks associated with achieving our production plan.

Both copper and zinc recoveries should be lower in 2013, reflecting the increased proportions of metallurgically challenging ore types.

We expect to produce between 27,800 tonnes and 30,900 tonnes of copper and between 35,900 tonnes and 39,900 tonnes of zinc in 2013.

We expect operating costs in 2013 to be slightly higher than 2012 levels primarily due to increased manpower levels, increased electricity costs and increased mine department consumables.

Financial review

Lower copper sales volumes due to lower copper production volumes and timing of shipments this quarter

---------------------------------------------------------------------------- three months ended year ended(millions unless December 31 December 31 objectiveotherwise stated) 2012 2011 2012 2011 2013----------------------------------------------------------------------------Sales analysisCopper sales (tonnes) 5,100 6,900 33,200 27,500 29,400Zinc sales (tonnes) 10,000 9,900 40,000 50,000 37,900 ---------------------------------------------------Gross copper sales $36 $53 $258 $214 $233Gross zinc sales 19 19 77 101 84Other metal sales 4 5 24 27 17 ---------------------------------------------------Gross sales 59 77 359 342 334Smelter processing charges and freight (13) (14) (67) (69) (74)----------------------------------------------------------------------------Net sales $46 $63 $292 $273 $260----------------------------------------------------------------------------Cost analysisTonnes of ore milled (thousands) 319 316 1,218 1,195 1,250Direct production costs ($ per tonne) $81 $76 $77 $78 $81----------------------------------------------------------------------------Direct production costs $26 $24 $94 $93 $101Change in inventory (4) (3) 2 (1) -Depreciation and other non-cash costs 8 9 33 26 32----------------------------------------------------------------------------Operating costs $30 $28 $129 $118 $133----------------------------------------------------------------------------Operating earnings $16 $35 $163 $155 $127----------------------------------------------------------------------------Operating cash flow $64 $8 $170 $152 $120----------------------------------------------------------------------------



The objective for 2013 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.

---------------------------------------------------------------------------- three months ended Year ended(millions) December 31 December 31----------------------------------------------------------------------------Lower metal prices ($5) ($8)Higher (lower) copper sales volumes (11) 34Lower zinc sales volumes - (11)Higher smelter processing charges and freight - 1Higher operating costs (2) (1)Lower (higher) depreciation 1 (3)Other (2) (4)----------------------------------------------------------------------------Higher (lower) operating earnings, compared to 2011 (19) 8Change in tax expense because of foreign exchange changes in Cayeli's Turkish lira accounts 2 13Changes in working capital (see note 17 on page 52) 72 (8)Higher depreciation (1) 3Other 2 2----------------------------------------------------------------------------Higher operating cash flow, compared to 2011 $56 $18----------------------------------------------------------------------------



Capital spending

----------------------------------------------------- three months ended December 31(thousands) 2012 2011 change-----------------------------------------------------Capital spending $8,300 $3,400 +144%---------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change-----------------------------------------------------Capital spending $17,500 $12,700 +38%--------------------------------------------------------------------------------- objective(thousands) 2013----------------------------Capital spending $18,000----------------------------



We spent $18 million in capital this year to begin construction of a pair of new ore passes, add to the underground mobile fleet, improve underground pastefill and water drainage infrastructure, replace the surface concrete batch plant, and continue mine development. In 2011 we spent $13 million to engineer the new ore passes, purchase mobile equipment, install column flotation cells and a conveyor dust collection system in the mill, add surface water runoff capacity, and continue our mine development.

2013 outlook for capital spending

We expect to spend $18 million on capital in 2013, including $6 million on mine development and $5 million to complete the upgrade of our ore pass system to address deterioration that has accumulated over time from normal abrasion.

Las Cruces

---------------------------------------------------------------------------- three months ended December 31(100 percent) 2012 2011 change----------------------------------------------------------------------------Tonnes of ore processed (000's) 276 231 +19%----------------------------------------------------------------------------Copper grades (percent) 6.9 6.9 -----------------------------------------------------------------------------Plant recoveries (percent) 90 86 +5%----------------------------------------------------------------------------Cathode copper production (tonnes) 17,300 14,100 +23%----------------------------------------------------------------------------Cost per pound of cathode produced $1.14 $1.21 -6%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(100 percent) 2012 2011 change----------------------------------------------------------------------------Tonnes of ore processed (000's) 1,082 776 +39%----------------------------------------------------------------------------Copper grades (percent) 7.1 6.5 +9%----------------------------------------------------------------------------Plant recoveries (percent) 88 84 +5%----------------------------------------------------------------------------Cathode copper production (tonnes) 67,700 42,100 +61%----------------------------------------------------------------------------Cost per pound of cathode produced $1.12 $1.54 -27%----------------------------------------------------------------------------



Plant production consistently at or above design capacity

2012 was a year of significant accomplishments for Las Cruces with plant production averaging the design capacity of 6,000 tonnes of copper cathode for the last 9 months of the year. This production level was reached following a shutdown in March to remove and re-align the ball mill gearing as well as to make numerous operating improvements to improve process flows. Las Cruces produced 17,300 tonnes of copper cathode in this quarter of 2012, with a three day maintenance shutdown, and achieved plant recoveries of 90 percent.

The plant reliability increased in all areas during 2012 with stable reactor and agitator performance and further improvements to crushing, conveying and grinding. In all, 12 days of planned downtime were required for ongoing plant maintenance compared to our original plan of 20 days. Overall copper recoveries were 88 percent in 2012, an improvement from 84 percent in 2011 due to the full implementation of the leach feed surge tank with oxygen addition. Plant feed grades averaged 7.1 percent during the year, compared to 6.5 percent in 2011.

Las Cruces production of 67,700 tonnes of copper cathode this year was significantly higher than 42,100 tonnes in 2011 as a result of process improvements and came within 1.5 percent of the high end of our guidance range.

Cost per pound of copper produced was significantly lower than in 2011 due to higher production volumes.

2013 outlook for production

In 2013, we will concentrate on reducing recovery losses downstream of the leaching reactors that have increased with the increase in copper cathode production and due to operating with process solutions that contain more copper.

We expect to produce between 68,500 tonnes and 72,000 tonnes copper cathode in 2013. The plant will be tested at higher ore throughput and lower grade to assess the effects on plant performance before we enter into lower copper grade areas of the mine that we expect in 2014.

We expect cost per pound of copper in 2013 to be similar to 2012 levels.

Financial review

Higher sales volumes due to higher production

---------------------------------------------------------------------------- three months ended year ended(millions unless December 31 December 31 objectiveotherwise stated) 2012 2011 2012 2011 2013----------------------------------------------------------------------------Sales analysisCopper sales (tonnes) 17,400 12,800 68,900 42,000 70,300 ----------------------------------------------------Gross copper sales $137 $98 $539 $345 $562Smelter processing charges and freight (1) - (2) (1) (3)----------------------------------------------------------------------------Net sales $136 $98 $537 $344 $559----------------------------------------------------------------------------Cost analysisPounds of copper produced (millions) 38 31 149 93 155Direct production costs ($ per pound) $1.14 $1.21 $1.12 1.54 $1.11----------------------------------------------------------------------------Direct production costs $43 38 $167 $143 $172Change in inventory - (3) 2 1 -Depreciation and other non-cash costs 20 23 89 78 93----------------------------------------------------------------------------Operating costs $63 $58 $258 $222 $265----------------------------------------------------------------------------Operating earnings $73 $40 $279 $122 $294----------------------------------------------------------------------------Operating cash flow $50 $44 $320 $188 $386----------------------------------------------------------------------------



The objective for 2013 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.

---------------------------------------------------------------------------- three months ended year ended(millions) December 31 December 31----------------------------------------------------------------------------Higher (lower) copper prices, denominated in US dollars $4 ($28)Higher copper sales volumes 32 220Higher smelter processing charges and freights (1) (1)Higher operating costs in base currency (7) (35)Foreign exchange - decreased operating costs 2 13Higher depreciation (3) (17)Other 6 5----------------------------------------------------------------------------Higher operating earnings, compared to 2011 33 157Changes in working capital (see note 17 on page 52) (29) (42)Change in depreciation 3 17Other (1) -----------------------------------------------------------------------------Higher operating cash flow, compared to 2011 $6 $132----------------------------------------------------------------------------



Capital spending

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Capital spending $18,000 $9,700 +86%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Capital spending $43,200 $51,900 -17%------------------------------------------------------------------------------------------------------------------------- objective(thousands) 2013---------------------------------------------Capital spending $49,000---------------------------------------------



We spent $43 million this year mainly on mine development, tailings facility expansion and land purchase. In 2011, we spent $52 million mainly for mine development, tailings facility expansion and plant improvements.

2013 outlook for capital spending

We expect to spend $49 million on capital projects in 2013. The largest expenditures should be for mine development ($22 million), tailings facility expansion ($5 million), debottlenecking ($8 million) and other plant improvement projects.

Pyhasalmi

---------------------------------------------------------------------------- three months ended December 31 2012 2011 change----------------------------------------------------------------------------Tonnes of ore milled (000's) 351 348 +1%Tonnes of ore milled per day 3,800 3,800 +1%----------------------------------------------------------------------------Grades (percent) copper 1.0 1.1 -9% zinc 3.0 2.1 +43% sulphur 41 43 -5%----------------------------------------------------------------------------Mill recoveries (percent) copper 97 95 +2% zinc 93 90 +3%----------------------------------------------------------------------------Production (tonnes) copper 3,300 3,500 -6% zinc 9,700 6,600 +47% pyrite 222,500 210,500 +6%----------------------------------------------------------------------------Cost per tonne of ore milled $47 $41 +15%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31 2012 2011 change----------------------------------------------------------------------------Tonnes of ore milled (000's) 1,384 1,386 -Tonnes of ore milled per day 3,800 3,800 -----------------------------------------------------------------------------Grades (percent) copper 1.0 1.1 -9% zinc 2.0 2.6 -23% sulphur 42 42 -----------------------------------------------------------------------------Mill recoveries (percent) copper 96 96 - zinc 92 91 +1%----------------------------------------------------------------------------Production (tonnes) copper 12,600 14,000 -10% zinc 25,600 32,300 -21% pyrite 891,700 804,900 +11%----------------------------------------------------------------------------Cost per tonne of ore milled $43 $41 +5%----------------------------------------------------------------------------



Lower grades this year in-line with annual objectives

Pyhasalmi continued its strong performance in 2012, processing 1.4 million tonnes of ore and achieving copper recoveries of 96 percent and zinc recoveries of 92 percent. Backfill supply was reliable and the underground open void volume was maintained below planned levels.

Both copper and zinc production were at the high end of our guidance range but lower than in 2011, as expected, because of lower grades in the areas we mined. A record 891,700 tonnes of pyrite concentrate was produced this year to meet higher customer demand.

Operating costs were higher this year than they were in 2011 due to higher labour, consumables and contractor costs, and due to the incremental costs associated with producing more pyrite.

2013 outlook for production

Pyhasalmi expects to mine 1.4 million tonnes of approximately 1 percent copper and 1.7 percent zinc in 2013, and produce between 12,000 tonnes and 13,400 tonnes of copper and 20,300 tonnes and 22,500 tonnes of zinc. Zinc production should be lower than it was in 2012 as we expect a decrease in zinc grades in 2013.

Pyhasalmi expects to produce and sell 820,000 tonnes of pyrite in 2013.

Operating costs are expected to remain at levels consistent with 2012.

Financial review

Lower earnings because of lower sales volumes and realized metal prices this year

---------------------------------------------------------------------------- three months ended year ended(millions unless December 31 December 31 objectiveotherwise stated) 2012 2011 2012 2011 2013----------------------------------------------------------------------------Sales analysisCopper sales (tonnes) 3,200 3,400 13,400 13,700 12,700Zinc sales (tonnes) 9,000 7,400 25,100 34,400 21,400Pyrite sales (tonnes) 299,700 175,900 852,500 809,200 820,000 ----------------------------------------------------Gross copper sales $25 $27 $106 $114 $101Gross zinc sales 18 14 48 70 47Other metal sales 21 18 72 76 61 ----------------------------------------------------Gross sales 64 59 226 260 209Smelter processing charges and freight (12) (13) (44) (56) (42)----------------------------------------------------------------------------Net sales 52 $46 $182 $204 $167----------------------------------------------------------------------------Cost analysisTonnes of ore milled (thousands) 351 348 1,384 1,386 1,370Direct production costs ($ per tonne) $47 $41 $43 $41 $42----------------------------------------------------------------------------Direct production costs $16 $14 $60 $57 $58Change in inventory - (1) - (1) -Depreciation and other non-cash costs 4 3 11 9 12----------------------------------------------------------------------------Operating costs $20 $16 $71 $65 $70----------------------------------------------------------------------------Operating earnings $32 $30 $111 $139 $97----------------------------------------------------------------------------Operating cash flow $28 $23 $97 $114 $84----------------------------------------------------------------------------



The objective for 2013 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.

---------------------------------------------------------------------------- three months ended year ended(millions) December 31 December 31----------------------------------------------------------------------------Lower copper prices $ - ($6)Higher (lower) zinc prices 1 (3)Higher (lower) zinc sales volumes 3 (11)Lower copper sales volumes (2) (5)Higher (lower) other metal sales 3 (3)Lower smelter processing prices and freight 1 4Higher operating costs in base currency (3) (8)Foreign exchange - decreased operating costs 1 5Other (2) (1)----------------------------------------------------------------------------Higher (lower) operating earnings, compared to 2011 2 (28)Change in tax expense (1) 7Changes in working capital (see note 17 on page 52) 3 5Other 1 (1)----------------------------------------------------------------------------Higher (lower) operating cash flow, compared to 2011 $5 ($17)----------------------------------------------------------------------------



Capital spending

---------------------------------------------------------------------------- three months ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Capital spending $2,600 $1,900 +37%-------------------------------------------------------------------------------------------------------------------------------------------------------- year ended December 31(thousands) 2012 2011 change----------------------------------------------------------------------------Capital spending $8,600 $7,000 +23%------------------------------------------------------------------------------------------------------------------------------- objective(thousands) 2013---------------------------------------------------Capital spending $8,000---------------------------------------------------



2013 outlook for capital spending

Capital spending of $8 million in 2013 will primarily be to replace underground mobile equipment, upgrade the pyrite flotation cleaner cells and flotation air blower system, and improve the reclaim water system.

Status of our development project

Cobre Panama

Construction progress

For a visual update on our construction progress, we invite you to visit our photo gallery on Inmet's web site at www.inmetmining.com.

At December 31, 2012, total construction was 9.3 percent completed compared to a planned completion percentage of 10.9 percent. We made the following advancements in the project's development this quarter:

Infrastructure

-- Our Engineering, Procurement and Construction Management (EP+CM) contractor, Joint Venture Panama (JVP), progressed with detailed engineering and procurement, earthworks and ground preparation for camps and road construction. We began the commissioning of the mine site's camp and general pioneering work is progressing well, including development work on the quarry and coastal road construction.-- Progress at the port site in Punta Rincon included completion of the jack-up barges allowing safe mooring of barges at the port site, and the mobile crusher allowing rock production to commence at the port site. The camp platform at the port site was completed in early 2013.



Power plant

-- Our Engineering, Procurement and Construction (EPC) contractor, SK Engineering and Construction, progressed with detailed engineering and procurement activities, and with planning. Geotechnical work has started and the fabrication of long-lead equipment continued as planned.



Process plant

-- We completed our evaluation of process plant bids and awarded the contract for detailed engineering and procurement services to Joint Venture Panama in late 2012. Upon satisfactory advancement of detailed engineering and procurement of certain equipment, we expect to award the contract for construction of the process plant in the third quarter of 2013.



MPSA and its contractors' workforce comprise more than 90 percent local residents from 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.

Our one-team approach for safety and health execution on the project has led to the current lost-time injury frequency of less than 0.23 injuries per 200,000 work hours worked since the Full Notice to Proceed was issued in May 2012.

Capital spending

The following table provides a breakdown of capital expenditures on a 100 percent basis.

---------------------------------------------------------------------------- three months ended year ended December 31 December 31 objective(US$ millions) 2012 2011 2012 2011 2013----------------------------------------------------------------------------Capital spending since issuance of full notice to proceed (FNTP) $243 $- $593 $- $2,147Interest paid on senior unsecured notes 70 - 70 - 169Changes in working capital - - (81) (5) (75)Capital spending prior to FNTP - 42 $131 134 -----------------------------------------------------------------------------Capital spending in the consolidated statements of cash flows $313 $42 $713 $129 $2,241----------------------------------------------------------------------------



We 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.

---------------------------------------------------------------------------- Franco- Total Inmet's Nevada's expenditures share after Stream KPMC's(US$ millions) (100% basis) Stream funding 20% share----------------------------------------------------------------------------Cumulative spending at December 31, 2012 $593 $313 $- $280(1)Future capital spending:2013 2,147 1,435 283 4292014 2,527 1,516 506 5052015 914 520 211 183----------------------------------------------------------------------------Total 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 commitments

Since construction commenced in May 2012, contracts have been 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, the port causeway and commodity berth, infrastructure and the power plant, detailed engineering and procurement of certain equipment for the process plant, the mobile mine equipment fleet, fuel supply, construction camp catering and the mine pre-stripping. The total value of commitments that MPSA has entered into since the start of full construction is approximately $4.1 billion, representing 67 percent of estimated capital expenditures. MPSA expects to award the construction contract for the mineral processing plant during the third quarter of 2013.

Funding plan

The table below outlines the total project funding plan as at December 31, 2012.

---------------------------------------------------------------------------- Total expenditures(US$ millions) (100% basis)----------------------------------------------------------------------------Total construction budget for Cobre Panama $6,181Less: Cumulative project funding at December 31, 2012 Inmet's share (400) Attributable to non-controlling interest (KPMC) (261)----------------------------------------------------------------------------Cumulative funding to date (661)Less: Future funding Attributable to precious metal stream partner (Franco-Nevada) (1,000) Attributable to non-controlling interest (KPMC) (1,136)----------------------------------------------------------------------------Inmet's share of future funding 3,384----------------------------------------------------------------------------Less: Cash on hand at December 31, 2012 (includes bonds and other securities and excludes MPSA cash) (3,531)----------------------------------------------------------------------------Excess funding position at December 31, 2012 $147----------------------------------------------------------------------------



Increase to Cobre Panama reserves and mine life

In December 2012, we announced an increase to proven and probable mineral reserves at Cobre Panama. The additional mineral reserves reflect the completion of work on resource definition, metallurgical recoveries, pit design and other engineering, allowing us to include the Balboa, Brazo and Botija Abajo mineralization in our mine plan for Cobre Panama. The additional mineral reserves increased Cobre Panama's total estimated contained copper by 27 percent to approximately 26 billion pounds, and increased estimated contained gold by 41 percent to approximately 7.3 million ounces. These additional mineral reserves have been integrated into a revised mine plan that extends the estimated mine life for Cobre Panama from 31 to 40 years.

2013 outlook for development

We plan to:

Infrastructure

-- Continue with mobilization of major contractors for bulk earthworks and complete the construction of platforms for the power plant and process plant.-- Complete development of additional quarries to support construction activity at the port, mine site, tailings management facility and coastal road.-- Continue the installation of temporary and permanent camps at the plant and port sites.-- Award contracts for the construction of the remainder of infrastructure.-- Develop and implement an operational readiness strategy to allow for the start of pre-stripping activities in 2014.



Power Plant

-- Progress with detailed engineering and procurement for the power plant and geotechnical investigation work.-- Begin construction activities for the power plant following site capture.



Process Plant

-- Complete detailed engineering, procurement of equipment and award the contract for construction of the process plant.-- Start construction activities for the process plant following site capture.



Other

-- Continue 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 develop and implement, with the assistance of our EPC/M contractors, our one-team, project specific health & safety and environmental and social mitigation plans that are consistent with the Environmental and Social Impact Assessment and Inmet's Corporate Responsibility Standards and Procedures.-- Continue to grow the strength of our management team and human resources dedicated to the project.



Managing our liquidity

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

Our capital structure includes a liquidity cushion that gives us the flexibility to deal with operational disruptions or general market downturns.

---------------------------------------------------------------------------- three months ended year ended December 31 December 31(millions) 2012 2011 2012 2011----------------------------------------------------------------------------CASH FROM OPERATING ACTIVITIESCayeli $64 $8 $170 $152Las Cruces 50 44 320 188Pyhasalmi 28 23 97 114Corporate development and exploration not incurred by operations (6) (4) (22) (21)General and administration (10) (5) (37) (26)Realized foreign exchange gains (losses) on cash (15) - 14 (8)Other 6 5 1 (7)---------------------------------------------------------------------------- 117 71 543 392----------------------------------------------------------------------------CASH FROM INVESTING AND FINANCINGPurchase of property, plant and equipment (342) (57) (786) (202)Purchase and maturity of bonds and other securities, net 44 13 (1,452) (226)Sale of 20 percent interest in Cobre Panama - - 161 -Long-term debt borrowing 493 - 1,922 -Funding from non-controlling shareholders 40 - 100 -Issuance of common shares - - - 486Dividends on common shares (7) (7) (14) (13)Foreign exchange on cash held in foreign currency 15 (23) 25 (5)Other (1) (4) (6) 3---------------------------------------------------------------------------- 242 (78) (50) 43----------------------------------------------------------------------------CASH FROM DISCONTINUED OPERATION (OK TEDI) - - - 297----------------------------------------------------------------------------Increase (decrease) in cash 359 (7) 493 732Cash and short-term investments Beginning of period 1,182 1,055 1,048 316---------------------------------------------------------------------------- End of period $1,541 $1,048 $1,541 $1,048----------------------------------------------------------------------------



Our available liquidity also includes $2,077 million of bonds and other securities ($607 million at December 31, 2011), providing a total of $3,618 billion in capital available to finance our growth strategy as at December 31, 2012.

OPERATING ACTIVITIES

Key components of the change in operating cash flows

---------------------------------------------------------------------------- three months ended year ended(millions) December 31 December 31----------------------------------------------------------------------------Higher earnings from operations (see page 5) $23 $137Add back higher depreciation included in earnings from operations 3 22Lower income tax expense - 18Higher corporate development and administrative costs (7) (12)Realized foreign exchange loss on cash held by Inmet Corporate (15) 22Changes in working capital (see note 17 on page 52) 51 (38)Other (9) 2----------------------------------------------------------------------------Higher operating cash flow, compared to 2011 $46 $151----------------------------------------------------------------------------



Operating cash flows this quarter and year to date were higher than in 2011 primarily due to higher earnings from operations before non-cash charges. The increase this quarter was also due to a reduction in net working capital, mainly due to the timing of income tax payments made by Pyhasalmi, and payments received from Cayeli's customers.

This year, the increase in net working capital reflects higher accounts receivable at Las Cruces associated with higher copper cathode sales during 2012 and the timing of collections from customers.

2013 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).

2013 estimated operating cash flow by operation

----------------------------------------(millions)----------------------------------------Cayeli $120Las Cruces 386Pyhasalmi 84---------------------------------------- $590----------------------------------------



INVESTING AND FINANCING

Capital spending

---------------------------------------------------------------------------- three months ended year ended December 31 December 31 objective(millions) 2012 2011 2012 2011 2013----------------------------------------------------------------------------Cayeli $8 $3 $18 $13 $18Las Cruces 18 10 43 52 49Pyhasalmi 3 2 9 7 8Cobre Panama 313 42 713 129 2,241Corporate and other - - 3 1 10---------------------------------------------------------------------------- $342 $57 $786 $202 $2,326----------------------------------------------------------------------------



Please see Results of our operations and Status of our development project for a discussion of actual results and our 2013 objectives. Capital spending this year was mainly for Cobre Panama.

Purchase and maturing of investments

In 2012, we invested $2.3 billion in US dollar-denominated bonds and other securities comprising US Treasury bonds, Canadian government and corporate bonds and Supranational bonds with credit ratings of A to AAA. The securities mature between 2013 and 2018 and have a weighted average annual yield to maturity of 0.31 percent. During the year, $840 million of securities matured. In 2011, we used most of the US dollar proceeds from the sale of Ok Tedi to buy $274 million in US Treasury bonds with AA credit ratings and $67 million of bonds matured.

Issuance of senior unsecured notes

On 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. On December 18, 2012, we issued an additional $0.5 billion of senior unsecured notes, bearing a coupon rate of interest of 7.5 percent and maturing in June 2021. The notes were priced at 100 percent of their face value, yielding proceeds of $493 million net of 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 Panama

On April 25, 2012, KPMC completed its acquisition of a 20 percent interest in MPSA. KPMC acquired its interest for $161 million in cash. Together with the 20 percent of funding of the estimated $6.2 billion of development costs for Cobre Panama it will provide during the construction period, this amounts to total funding of $1.4 billion. During 2012, KPMC provided $100 million of this funding ($40 million this quarter).

Issuance of common shares - 2011

In 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 - 2011

In January 2011, we sold our 18 percent equity interest in Ok Tedi for net proceeds of $297 million (after Papua New Guinea withholding taxes).

2013 outlook for investing and financing

Capital spending

We expect capital spending to be $2,326 million in 2013. The more significant items include:

- $2,241 million at Cobre Panama to advance construction activities on the project- $49 million at Las Cruces, including $22 million for mine development, as well as other capital projects including a tailings facility expansion and certain plant improvements.



Sale of precious metal stream to 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 FNTP reaches $1 billion (expected by mid-2013) and will be provided pro-rata on a 1:3 ratio with Inmet's subsequent funding contributions.

Financial condition

Our strategy is to make sure we have sufficient liquidity (including cash and committed credit facilities) to finance our operating requirements as well as our growth projects. At December 31, 2012, we had $3,618 million in total funds, including $1,541 million of cash and short-term investments and $2,077 million invested in bonds and other securities.

Cash

At December 31, 2012 our cash and short-term investments of $1,541 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 December 31, 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 45 in the consolidated financial statements for more details about where our cash is invested.

Bonds and other securities

We hold a portfolio of bonds and other securities to provide better yields while minimizing our investment risk. As at December 31, 2012, our portfolio was $2,077 million. The portfolio includes:

-- 34 percent US Treasury bonds-- 25 percent Canadian and provincial government bonds-- 37 percent corporate bonds-- 4 percent Supranational bonds.



The securities mature between 2013 and 2018.

Restricted cash

Our restricted cash balance of $78 million as at December 31, 2012 included:

-- $20 million in cash collateralized letters of credit for Inmet-- $57 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-- $1 million for future reclamation at Pyhasalmi.



COMMON SHARES

----------------------------------------------------------------------------Common shares outstanding as of December 31, 2012 and February 21, 2013 69,365,748----------------------------------------------------------------------------Deferred share units outstanding as of December 31, 2012 109,022(redeemable on a one-for-one basis for common shares)----------------------------------------------------------------------------



Additional risk factor

We have significantly increased our cash balance following the issuance of our senior unsecured notes for the construction of Cobre Panama. For U.S. federal income tax purposes a non-U.S. corporation may be classified as a "passive foreign investment company" (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. Based on our analysis, we do not believe that we are a PFIC in the current taxation year. The methods used to determine income and assets for the purpose of this test are subject to interpretation and judgement, and based on the manner in which fair value is determined, the analysis could show that we are a PFIC. If we are 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 on a number of assumptions, there can be no assurance that Inmet is not a PFIC in the current year or will not become a PFIC in 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 information

Pages 32 and 33 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: Cayeli (Turkey), Las Cruces (Spain) and Pyhasalmi (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.

Fourth quarter conference call

Will be held on

-- Friday, February 22, 2013-- 8:30 a.m. Eastern Time-- webcast available at http://events.digitalmedia.telus.com/inmet/022213/index.php or www.inmetmining.com



You can also dial in by calling

-- Local or international: +1.416.340.8530-- Toll-free within North America: +1.877.240.9772



Starting at approximately 10:30 a.m. (ET) Friday, February 22, 2013, a conference call replay will be available

-- Local or international: +1.905.694.9451 passcode 7813798-- Toll-free within North America: +1.800.408.3053 passcode 7813798INMET MINING CORPORATIONSupplementary financial informationCash costs2012 For the year ended December 31 per pound of copper ------------------------------------------ LAS CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------(US dollars)Direct production costs $1.27 $1.08 $2.18 $1.26Royalties and variable compensation 0.11 0.06 - 0.07Smelter processing charges and freight 0.97 0.02 0.95 0.39Metal credits (1.47) - (3.81) (0.84) ------------------------------------------Cash cost $0.88 $1.16 ($0.68) $0.88 ------------------------------------------2011 For the year ended December 31 per pound of copper ------------------------------------------ LAS CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------(US dollars)Direct production costs $1.35 $1.55 $1.93 $1.54Royalties and variable compensation $0.18 0.07 - 0.10Smelter processing charges and freight $1.48 0.01 1.16 0.70Metal credits (2.41) - (4.02) (1.48) ------------------------------------------Cash cost $0.60 $1.63 ($0.93) $0.86 ------------------------------------------Reconciliation of cash costs to statements of earnings2012 For the year ended December 31 per pound of copper ------------------------------------------(millions of US dollars, except LAS where otherwise noted) CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------GAAP reference page 17 page 20 page 22Direct production costs $94 $167 $60 $321Smelter processing charges and freight 67 2 44 113By product sales (101) - (120) (221)Adjust smelter processing and freight, and sales to production basis 1 - (3) (2) ------------------------------------------Operating costs net of metal credits $61 $169 ($19) $211Inmet's share of production (000's) 69,200 149,200 27,800 246,200 ------------------------------------------Cash cost (US dollars) $0.88 $1.16 ($0.68) $0.88 ------------------------------------------2011 For the year ended December 31 per pound of copper ------------------------------------------(millions of US dollars, except LAS where otherwise noted) CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------GAAP reference page 17 page 20 page 22Direct production costs $93 $143 $57 $293Smelter processing charges and freight 69 1 56 126By product sales (128) - (146) (274)Adjust smelter processing and freight, and sales to production basis 4 - 4 8 ------------------------------------------Operating costs net of metal credits $38 $144 ($29) $153Inmet's share of production (000's) 63,300 92,900 30,800 187,000 ------------------------------------------Cash cost (US dollars) $0.60 $1.63 ($0.93) $0.86 ------------------------------------------INMET MINING CORPORATIONSupplementary financial informationCash costs2012 For the three months ended December 31 per pound of copper ------------------------------------------- LAS CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------(US dollars)Direct production costs $1.59 $1.11 $2.30 $1.37Royalties and variable compensation 0.08 0.05 - 0.05Smelter processing charges and freight 1.03 0.02 $1.21 0.42Metal credits (1.68) - ($4.71) (0.99) -------------------------------------------Cash cost $1.02 $1.18 ($1.20) $0.85 -------------------------------------------2011 For the three months ended December 31 per pound of copper ------------------------------------------- LAS CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------(US dollars)Direct production costs $1.15 $1.19 $1.86 $1.27Royalties and variable compensation 0.09 0.05 - 0.06Smelter processing charges and freight 1.13 0.01 0.92 0.50Metal credits (1.71) - (3.36) (1.01) -------------------------------------------Cash cost $0.66 $1.25 ($0.58) $0.82 -------------------------------------------Reconciliation of cash costs to statements of earnings2012 For the three months ended December 31 per pound of copper -------------------------------------------(millions of US dollars, except LAS where otherwise noted) CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------GAAP reference page 17 page 20 page 22Direct production costs $26 $43 $16 $85Smelter processing charges and freight 13 1 12 26By product sales (23) - (39) (62)Adjust smelter processing and freight, and sales to production basis - - 2 2 -------------------------------------------Operating costs net of metal credits $16 $44 ($9) $51Inmet's share of production (000's) 15,500 38,200 7,200 60,900 -------------------------------------------Cash cost (US dollars) $1.02 $1.18 ($1.20) $0.85 -------------------------------------------2011 For the three months ended December 31 per pound of copper -------------------------------------------(millions of US dollars, except LAS where otherwise noted) CAYELI CRUCES PYHASALMI TOTAL----------------------------------------------------------------------------GAAP reference page 17 page 20 page 22Direct production costs $24 $38 $14 $76Smelter processing charges and freight 14 - 13 27By product sales (24) - (32) (56)Adjust smelter processing and freight, and sales to production basis (1) - 1 - -------------------------------------------Operating costs net of metal credits $13 $38 ($4) $47Inmet's share of production (000's) 19,000 31,100 7,700 57,800 -------------------------------------------Cash cost (US dollars) $0.66 $1.25 ($0.58) $0.82 -------------------------------------------INMET MINING CORPORATIONQuarterly review(unaudited)Latest Four Quarters--------------------------------------------------------------------------- 2012 2012(2) 2012 2012(1)(thousands of US dollars, except Fourth Third Second First per share amounts) quarter quarter quarter quarter----------------------------------------------------------------------------STATEMENTS OF EARNINGSGross sales $ 259,868 $ 327,187 $ 251,395 $ 285,527Smelter processing charges and freight (26,155) (30,023) (28,480) (29,338)Cost of sales (excluding depreciation) (91,273) (91,096) (84,634) (79,624) Depreciation (30,079) (37,633) (29,193) (30,067) ------------------------------------------- 112,361 168,435 109,088 146,498Corporate development and exploration (8,620) (7,905) (10,290) (8,801)General and administration (14,896) (12,982) (15,899) (9,745)Investment and other income (16,279) 1,645 45,103 (6,263)Finance costs (2,632) (2,463) (2,379) (2,596)Income tax expense (31,713) (42,135) (31,444) (26,012) -------------------------------------------Income from continuing operations $ 38,221 $ 104,595 $ 94,179 $ 93,081 -------------------------------------------Net income attributable to: Inmet equity holders $ 38,775 $ 104,897 $ 94,458 $ 93,081 Non-controlling interest (554) (302) (279) - ------------------------------------------- $ 38,221 $ 104,595 $ 94,179 $ 93,081 -------------------------------------------Net Income per share Basic $ 0.56 $ 1.51 $ 1.36 $ 1.35 Diluted $ 0.56 $ 1.50 $ 1.35 $ 1.34Previous Four Quarters----------------------------------------------------------------------------(thousands of US dollars, except 2011(1) 2011(1) 2011(1) 2011(1) per share amounts) Fourth Third Second First quarter quarter quarter quarter----------------------------------------------------------------------------STATEMENTS OF EARNINGSGross sales $ 233,394 $ 253,432 $ 214,894 $ 246,191Smelter processing charges and freight (27,330) (35,865) (32,793) (30,581)Cost of sales (excluding depreciation) (90,177) (78,563) (71,302) (76,633) Depreciation (26,835) (26,452) (25,802) (26,180) ------------------------------------------- 89,052 112,552 84,997 112,797Corporate development and exploration (6,333) (4,539) (4,417) (12,984)General and administration (7,487) (9,669) (7,995) (8,155)Investment and other income (3,883) 34,640 4,581 (5,590)Finance costs (2,314) (2,301) (2,310) (2,257)Income tax expense (22,491) (32,696) (20,588) (26,296) -------------------------------------------Income from continuing operations 46,544 97,987 54,268 57,515Income from discontinued operation (net of taxes) - - 80,786 ------------------------------------------- $ 46,544 $ 97,987 $ 54,268 $ 138,301 -------------------------------------------Net income attributable to: Inmet equity holders $ 46,544 $ 97,987 $ 54,268 $ 138,301 Non-controlling interest - - - - ------------------------------------------- $ 46,544 $ 97,987 $ 54,268 $ 138,301 -------------------------------------------Income from continuing operations per share Basic $ 0.67 $ 1.41 $ 0.83 $ 0.94 Diluted $ 0.67 $ 1.41 $ 0.83 $ 0.93Income from discontinuing operations per share Basic $ - $ - $ - $ 1.32 Diluted $ - $ - $ - $ 1.31Net Income per share Basic $ 0.67 $ 1.41 $ 0.83 $ 2.26 Diluted $ 0.67 $ 1.41 $ 0.83 $ 2.241. Information restated from previously reported Canadian dollar amounts toUS dollar amounts at May 31, 2012 exchange rate of US $0.97 per Canadiandollar.2. Investment and other income in the third quarter has been recast as aresult of a reassessment of the embedded derivative relating to the seniorunsecured notes prepayment option as being closely related at inception. Thenet effect was a decrease to investment and other income for the thirdquarter of 2012 and an equivalent decrease in net income in that period.INMET MINING CORPORATIONConsolidated statements of financial position(Unaudited) December December DecemberAs at balance sheet date Note 31, 31, 31,(thousands of US dollars) reference 2012 2011(1) 2010(1)----------------------------------------------------------------------------AssetsCurrent assets: Cash and short term investments 4 $1,541,219 $1,048,457 $316,045 Restricted cash 5 1,291 784 597 Accounts receivable 160,387 101,867 115,628 Inventories 92,399 87,654 69,860 Current portion of bonds and other securities 6 883,599 175,921 52,201 Assets held for sale - - 308,935 -------------------------------------- 2,678,895 $1,414,683 863,266Restricted cash 5 77,050 69,538 67,831Property, plant and equipment 2,632,297 1,772,766 1,680,858Bonds and other securities 6 1,193,088 430,787 311,091Deferred income tax assets 895 317 8,444Other assets 1,643 1,380 2,261 --------------------------------------Total assets $6,583,868 $3,689,471 $2,933,751----------------------------------------------------------------------------LiabilitiesCurrent liabilities: Accounts payable and accrued liabilities 7 282,676 138,596 $132,009 Provisions 8 20,041 13,087 17,106 Current portion of long term debt 9 17,870 - - Liabilities associated with assets held for sale - - 108,338 -------------------------------------- 320,587 $151,683 257,453Long-term debt 9 1,941,989 16,581 16,091Provisions 8 227,146 170,025 157,235Other liabilities 18,243 17,156 17,541Deferred income tax liabilities 104,099 28,351 12,127 --------------------------------------Total liabilities 2,612,064 $383,796 460,447 --------------------------------------Commitments and contingencies 18EquityShare capital 1,541,773 1,541,324 1,054,927Contributed surplus 64,825 64,629 64,028Share based compensation 10 21,896 8,256 6,334Retained earnings 2,176,197 1,851,010 1,527,342Accumulated other comprehensive loss 11 (85,413) (159,544) (179,327) --------------------------------------Total equity attributable to Inmet equity holders $3,719,278 $3,305,675 2,473,304Non-controling interest 12 252,526 - - --------------------------------------Total equity $3,971,804 $3,305,675 $2,473,304 --------------------------------------Total liabilities and equity $6,583,868 $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) CORPORATE LAS2012 As at December 31 & OTHER CAYELI CRUCES---------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)AssetsCash and short-term investments $ 1,128,087 $ 148,678 $ 157,903Other current assets 894,911 41,529 148,250Restricted cash 19,804 - 55,629Property, plant and equipment 3,764 134,389 852,955Bonds and other securities 1,092,056 101,032 -Other non-current assets 1,466 1,072 - ------------------------------------ $ 3,140,088 $ 426,700 $ 1,214,737 ------------------------------------LiabilitiesCurrent liabilities $ 61,204 $ 54,111 $ 59,288Long-term debt 1,941,989 - -Provisions 79,809 21,772 69,189Other liabilities 681 - 17,562Deferred income tax liabilities 889 - 91,594 ------------------------------------ $ 2,084,572 $ 75,883 $ 237,633 ------------------------------------ DISCONTINUED COBRE OPERATIONS -2012 As at December 31 PYHASALMI PANAMA OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)AssetsCash and short-term investments $ 22,071 $ 84,480 $ - $ 1,541,219Other current assets 51,823 1,163 - 1,137,676Restricted cash 1,617 - - 77,050Property, plant and equipment 70,166 1,571,023 - 2,632,297Bonds and other securities - - - 1,193,088Other non-current assets - - - 2,538 ------------------------------------------------- $ 145,677 $ 1,656,666 $ - $ 6,583,868 -------------------------------------------------LiabilitiesCurrent liabilities $ 19,472 $ 126,512 $ - $ 320,587Long-term debt - - - 1,941,989Provisions 35,800 20,576 - 227,146Other liabilities - - - 18,243Deferred income tax liabilities 11,616 - - 104,099 ------------------------------------------------- $ 66,888 $ 147,088 $ - $ 2,612,064 ------------------------------------------------- CORPORATE LAS2011 As at December 31 & OTHER CAYELI CRUCES---------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)AssetsCash and short-term investments $ 711,427 $ 133,215 $ 131,799Other current assets 183,715 44,728 83,926Restricted cash 16,306 - 51,667Property, plant and equipment 1,196 137,736 869,308Bonds and other securities 351,082 79,705 -Other non-current assets 1,262 435 - ------------------------------------ $ 1,264,988 $ 395,819 $ 1,136,700 ------------------------------------LiabilitiesCurrent liabilities $ 21,305 $ 41,460 $ 53,152Long-term debt 16,581 - -Provisions 68,823 17,450 53,857Other liabilities 655 - 16,501Deferred income tax liabilities - - 17,095 ------------------------------------ $ 107,364 $ 58,910 $ 140,605 ------------------------------------ DISCONTINUED COBRE OPERATIONS -2011 As at December 31 PYHASALMI PANAMA OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)AssetsCash and short-term investments $ 46,109 $ 25,907 $ - $ 1,048,457Other current assets 51,893 1,964 - 366,226Restricted cash 1,565 - - 69,538Property, plant and equipment 66,103 698,423 - 1,772,766Bonds and other securities - - - 430,787Other non-current assets - - - 1,697 ------------------------------------------------- $ 165,670 $ 726,294 $ - $ 3,689,471 -------------------------------------------------LiabilitiesCurrent liabilities $ 16,418 $ 19,348 $ - $ 151,683Long-term debt - - - 16,581Provisions 29,895 - - 170,025Other liabilities - - - 17,156Deferred income tax liabilities 11,256 - - 28,351 ------------------------------------------------- $ 57,569 $ 19,348 $ - $ 383,796 ------------------------------------------------- CORPORATE LAS2010 As at December 31 & OTHER CAYELI CRUCES---------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)AssetsCash and short-term investments $ 51,493 $ 104,324 $ 57,961Other current assets 58,851 57,084 57,708Restricted cash 16,368 - 49,883Property, plant and equipment 754 147,799 911,496Bonds and other securities 248,288 62,803 -Other non-current assets 922 5,571 4,212 ------------------------------------ $ 376,676 $ 377,581 $ 1,081,260 ------------------------------------LiabilitiesCurrent liabilities $ 29,322 $ 38,393 $ 45,718Long-term debt 16,091 - -Provisions 55,707 20,920 54,644Other liabilities 655 - 16,886Deferred income tax liabilities 171 - - ------------------------------------ $ 101,946 $ 59,313 $ 117,248 ------------------------------------ DISCONTINUED COBRE OPERATIONS -2010 As at December 31 PYHASALMI PANAMA OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)AssetsCash and short-term investments $ 93,970 $ 8,297 $ - $ 316,045Other current assets 64,088 664 308,826 547,221Restricted cash 1,580 - - 67,831Property, plant and equipment 64,854 555,955 - 1,680,858Bonds and other securities - - - 311,091Other non-current assets - - - 10,705 ------------------------------------------------- $ 224,492 $ 564,916 $ 308,826 $ 2,933,751 -------------------------------------------------LiabilitiesCurrent liabilities $ 27,994 $ 7,688 $ 108,338 $ 257,453Long-term debt - - - 16,091Provisions 25,964 - - 157,235Other liabilities - - - 17,541Deferred income tax liabilities 11,956 - - 12,127 ------------------------------------------------- $ 65,914 $ 7,688 $ 108,338 $ 460,447 -------------------------------------------------INMET MINING CORPORATIONConsolidated statements of changes in equity(unaudited)---------------------------------------------------------------------------- Attributable to Inmet equity holders----------------------------------------------------------------------------(thousands of US Note Share Retained Contributed Share based dollars) reference Capital earnings surplus compensation----------------------------------------------------------------------------Balance as at December 31, 2010 $1,054,927 $1,527,342 $64,028 $6,334Comprehensive income - 337,100 - -Equity settled share-based compensation plans 198 - 601 1,922Dividends - (13,432) - -Issuance of share capital 486,199 - - - ------------------------------------------------Balance as at December 31, 2011 $1,541,324 $1,851,010 $64,629 $8,256 ------------------------------------------------Comprehensive income - 331,211 - -Equity settled share-based compensation plans 449 - 196 13,640Dividends - (13,616) - -Equity funding from non- controlling shareholder - - - -Sale of 20 percent interest in Cobre Panama 12 - 7,592 - - ------------------------------------------------Balance as at December 31, 2012 1,541,773 2,176,197 64,825 21,896 ------------------------------------------------------------------------------------------------------------------------ Attributable to Inmet equity holders------------------------------------------------------------------------ Accumulated other comprehensive Non-(thousands of US income (loss) controlling Total dollars) (note 11) Total interest equity------------------------------------------------------------------------Balance as at December 31, 2010 ($179,327) $2,473,304 $ - $2,473,304Comprehensive income 19,783 356,883 - 356,883Equity settled share-based compensation plans - 2,721 - 2,721Dividends - (13,432) - (13,432)Issuance of share capital - 486,199 - 486,199 -------------------------------------------------------Balance as at December 31, 2011 ($159,544) $3,305,675 $ - $3,305,675 -------------------------------------------------------Comprehensive income 68,358 399,569 4,867 404,436Equity settled share-based compensation plans - 14,285 - 14,285Dividends - (13,616) - (13,616)Equity funding from non- controlling shareholder - - 100,000 100,000Sale of 20 percent interest in Cobre Panama 5,773 13,365 147,659 161,024 -------------------------------------------------------Balance as at December 31, 2012 (85,413) $3,719,278 $252,526 $3,971,804 -------------------------------------------------------INMET MINING CORPORATIONConsolidated statements of earnings(unaudited) Three Months Ended Year Ended December 31 December 31(thousands of US dollars except per share amounts) reference 2012 2011(1) 2012 2011(1)----------------------------------------------------------------------------Gross sales $259,868 $233,394 $1,123,977 $947,911Smelter processing charges and freight (26,155) (27,330) (113,996) (126,569)Cost of sales (excluding depreciation) (91,273) (90,177) (346,627) (316,675) Depreciation (30,079) (26,835) (126,972) (105,269)----------------------------------------------------------------------------Earnings from operations 112,361 89,052 536,382 399,398Corporate development and exploration (8,620) (6,333) (35,616) (28,273)General and administration (14,896) (7,487) (53,522) (33,306)Investment and other income 13 (16,279) (3,883) 24,206 29,748Finance costs 14 (2,632) (2,314) (10,070) (9,182)----------------------------------------------------------------------------Income before taxation 69,934 69,035 461,380 358,385Income tax expense 15 (31,713) (22,491) (131,304) (102,071)----------------------------------------------------------------------------Income from continuing operations 38,221 46,544 330,076 $256,314Income from discontinued operation (net of taxes) - - - 80,786----------------------------------------------------------------------------Net income 38,221 46,544 330,076 $337,100----------------------------------------------------------------------------Net income (loss) attributable to:Inmet equity holders 38,775 46,544 331,211 $337,100Non-controlling interests (554) - (1,135) ----------------------------------------------------------------------------- 38,221 46,544 330,076 $337,100----------------------------------------------------------------------------Earnings per common share 16Income from continuing operations Basic $0.56 $0.67 $4.78 $3.86 Diluted $0.56 $0.67 $4.75 $3.85----------------------------------------------------------------------------Income from discontinued operation Basic $ - - $ - $1.22 Diluted $ - - $ - $1.21----------------------------------------------------------------------------Net income Basic $0.56 $0.67 $4.78 $5.08 Diluted $0.56 $0.67 $4.75 $5.06----------------------------------------------------------------------------(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 year ended CORPORATE LAS December 31 & OTHER CAYELI CRUCES-----------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Gross sales $ - $ 358,964 $ 538,981Smelter processing charges and freight - (67,348) (2,374)Cost of sales (excluding depreciation) (17,104) (104,045) (165,320) Depreciation - (24,692) (92,037) --------------------------------------Earnings from operations (17,104) 162,879 279,250Corporate development and exploration (22,490) (1,347) (1,600)General and administration (53,522) - -Investment and other income 25,241 (524) 1,580Finance costs (3,340) (1,155) (4,753)Income tax expense (1,935) (32,923) (72,495) --------------------------------------Net income from continuing operations $ (73,150) $ 126,930 $ 201,982Income from discontinued operation (net of taxes) - - - --------------------------------------Net income (loss) $ (73,150) $ 126,930 $ 201,982 -------------------------------------- DISCONTINUED2012 For the year ended COBRE OPERATIONS December 31 PYHASALMI PANAMA -OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Gross sales $ 226,032 $ - $ - $1,123,977Smelter processing charges and freight (44,274) - - (113,996)Cost of sales (excluding depreciation) (60,158) - - (346,627) Depreciation (10,243) - - (126,972) --------------------------------------------------Earnings from operations 111,357 - - 536,382Corporate development and exploration (4,368) (5,811) - (35,616)General and administration - - - (53,522)Investment and other income (1,727) (364) - 24,206Finance costs (726) (96) - (10,070)Income tax expense (23,951) - - (131,304) --------------------------------------------------Net income from continuing operations $ 80,585 $ (6,271) $ - $ 330,076Income from discontinued operation (net of taxes) - - - - --------------------------------------------------Net income (loss) $ 80,585 $ (6,271) $ - $ 330,076 --------------------------------------------------2011 For the year ended CORPORATE LAS December 31 & OTHER CAYELI CRUCES--------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Gross sales $ - $ 342,458 $ 345,568Smelter processing charges and freight - (69,424) (1,188)Cost of sales (excluding depreciation) (16,190) (97,079) (147,076) Depreciation - (21,337) (74,931) -----------------------------------Earnings from operations (16,190) 154,618 122,373Corporate development and exploration (20,590) (1,612) (435)General and administration (33,306) - -Investment and other income 20,074 7,521 1,686Finance costs (3,720) (570) (4,027)Income tax expense 2,374 (50,947) (22,788) -----------------------------------Net income from continuing operations $ (51,358) $ 109,010 $ 96,809Income from discontinued operation (net of taxes) - - - -----------------------------------Net income (loss) $ (51,358) $ 109,010 $ 96,809 ----------------------------------- DISCONTINUED2011 For the year ended COBRE OPERATIONS December 31 PYHASALMI PANAMA -OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Gross sales $ 259,885 $ - $ - $ 947,911Smelter processing charges and freight (55,957) - - (126,569)Cost of sales (excluding depreciation) (56,330) - - (316,675) Depreciation (9,001) - - (105,269) --------------------------------------------------Earnings from operations 138,597 - - 399,398Corporate development and exploration (3,478) (2,158) - (28,273)General and administration - - - (33,306)Investment and other income 447 20 - 29,748Finance costs (865) - - (9,182)Income tax expense (30,710) - - (102,071) --------------------------------------------------Net income from continuing operations $ 103,991 $ (2,138) $ - $ 256,314Income from discontinued operation (net of taxes) - - 80,786 80,786 --------------------------------------------------Net income (loss) $ 103,991 $ (2,138) $ 80,786 $ 337,100 --------------------------------------------------INMET MINING CORPORATIONSegmented statements of earnings(unaudited)2012 For the three months CORPORATE LAS ended December 31 & OTHER CAYELI CRUCES--------------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Gross sales $ - $ 58,742 $ 136,909Smelter processing charges and freight - (12,856) (861)Cost of sales (excluding depreciation) (9,924) (24,691) (40,320) Depreciation - (4,702) (22,331) -----------------------------------------Earnings from operations (9,924) 16,493 73,397Corporate development and exploration (5,679) (355) 5General and administration (14,896) - -Investment and other income (12,970) 376 (2,238)Finance costs (867) (293) (1,190)Income tax expense (1,346) (3,983) (18,371) -----------------------------------------Net income from continuing operations $ (45,682) $ 12,238 $ 51,603 - - - -----------------------------------------Net income (loss) $ (45,682) $ 12,238 $ 51,603 ----------------------------------------- DISCONTINUED2012 For the three months COBRE OPERATIONS - ended December 31 PYHASALMI PANAMA OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Gross sales $ 64,217 $ - $ - $ 259,868Smelter processing charges and freight (12,438) - - (26,155)Cost of sales (excluding depreciation) (16,338) - - (91,273) Depreciation (3,046) - - (30,079) --------------------------------------------------Earnings from operations 32,395 - - 112,361Corporate development and exploration (1,028) (1,573) - (8,620)General and administration - - - (14,896)Investment and other income (953) (494) - (16,279)Finance costs (186) (96) - (2,632)Income tax expense (8,013) - - (31,713) --------------------------------------------------Net income from continuing operations $ 22,215 $ (2,153) $ - $ 38,221 - - - - --------------------------------------------------Net income (loss) $ 22,215 $ (2,153) $ - $ 38,221 --------------------------------------------------2011 For the three months CORPORATE LAS ended December 31 & OTHER CAYELI CRUCES--------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Gross sales $ - $ 77,124 $ 97,731Smelter processing charges and freight - (14,373) (351)Cost of sales (excluding depreciation) (16,190) (22,692) (37,867) Depreciation - (5,391) (19,129) -----------------------------------Earnings from operations (16,190) 34,668 40,384Corporate development and exploration (4,466) (377) (429)General and administration (7,487) - -Investment and other income (5,544) 480 910Finance costs (941) (148) (1,009)Income tax expense 1,662 (9,444) (8,097) -----------------------------------Net income from continuing operations $ (32,966) $ 25,179 $ 31,759Income from discontinued operation (net of taxes) - - - -----------------------------------Net income (loss) $ (32,966) $ 25,179 $ 31,759 ----------------------------------- DISCONTINUED2011 For the three months COBRE OPERATIONS ended December 31 PYHASALMI PANAMA -OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Gross sales $ 58,539 $ - $ - $ 233,394Smelter processing charges and freight (12,606) - - (27,330)Cost of sales (excluding depreciation) (13,428) - - (90,177) Depreciation (2,315) - - (26,835) --------------------------------------------------Earnings from operations 30,190 - - 89,052Corporate development and exploration (1,061) - - (6,333)General and administration - - - (7,487)Investment and other income 156 115 - (3,883)Finance costs (216) - - (2,314)Income tax expense (6,612) - - (22,491) --------------------------------------------------Net income from continuing operations $ 22,457 $ 115 $ - $ 46,544Income from discontinued operation (net of taxes) - - - - --------------------------------------------------Net income (loss) $ 22,457 $ 115 $ - $ 46,544 --------------------------------------------------INMET MINING CORPORATIONConsolidated statements of comprehensive income(unaudited) Three Months Ended Year Ended December 31 December 31 Note(thousands of US dollars) reference 2012 2011(1) 2012 2011(1)----------------------------------------------------------------------------Net income $38,221 $46,544 $330,076 $337,100 ---------------------------------------Other comprehensive income for the period:Continuing operations Changes in fair value of bonds and other securities (1,175) (649) 296 (3,552) Currency translation adjustments 38,266 (107,104) 73,176 4,026Reclassification to net income of losses on bonds and other securities 659 3,440 659 3,440Income tax recovery related to bonds and other securities - other comprehensive income - - - 15 --------------------------------------- 37,750 (104,313) 74,131 3,929 ---------------------------------------Other comprehensive income from discontinued operation (net of taxes) - - - 15,854 ---------------------------------------Comprehensive income $75,971 ($57,769) $404,207 $356,883----------------------------------------------------------------------------(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 Year Ended December 31 December 31(thousands of US Note dollars) reference 2012 2011(2) 2012 2011(2)----------------------------------------------------------------------------Cash provided by (used in) operating activities(1)Net income from continuing operations $38,221 $46,544 $330,076 $256,314Add (deduct) items not affecting cash: Depreciation 30,079 26,835 126,972 105,269 Deferred income taxes 18,431 9,233 72,569 25,504 Accretion expense on provisions and capital leases 2,163 1,855 8,289 7,393 Change in asset retirement obligations at closed sites 9,924 16,190 17,104 16,190 Foreign exchange loss (gain) 4,056 6,031 6,361 (20,384) Stock based compensation 5,158 2,209 17,323 3,473 Other 4,252 7,715 6,155 3,940Settlement of asset retirement obligations (4,969) (4,209) (8,503) (10,509)Net change in non- cash working capital 17 9,536 (41,635) (32,954) 4,786 ----------------------------------------------- 116,851 70,768 543,392 391,976 -----------------------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (342,467) (57,100) (785,761) (201,909)Acquisition of bonds and other securities 6 (537,345) (2,121) (2,291,513) (296,014)Maturity of bonds and other securities 581,488 15,613 839,673 66,508Funding received under Cobre Panama option agreement - - - 12,310Sale (purchase) of short-term investments, net (507,636) 80,055 (249,177) (251,632)Other - (3,730) - 255 ----------------------------------------------- (805,960) 32,717 (2,486,778) (670,482) -----------------------------------------------Cash provided by (used in) financing activitiesIssuance of common shares - - - 486,199Long-term debt borrowing, net of transaction costs 9 492,837 - 1,921,868 -Dividends on common shares (6,857) (6,719) (13,616) (13,432)Financial assurance payments (228) (202) (5,454) (2,493)Funding by non- controlling shareholder 40,000 - 100,000 -Sale of 20 percent interest in Cobre Panama 12 - - 160,952 -Other (170) (522) (1,982) (2,767) ----------------------------------------------- 525,582 (7,443) 2,161,768 467,507 -----------------------------------------------Foreign exchange on cash held in foreign currencies 15,445 (22,796) 25,203 (5,204) -----------------------------------------------Cash provided by discontinued operation - - - 297,220 -----------------------------------------------Increase in cash: (148,082) 73,246 243,585 481,017Cash: Beginning of period 1,181,665 716,752 789,998 308,981 ----------------------------------------------- End of period $1,033,583 $789,998 $1,033,583 $789,998Short term investments 507,636 258,459 507,636 258,459 -----------------------------------------------Cash and short- term investments $1,541,219 $1,048,457 $1,541,219 $1,048,457----------------------------------------------------------------------------(See accompanying notes)(1)Supplementary cash flow information: Cash interest paid $70,365 $ - $71,426 $1,118 Cash taxes paid $13,951 $29,038 $65,936 $92,102----------------------------------------------------------------------------(2)refer to note 3 for effect of change in presentation currency to the US DollarINMET MINING CORPORATIONSegmented statements of cash flows(unaudited)For the year ended December CORPORATE 31, 2012 & OTHER CAYELI LAS CRUCES-------------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Cash provided by (used in) operating activitiesBefore net change in non- cash working capital ($40,830) $158,909 $372,140Net change in non-cash working capital 3,131 11,307 (52,337) -------------------------------------- (37,699) 170,216 319,803 --------------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (3,732) (17,531) (43,217)Acquisition of bonds and other securities (2,271,677) (19,836) -Maturity of bonds and other securities 839,673 - -Sale (purchase) of short- term investments, net (249,177) - - -------------------------------------- (1,684,913) (37,367) (43,217) --------------------------------------Cash provided by (used in) financing activitiesFunding by non-controlling shareholder - - -Long-term obligations 1,921,868 - -Funding received - Cobre Panama option agreement - - -Other (16,744) - (4,379) -------------------------------------- 1,905,124 - (4,379) --------------------------------------Foreign exchange on cash held in foreign currencies 20,289 (977) 930 --------------------------------------Cash provided by discontinued operation - - - --------------------------------------Intergroup funding (distributions) (35,318) (116,409) (247,033) --------------------------------------Increase (decrease) in cash 167,483 15,463 26,104Cash: Beginning of year 452,968 133,215 131,799 -------------------------------------- End of period 620,451 148,678 157,903Short term investments 507,636 - - --------------------------------------Cash and short-term investments $1,128,087 $148,678 $157,903 -------------------------------------- DISCONTINUEDFor the year ended December COBRE OPERATIONS 31, 2012 PYHASALMI PANAMA -OK TEDI TOTAL--------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Cash provided by (used in) operating activitiesBefore net change in non- cash working capital $92,306 ($6,179) $ - $576,346Net change in non-cash working capital 4,945 - - (32,954) ----------------------------------------------- 97,251 (6,179) - 543,392 -----------------------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (8,648) (712,633) - (785,761)Acquisition of bonds and other securities - - - (2,291,513)Maturity of bonds and other securities - - - 839,673Sale (purchase) of short- term investments, net - - - (249,177) ----------------------------------------------- (8,648) (712,633) - (2,486,778) -----------------------------------------------Cash provided by (used in) financing activitiesFunding by non-controlling shareholder - 100,000 - 100,000Long-term obligations - - - 1,921,868Funding received - Cobre Panama option agreement - 160,952 - 160,952Other - 71 - (21,052) ----------------------------------------------- - 261,023 - 2,161,768 -----------------------------------------------Foreign exchange on cash held in foreign currencies 389 4,572 - 25,203 -----------------------------------------------Cash provided by discontinued operation - - - - -----------------------------------------------Intergroup funding (distributions) (113,030) 511,790 - - -----------------------------------------------Increase (decrease) in cash (24,038) 58,573 - 243,585Cash: Beginning of year 46,109 25,907 - 789,998 ----------------------------------------------- End of period 22,071 84,480 - 1,033,583Short term investments - - - 507,636 -----------------------------------------------Cash and short-term investments $22,071 $84,480 $ - $1,541,219 -----------------------------------------------For the year ended December CORPORATE LAS 31, 2011 & OTHER CAYELI CRUCES---------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Cash provided by (used in) operating activitiesBefore net change in non-cash working capital ($55,319) $132,064 $198,630Net change in non-cash working capital (4,615) 19,755 (10,177) --------------------------------- (59,934) 151,819 188,453 ---------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (1,055) (12,708) (51,935)Acquisition of bonds and other securities (280,830) (15,184) -Maturity of bonds and other securities 66,508 - -Funding received under Cobre Panama option agreement - - -Sale (purchase) of short-term investments, net (258,678) - 7,046Other 255 - - --------------------------------- (473,800) (27,892) (44,889) ---------------------------------Cash provided by (used in) financing activities 472,540 - (5,033) ---------------------------------Foreign exchange on cash held in foreign currencies - 642 (3,781) ---------------------------------Cash provided by discontinued operation - - - ---------------------------------Intergroup funding (distributions) 462,669 (95,678) (53,848) ---------------------------------Increase (decrease) in cash 401,475 28,891 80,902Cash: Beginning of year 51,493 104,324 50,897 --------------------------------- End of period 452,968 133,215 131,799Short term investments 258,459 - - ---------------------------------Cash and short-term investments $711,427 $133,215 $131,799 --------------------------------- DISCONTINUEDFor the year ended December COBRE OPERATIONS - 31, 2011 PYHASALMI PANAMA OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Cash provided by (used in) operating activitiesBefore net change in non-cash working capital $113,953 ($2,138) $ - $387,190Net change in non-cash working capital (177) - - 4,786 ----------------------------------------------- 113,776 (2,138) - 391,976 -----------------------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (7,024) (129,187) - (201,909)Acquisition of bonds and other securities - - - (296,014)Maturity of bonds and other securities - - - 66,508Funding received under Cobre Panama option agreement - 12,310 - 12,310Sale (purchase) of short-term investments, net - - - (251,632)Other - - - 255 ----------------------------------------------- (7,024) (116,877) - (670,482) -----------------------------------------------Cash provided by (used in) financing activities - - - 467,507 -----------------------------------------------Foreign exchange on cash held in foreign currencies (2,608) 543 - (5,204) -----------------------------------------------Cash provided by discontinued operation - - 297,220 297,220 -----------------------------------------------Intergroup funding (distributions) (152,005) 136,082 (297,220) - -----------------------------------------------Increase (decrease) in cash (47,861) 17,610 - 481,017Cash: Beginning of year 93,970 8,297 - 308,981 ----------------------------------------------- End of period 46,109 25,907 - 789,998Short term investments - - - 258,459 -----------------------------------------------Cash and short-term investments $46,109 $25,907 $ - $1,048,457 -----------------------------------------------INMET MINING CORPORATIONSegmented statements of cash flows(unaudited)For the three months ended CORPORATE December 31, 2012 & OTHER CAYELI LAS CRUCES-----------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Cash provided by (used in) operating activitiesBefore net change in non- cash working capital ($28,968) $17,617 $94,801Net change in non-cash working capital 6,409 46,272 (44,973) -------------------------------------- (22,559) 63,889 49,828 --------------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (892) (8,343) (18,027)Acquisition of bonds and other securities (537,097) (248) -Maturity of bonds and other securities 581,488 - -Sale (purchase) of short- term investments (507,636) - - -------------------------------------- (464,137) (8,591) (18,027) --------------------------------------Cash provided by (used in) financing activitiesFunding by non-controlling shareholder - - -Long-term obligations 492,837 - -Other (7,021) - (305) -------------------------------------- 485,816 - (305) --------------------------------------Foreign exchange on cash held in foreign currencies 11,224 65 2,984 --------------------------------------Intergroup funding (distributions) (192,066) 1,678 (3,889) --------------------------------------Increase (decrease) in cash (181,722) 57,041 30,591Cash: Beginning of year 802,173 91,637 127,312 -------------------------------------- End of period 620,451 148,678 157,903Short term investments 507,636 - - --------------------------------------Cash and short-term investments $1,128,087 $148,678 $157,903 -------------------------------------- DISCONTINUEDFor the three months ended COBRE OPERATIONS - December 31, 2012 PYHASALMI PANAMA OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Cash provided by (used in) operating activitiesBefore net change in non- cash working capital $25,926 ($2,061) $ - $107,315Net change in non-cash working capital 1,828 - - 9,536 -------------------------------------------------- 27,754 (2,061) - 116,851 --------------------------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (2,618) (312,587) - (342,467)Acquisition of bonds and other securities - - - (537,345)Maturity of bonds and other securities - - - 581,488Sale (purchase) of short- term investments - - - (507,636) -------------------------------------------------- (2,618) (312,587) - (805,960) --------------------------------------------------Cash provided by (used in) financing activitiesFunding by non-controlling shareholder - 40,000 - 40,000Long-term obligations - - 492,837Other - 71 - (7,255) -------------------------------------------------- - 40,071 - 525,582 --------------------------------------------------Foreign exchange on cash held in foreign currencies 1,172 - - 15,445 --------------------------------------------------Intergroup funding (distributions) (34,890) 229,167 - - --------------------------------------------------Increase (decrease) in cash (8,582) (45,410) - (148,082)Cash: Beginning of year 30,653 129,890 - 1,181,665 -------------------------------------------------- End of period 22,071 84,480 - 1,033,583Short term investments - - - 507,636 --------------------------------------------------Cash and short-term investments $22,071 $84,480 $ - $1,541,219 --------------------------------------------------For the three months CORPORATE LAS ended December 31, 2011 & OTHER CAYELI CRUCES-------------------------------------------------------------(thousands of US dollars) (Turkey) (Spain)Cash provided by (used in) operating activitiesBefore net change in non- cash working capital ($6,338) $33,654 $60,044Net change in non-cash working capital 1,397 (25,475) (15,959) ----------------------------------- (4,941) 8,179 44,085 -----------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (345) (3,437) (9,666)Acquisition of bonds and other securities (1,807) (314) -Maturity of bonds and other securities 15,613 - -Sale (purchase) of short- term investments 80,056 - (1)Other (2,790) (940) - ----------------------------------- 90,727 (4,691) (9,667) -----------------------------------Cash provided by (used in) financing activities (6,836) - (607) -----------------------------------Foreign exchange on cash held in foreign currencies - (5,422) (8,667) -----------------------------------Cash provided by discontinued operation (297,220) - - -----------------------------------Intergroup funding (distributions) 346,804 (54) (14,675) -----------------------------------Increase (decrease) in cash 128,534 (1,988) 10,469Cash: Beginning of year 324,433 135,203 121,331 ----------------------------------- End of period 452,967 133,215 131,800Short term investments 258,459 - - -----------------------------------Cash and short-term investments $711,426 $133,215 $131,800 ----------------------------------- DISCONTINUEDFor the three months COBRE OPERATIONS - ended December 31, 2011 PYHASALMI PANAMA OK TEDI TOTAL---------------------------------------------------------------------------- (Papua New(thousands of US dollars) (Finland) (Panama) Guinea)Cash provided by (used in) operating activitiesBefore net change in non- cash working capital $24,928 $115 $ - $112,403Net change in non-cash working capital (1,598) - - (41,635) --------------------------------------------------- 23,330 115 - 70,768 ---------------------------------------------------Cash provided by (used in) investing activitiesPurchase of property, plant and equipment (1,914) (41,738) - (57,100)Acquisition of bonds and other securities - - - (2,121)Maturity of bonds and other securities - - - 15,613Sale (purchase) of short- term investments - - - 80,055Other - - - (3,730) --------------------------------------------------- (1,914) (41,738) - 32,717 ---------------------------------------------------Cash provided by (used in) financing activities - - - (7,443) ---------------------------------------------------Foreign exchange on cash held in foreign currencies (7,224) (1,483) - (22,796) ---------------------------------------------------Cash provided by discontinued operation - - 297,220 - ---------------------------------------------------Intergroup funding (distributions) (75,914) 41,059 (297,220) - ---------------------------------------------------Increase (decrease) in cash (61,722) (2,047) - 73,246Cash: Beginning of year 107,831 27,954 - 716,752 --------------------------------------------------- End of period 46,109 25,907 - 789,998Short term investments - - - 258,459 ---------------------------------------------------Cash and short-term investments $46,109 $25,907 $ - $1,048,457 ---------------------------------------------------



Notes to the consolidated financial statements

1. Corporate information

Inmet Mining Corporation is a publicly traded corporation listed on the Toronto stock exchange. Our registered and head office is 330 Bay Street, Suite 1000, Toronto Canada. Our principal activities are the exploration, development and mining of base metals.

2. Basis of presentation and statement of compliance

We 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, 2012, 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, 2012. These interim financial statements should be read in conjunction with our consolidated financial statements for the year ended December 31, 2012, which are included in our 2012 annual report.

3. Change in functional and presentation currencies to the US dollar

Prior to June 1, 2012, Inmet Mining's functional currency and our presentation currency were the Canadian dollar. The decision to proceed with full scale development of Cobre Panama has significantly increased Inmet Mining's exposure to the US dollar considering:

-- Inmet Mining'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 Mining's functional currency. Our operating entities continue to measure the items in their financial statements using their functional currencies; Cayeli and Cobre Panama use the US dollar, and Pyhasalmi and Las Cruces use the euro. IFRS requires a change in functional currency to be accounted for prospectively. We therefore translated Inmet Mining'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.

Following the change in Inmet Mining'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.

4. Cash and short-term investments

---------------------------------------------------------------------------- December December December 31, 2012 31, 2011 31, 2010----------------------------------------------------------------------------Cash and cash equivalents:Liquidity funds $806,269 $375,523 $188,415Term deposits 51,243 6,548 51,306Overnight deposits 31,387 70,389 4,182Bankers' acceptances - 891 -Money market funds 14,410 126,336 38,774Corporate - 11,593 -Bank deposits 130,274 31,722 26,304Provincial short-term notes - 166,996 ----------------------------------------------------------------------------- 1,033,583 789,998 308,981----------------------------------------------------------------------------Short-term investments:Corporate - 48,588 -Term deposits 211,536 - 7,064Provincial 15,079 187,191 -Bankers' acceptances 21,494 22,680 -Asset backed securities 259,527(i) - ----------------------------------------------------------------------------- 507,636 258,459 7,064----------------------------------------------------------------------------Total cash and short-term instruments $1,541,219 $1,048,457 $316,045----------------------------------------------------------------------------(i) Bank sponsored securitized programs with highest credit quality ratingand supported by global liquidity lines.



5. Restricted cash

---------------------------------------------------------------------------- December December December 31, 2012 31, 2011 31, 2010----------------------------------------------------------------------------Collateralized cash for letter of credit facility - Inmet $19,804 $16,306 $16,368MiningCollateralized cash for letters of credit - Las Cruces 56,920 52,451 50,480Collateralized cash for Pyhasalmi reclamation 1,617 1,565 1,580 -------------------------------------- 78,341 70,322 68,428Less current portion:Collateralized cash for letters of credit - Las Cruces (1,291) (784) (597)---------------------------------------------------------------------------- $77,050 $69,538 $67,831----------------------------------------------------------------------------



6. Bonds and other securities

The table below provides a breakdown of our bonds and other securities as at the balance sheet date by financial instrument classification.

---------------------------------------------------------------------------- December December December 31, 2012 31, 2011 31, 2010----------------------------------------------------------------------------Current available for sale securities (a) $736,387 $ - $ -Current held to maturity securities (b) 147,212 175,921 52,201 -------------------------------- 883,599 175,921 52,201Available for sale securities (a) 824,092 - -Held to maturity securities (b) 366,513 427,727 308,483 -------------------------------- 1,190,605 427,727 308,483Other 2,483 3,060 2,608---------------------------------------------------------------------------- $2,076,687 $606,708 $363,292---------------------------------------------------------------------------- (a) In 2012, we invested US cash of $2,223 million in US dollar-denominated Treasury, corporate and Supranational bonds and other securities with credit ratings of A- to AAA. These securities mature between 2013 and 2018 and have a weighted average yield to maturity of 0.29 percent. We designated these securities as available for sale and recognized them at fair value. During the year, $662 million securities matured (2011 - nil). (b) In 2012, we purchased $69 million (2011 - $292 million) of US Treasury bonds, US Corporate bonds and Canadian and Provincial government bonds. During the year, securities with a face value of $178 million matured (2011 - $67 million). The securities have an annual yield to maturity of 1.1 percent. We designated these bonds as held to maturity, measuring them initially at fair value and subsequently at amortized cost.



7. Accounts payable and accrued liabilities

The table below shows the significant components of our accounts payable and accrued liabilities balance.

---------------------------------------------------------------------------- December December December 31, 2012 31, 2011 31, 2010----------------------------------------------------------------------------Accounts payables and accrued liabilities $258,024 $117,725 $91,778Amounts payable related to metal sales 3,788 737 573Income taxes payable 20,864 20,134 39,658---------------------------------------------------------------------------- $282,676 $138,596 $132,009----------------------------------------------------------------------------



8. Provisions

We recorded an additional $14 million of asset retirement obligations this year ($10 million this quarter), for liabilities at our closed properties. $7 million of this increase is the result of a decrease in the discount rates we applied in determining the liabilities. Additionally, we recognized $7 million due to an increase in our estimated closure costs, primarily at Troilus for on-going treatment of tailings and associate labour costs. We also recognized liabilities of $20 million at Cobre Panama as a result of development activities that took place during the year.

In 2011, we recorded increased asset retirement obligations of $16 million: $5 million for additional closure liabilities at Troilus, and $11 million from a decrease in the discount rates we applied.

9. Long-term debt

---------------------------------------------------------------------------- December 31, December 31, December 31, 2012 2011 2010----------------------------------------------------------------------------Senior unsecured notes(a):8.75% notes $1,449,315 $ - $ -7.5% notes 492,674 - - -------------------------------------- 1,941,989 - - --------------------------------------Promissory note 17,870 16,581 16,091---------------------------------------------------------------------------- 1,959,859 16,581 16,091----------------------------------------------------------------------------Less current portion:Promissory note 17,870 - -----------------------------------------------------------------------------Total long-term debt $1,941,989 $16,581 $16,091----------------------------------------------------------------------------



(a) On May 18, 2012, we issued $1,500 million aggregate principal amount of 8.75 percent senior unsecured notes (8.75 percent Notes) due June 2020. The 8.75 percent 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.

We may redeem, prior to June 1, 2016, up to 35 percent of the 8.75 percent 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 8.75 percent 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 8.75 percent 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, 2016 104.375 percentJune 1, 2017 102.188 percentJune 1, 2018 and thereafter 100.000 percent



On December 18, 2012, we issued $500 million aggregate principal amount of 7.5 percent senior unsecured notes (7.5 percent Notes) due June 2021. The 7.5 percent Notes were priced at 100 percent of their face value, yielding proceeds of $493 million net of the directly attributable transaction costs.

We may redeem, prior to December 1, 2015, up to 35 percent of the 7.5 percent Notes with the net proceeds of certain equity offerings at a redemption price equal to 107.5 percent of the principal amount plus accrued interest. Prior to December 1, 2016, we may redeem the 7.5 percent 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 December 1, 2016. We may redeem the 7.5 percent Notes at any time on or after December 1, 2016 at the redemption prices and periods set forth below, plus accrued and unpaid interest:

December 1, 2016 103.750 percentDecember 1, 2017 101.875 percentDecember 1, 2018 and thereafter 100.000 percent



These senior unsecured 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 are being used to fund the development of Cobre Panama, interest costs are being capitalized to project assets during the construction period of this project. The 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.

10. Stock-based compensation

During 2012, the following issuances were made under our equity-based compensation plans:

Stock option plan

On 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) plan

On 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, historical average volatilities and a risk free interest rate of 1.0 percent, resulting in December 31, 2012 fair values per PSU of Cdn $133.61 and Cdn $109.26, respectively, for the 2011 and 2012 awards.

We recognized the following share-based compensation expense in general and administration relating to all outstanding equity-based awards:

---------------------------------------------------------------------------- three months ended year ended December December 31 31 2012 2011 2012 2011----------------------------------------------------------------------------Stock option plan $1,068 $1,383 $5,090 $3,688Performance share unit plan 2,592 455 3,038 750Long-term incentive plan (LTIP) 1,121 - 7,880 735Deferred share unit plan 327 224 1,119 997Share award plan 50 147 196 601---------------------------------------------------------------------------- $5,158 $2,209 17,336 $6,771----------------------------------------------------------------------------



11. Accumulated other comprehensive loss

Accumulated other comprehensive loss includes:

---------------------------------------------------------------------------- December December December 31, 2012 31, 2011 31, 2010----------------------------------------------------------------------------Unrealized losses on gold forward sales contracts sales (net of tax of $nil) (December 31, 2011 - $nil, December 31, 2010 - $2,350) $ - $ - ($5,481)Unrealized gains (losses) on bonds and other securities (net of tax of $91) (December 31, 2011 - $91, December 31, 2010 - $76) 421 (534) (438)Currency translation adjustment (85,834) (159,010) (173,408)----------------------------------------------------------------------------Accumulated other comprehensive loss ($85,413) ($159,544) ($179,327)----------------------------------------------------------------------------



Currency translation adjustments

The table below is breakdown of our currency translation adjustments.

---------------------------------------------------------------------------- December December December 31, 2012 31, 2011 31, 2010----------------------------------------------------------------------------Pyhasalmi (euro functional currency) ($18,981) ($27,378) ($23,580)Las Cruces (euro functional currency) (63,557) (103,071) (90,456)Cayeli (US dollar functional currency) (12,003) (15,068) (20,243)Cobre Panama (US dollar functional currency) 8,707 (13,493) (28,757)Ok Tedi (US dollar functional currency) - - (10,372)---------------------------------------------------------------------------- ($85,834) ($159,010) ($173,408)----------------------------------------------------------------------------



12. Sale of 20 percent interest in Cobre Panama

On 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, the sale was 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.

13. Investment and other income

---------------------------------------------------------------------------- three months ended year ended December December 31 31 2012 2011 2012 2011----------------------------------------------------------------------------Interest income $3,818 $4,668 $15,144 $16,099Foreign exchange gain (loss) (19,608) (8,327) 6,270 10,446Dividend and royalty income 759 1,460 2,988 2,944Other (1,248) (1,684) (196) 259---------------------------------------------------------------------------- ($16,279) ($3,883) $24,206 $29,748----------------------------------------------------------------------------Foreign exchange gain (loss) is a result of:---------------------------------------------------------------------------- three months ended year ended December 31 December 31 2012 2011 2012 2011----------------------------------------------------------------------------Translation of US dollar cash held in euro based entities ($14,771) $ - ($15,998) $ -Translation of US dollar cash held by Corporate prior to June 2012 - 5 27,338 (8,001)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 - (8,321) 4,330 11,232Translation of Cdn dollar cash held by Corporate subsequent to May 2012 (357) - 2,231 -Translation of Cdn dollar bonds and other securities subsequent to May 2012 (2,067) - 7,912 -Translation of other monetary assets and liabilities (2,413) (11) (2,659) 7,215---------------------------------------------------------------------------- ($19,608) ($8,327) $6,270 $10,446----------------------------------------------------------------------------



14. Finance costs

three months ended year ended December 31 December 31 2012 2011 2012 2011----------------------------------------------------------------------------Interest on note payable $277 $282 $1,067 $1,119Accretion on note payable 192 176 714 670Accretion on provisions and capital lease obligations 2,163 1,856 8,289 7,393---------------------------------------------------------------------------- $2,632 $2,314 $10,070 $9,182----------------------------------------------------------------------------



15. Income tax

For the three months ended December 31, 2012:

Corporate Cayeli Las Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Current income taxes $474 $5,838 ($795) $7,765 $13,282Deferred income taxes 872 (1,855) 19,166 248 18,431----------------------------------------------------------------------------Income tax expense $1,346 $3,983 $18,371 $8,013 $31,713----------------------------------------------------------------------------For the three months ended December 31, 2011:---------------------------------------------------------------------------- Corporate Cayeli Las Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Current income taxes ($1,577) $7,907 $81 $6,847 $13,258Deferred income taxes (85) 1,537 8,016 (235) 9,233----------------------------------------------------------------------------Income tax expense ($1,662) $9,444 $8,097 $6,612 $22,491----------------------------------------------------------------------------For the year ended December 31, 2012:---------------------------------------------------------------------------- Las Corporate Cayeli Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Current income taxes $1,002 $33,536 $255 $23,942 $58,735Deferred income taxes 933 (613) 72,240 9 72,569----------------------------------------------------------------------------Income tax expense $1,935 $32,923 $72,495 $23,951 $131,304----------------------------------------------------------------------------For the year ended December 31, 2011:---------------------------------------------------------------------------- Corporate Cayeli Las Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Current income taxes ($2,171) $46,840 $606 $31,292 $76,567Deferred income taxes (203) 4,107 22,182 (582) 25,504----------------------------------------------------------------------------Income tax expense ($2,374) $50,947 $22,788 $30,710 $102,071----------------------------------------------------------------------------



16. Net income per share

---------------------------------------------------------------------------- three months ended year ended December 31 December 31(thousands) 2012 2011 2012 2011----------------------------------------------------------------------------Income from continuing operations available to common shareholders $38,221 $46,544 $331,211 $256,314Income from discontinued operations available to common shareholders - - - 80,786----------------------------------------------------------------------------Net income available to common shareholders $38,221 $46,544 $331,211 $337,100---------------------------------------------------------------------------- three months ended year ended December 31 December 31(thousands) 2012 2011 2012 2011----------------------------------------------------------------------------Weighted average common shares outstanding 69,366 69,332 69,362 66,432Plus incremental shares from assumed conversions:Deferred share units 109 122 109 122Long term incentive plan units 312 - 312 18----------------------------------------------------------------------------Diluted weighted average common shares outstanding 69,787 69,454 69,783 66,572----------------------------------------------------------------------------



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

---------------------------------------------------------------------------- three months ended December 31(US dollars per share) 2012 2011---------------------------------------------------------------------------- Basic Diluted Basic DilutedNet income from continuing operations per share $0.56 $0.56 $0.67 $0.67Income from discontinued operations per share - - - -----------------------------------------------------------------------------Net income per share $0.56 $0.56 $0.67 $0.67----------------------------------------------------------------------------



The table below shows our earnings per common share for the year ended December 31.

---------------------------------------------------------------------------- year ended December 31(US dollars per share) 2012 2011---------------------------------------------------------------------------- Basic Diluted Basic DilutedNet income from continuing operations per share $4.78 $4.75 $3.86 $3.85Income from discontinued operations per share - - 1.22 1.21----------------------------------------------------------------------------Net income per share $4.78 $4.75 $5.08 $5.06----------------------------------------------------------------------------



17. Statements of cash flows

For the three months ended December 31, 2012:---------------------------------------------------------------------------- Corporate Cayeli Las Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Accounts receivable ($1,241) $39,020 ($47,627) ($5,399) ($15,247)Inventories - (4,956) 266 (79) ($4,769)Accounts payable and accrued liabilities 7,301 14,281 2,623 233 24,438Taxes payable 348 (2,059) (1,842) 7,075 3,522Provisions (283) - 1,607 - 1,324Other 284 (14) - (2) 268---------------------------------------------------------------------------- $6,409 $46,272 ($44,973) $1,828 $9,536----------------------------------------------------------------------------For the three months ended December 31, 2011:---------------------------------------------------------------------------- Corporate Cayeli Las Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Accounts receivable $342 ($17,642) ($6,758) $6,314 ($17,744)Inventories - (3,009) (4,984) (1,286) (9,279)Accounts payable and accrued liabilities 2,253 816 (4,297) 1,486 258Taxes payable (1,146) (6,593) 80 (7,856) (15,515)Provisions (52) - - - (52)Other - 953 - (256) 697---------------------------------------------------------------------------- $1,397 ($25,475) ($15,959) ($1,598) ($41,635)----------------------------------------------------------------------------For the year ended December 31, 2012:---------------------------------------------------------------------------- Corporate Cayeli Las Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Accounts receivable ($4,066) $2,318 ($56,492) ($801) ($59,041)Inventories - 1,296 (150) 441 1,587Accounts payable and accrued liabilities 5,274 11,096 3,540 1,148 21,058Taxes payable 2,206 (3,395) (842) 4,161 2,130Provisions (283) - 1,607 - 1,324Other - (8) - (4) (12)---------------------------------------------------------------------------- $3,131 $11,307 ($52,337) $4,945 ($32,954)----------------------------------------------------------------------------For the year ended December 31, 2011:---------------------------------------------------------------------------- Corporate Cayeli Las Cruces Pyhasalmi and other (Turkey) (Spain) (Finland) Total----------------------------------------------------------------------------Accounts receivable ($180) $12,895 ($10,913) $15,875 $17,677Inventories - (1,121) (7,713) (1,328) (10,162)Accounts payable and accrued liabilities 1,142 7,615 8,535 (234) 17,058Taxes payable (4,887) (803) (86) (14,234) (20,010)Provisions (690) - - - (690)Other - 1,169 - (256) 913---------------------------------------------------------------------------- ($4,615) $19,755 ($10,177) ($177) $4,786----------------------------------------------------------------------------



18. Commitments

Capital commitments

As at December 31, 2012, Cobre Panama had committed $3.6 billion (net of spending to that date) on a 100 percent basis for the design and supply of coal-fired power plant, two SAG mills, four ball mills, and the related gearless drive, engineering and other construction activities.

Las Cruces committed $5 million for the upgrade of its safety infrastructure.

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 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 payable precious metals attributable to Inmet's 80 percent ownership based on the current 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.

Cayeli tax audit

Our tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. In 2012 Cayeli became the subject of an audit of its 2008 to 2011 taxation years. On February 4, 2013, Cayeli received an assessment from the Turkish tax authorities adjusting the amount of withholding taxes to be remitted on dividends paid by Cayeli to its direct shareholder. The shares of Cayeli are owned by an indirect wholly-owned Spanish subsidiary of Inmet. The Turkish tax authorities have taken the position that Inmet and not the Spanish subsidiary is the beneficial owner of the dividends. The Turkish tax authorities are therefore taking the position that the withholding tax on the dividends should be the 15 percent domestic rate and not the reduced rate of 5 percent under the Turkey-Spain tax treaty. The dividends paid during the period assessed total TL 628 million. The proposed tax liability is TL 63 million (US $35 million) plus interest and penalties. Our view is that the relevant facts and circumstances support the position that Cayeli fulfilled its tax remittance obligations and Cayeli intends to vigorously dispute the assessment.



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

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



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