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.
