TORONTO, CANADA--(Marketwire - Feb. 23, 2011) -

All amounts in Canadian dollars unless indicated otherwise

Inmet (News - Market indicators) announces fourth quarter earnings of $2.53 per share compared with earnings of $1.60 per share in the fourth quarter of 2009.

Fourth quarter highlights

• Consolidation of ownership interest in Las Cruces to 100 percent
  On December 15, 2010, we acquired Leucadia National Corporation's (Leucadia's) 30 percent indirect equity interest and associated subordinated sponsor loans in Las Cruces for value of $497 million, significantly increasing our exposure to copper. The consideration we paid included US $150 million in cash and 5.44 million Inmet common shares.
  
  
• Amendment of subscription agreement with Temasek and subsequent Panama Mineral Resources Code amendment passed by National Assembly
  On December 23, 2010, the subscription agreement with Temasek was amended such that the subscription receipts purchased will now be exchangeable for 7.78 million Inmet common shares (formerly 9.26 million Inmet common shares), representing a subscription price per Inmet common share of approximately $64. The subscription receipts will now be automatically exchanged no later than 150 days after the coming into effect of legislation to amend Panama's Mineral Resources Code to permit entities in which foreign governmental bodies or authorities have an interest to hold direct or indirect interests in mining concessions in Panama. The legislation to amend the Code passed final reading in the Panamanian Assembly and came into effect in February 2011. We expect to exchange the Temasek subscription receipts for common shares before June 30, 2011.
  
  
• Sale of our interest in Ok Tedi
  On December 2, 2010, we announced an agreement with Ok Tedi Mining Limited for it to repurchase our 18 percent equity interest in Ok Tedi for US $335 million. Our net proceeds after withholding taxes in Papua New Guinea were US $307 million. The transaction closed on January 28, 2011.
  
  
• Las Cruces progressing
  We continued to improve plant throughput and leaching conditions, significantly increased copper recoveries from 77 percent in the third quarter to 86 percent and produced 9,000 tonnes of copper cathode this quarter. We continue to implement the ramp up plan to achieve our goal of full production rates in 2011.
  
  
• Continuing strong performance at Çayeli and Pyhäsalmi
  Çayeli milled 288,000 tonnes and Pyhäsalmi milled 350,000 tonnes with both operations reaching near- record annual throughput in 2010.
  
  
• Sale of non-core investment
  We disposed of our investment in Premier Gold Mines Limited for $61.4 million in cash and recognized a gain of $50.5 million. This increased earnings after tax by $0.90 per share.

Merger with Lundin Mining Corporation to create Symterra Corporation

On January 12, 2011, we entered into an arrangement agreement with Lundin Mining Corporation (Lundin) to merge, and create Symterra Corporation (Symterra), an international copper producer.

The proposed merger will be effected by way of a Plan of Arrangement completed under the Canada Business Corporations Act. It will feature a common share exchange through which Inmet common shareholders will receive 3.4918 common shares of the merged company for each common share of Inmet they own and Lundin common shareholders will receive 0.3333 common shares of the merged company for each common share of Lundin they own. The exchange ratio represents no premium to either party based on the 30 day volume weighted average price on the Toronto Stock Exchange for each of Inmet and Lundin to January 11, 2011.

Inmet and Lundin shareholders must both approve the proposed merger by two thirds of the votes cast at special shareholder meetings held to consider the transaction. The joint information circular was mailed to shareholders on February 18, 2011. The shareholder meetings will be held on March 14, 2011.

The arrangement agreement includes customary reciprocal deal protections. Each party has agreed not to solicit any alternative transactions and has furthermore agreed to pay the other a break fee of $120 million in certain circumstances. In addition, each company has granted the other a right to match any competing offer.

Both Boards of Directors have determined that the proposed merger is in the best interest of their respective companies based on a number of factors, including fairness opinions received from their financial advisors, and have unanimously approved the terms of the proposed merger and recommend that their respective shareholders vote in favour of the proposed merger.

The largest shareholder of each of Inmet (Leucadia, representing 17.94 percent of Inmet) and Lundin (Lukas Lundin and Lundin family trusts, representing 12.32 percent of Lundin) has executed an agreement to vote their shares in favour of the proposed merger subject to customary fiduciary waivers in the case of a superior offer. The directors of each company have agreed to vote their shares in favour of the merger.

We believe that the combination of the two companies will create a larger, financially stronger, diversified and more globally competitive base metals mining company with a balanced portfolio of five low-cost, long-life mines predominately located in Europe, substantial opening cash balances, a strong balance sheet and excellent growth prospects with two world class copper development projects. We believe that the business combination will create superior value from greater scale, greater management depth, a more diversified asset base and enhanced capital markets profile. We believe that the growth prospects for shareholders are greater through Symterra than Inmet could achieve on its own.

There is a risk that we may not realize the anticipated benefits of the arrangement and statements regarding the merger of Inmet and Lundin are subject to various risks and assumptions. See Forward- looking information on page 4.

Key financial data

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, 2010.

Forward looking information

Securities regulators encourage companies to disclose forward-looking information to help investors understand a company's future prospects. This press release contains statements about our future financial condition, results of operations and business. Our objectives and outlook have been prepared based on our existing operations, expectations and circumstances. If the proposed merger with Lundin occurs, actual results would be substantially different.

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

Our financial results

Key changes in 2010

Understanding our performance

Metal prices

The table below shows the average metal prices we realized in US dollars and Canadian dollars (the prices we realize include finalization adjustments – see Gross sales on page 8).

Copper

Copper prices rose significantly from US $3.67 per pound at the beginning of the quarter, to a record high of US $4.42 per pound on December 31, and averaging US $3.92 per pound for the quarter. This quarter, London Metals Exchange (LME) inventories increased by 4,000 tonnes to 378,000 tonnes.

Zinc

Zinc prices averaged US $1.05 per pound this quarter, an increase of 15 percent from the third quarter of 2010, despite an increase in LME inventories to approximately 700,000 tonnes on December 31.

Gold

Gold prices rose for the ninth consecutive quarter, increasing by 12 percent, and reached a record high of US $1,423 per ounce early in December.

Pyrite

Sulphur prices rose steadily this quarter, driven mainly by increasing prices for agricultural products, which increased demand for sulphuric acid from agricultural product growing regions.

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 2009.

Our sales are affected by the conversion of US dollar revenue to Canadian dollars. Compared to the same quarter last year, the value of the Canadian dollar appreciated 5 percent relative to the US dollar, and 12 percent relative to the euro.

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

• translate the results of our operations from their functional currency (US dollars or euros) to Canadian dollars
• revalue US dollars and euros that we hold in cash in Canada.

Treatment charges down for copper

Treatment charges are one component of smelter processing charges. We also pay smelters for content losses and price participation.

The table below shows the average charges we realized this quarter and for the year. While treatment charges for zinc concentrates were higher than last year, price participation was lower.

Statutory tax rates remain consistent

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

Earnings from operations

Gross sales were higher

Key components of the change in sales: higher copper prices, new gross sales at Las Cruces, lower sales volumes at Troilus and Çayeli

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 $6 million in positive finalization adjustments from third quarter sales.

At year end, the following sales had not been settled:

• 3 million pounds of copper provisionally priced at US $4.37 per pound
• 15 million pounds of zinc provisionally priced at US $1.11 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:

Significantly higher copper and pyrite sales volumes, lower gold 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.

Copper production and sales volumes were up this year mainly because of Las Cruces. Zinc production was lower this quarter but higher this year because of changes in zinc grades at Pyhäsalmi. Copper and zinc sales volumes were lower than production volumes this quarter mainly because of the timing of shipments at Çayeli. Gold production and sales volumes were lower this year because Troilus ceased production in June 2010. Pyhäsalmi realized higher pyrite sales volumes this year because of higher demand from China.

2011 outlook for sales

We use our production objectives to estimate our sales target.

We expect copper production in 2011 to be slightly higher than it was this year. Our share of copper production at Las Cruces should more than double as the operation ramps up to its nameplate capacity of 72,000 tonnes of copper cathode, and because we increased our ownership in Las Cruces from 70 percent to 100 percent in December 2010. Higher production at Las Cruces should be mostly offset, however, by the divestment of our 18 percent equity interest in Ok Tedi in January 2011.

We expect 2011 zinc sales volumes to be similar to this year because zinc production should be approximately the same as it was in 2010.

With production ceasing at Troilus in 2010 and the sale of our 18 percent equity investment in Ok Tedi in January 2011, no gold sales are expected for 2011.

Our Canadian dollar sales revenues are affected by the US dollar denominated metal price we receive, and the exchange rate between the US dollar and Canadian dollar.

We expect global copper supply to grow modestly in 2011. New production should be mostly offset by declining production at large existing copper mines and possible labour disruptions. We expect continued strong demand in China, increasing economic recovery in Europe and the United States, and continued interest from investors. Increasing demand, combined with tighter supply, should mean copper prices will remain close to all time highs during 2011.

For zinc, we expect modest increases in both market supply and demand, and a small market deficit, which should support prices in 2011 at levels consistent with those of 2010.

Lower smelter processing charges, higher freight this year

Our copper treatment and refining charges were lower than they were in 2009 because of more favourable terms with smelters. Our 2009 rates were negotiated at the end of 2008, amidst the global market downturn. Zinc treatment charges were higher for the year than for 2009 because of our terms with smelters, more than offset by lower price participation. Zinc treatment charges this quarter were lower than the fourth quarter of 2009 because sales volumes were lower. Content losses were higher because metal prices were higher than they were last year. Freight was higher this year mainly because pyrite shipments were higher.

2011 outlook for smelter processing charges and freight

We sell approximately 90 percent of our copper concentrate under long-term contracts. We expect our costs for copper treatment and refining to remain low in 2011. A tight concentrate supply should keep the copper market in a deficit position in 2011, and treatment costs close to this year's level. We expect copper price participation to be minimal.

We expect total zinc smelter processing charges, including price participation, to be lower than in 2010, and a small deficit to evolve in the zinc concentrate market.

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 2010.

Direct production costs and cost of sales higher than last year

Direct production costs

Direct production costs are higher this quarter and for the year than they were in 2009, mainly because we began recognizing operating results at Las Cruces in our consolidated income statement effective July 1, 2010, and because of higher labour and royalty costs at Çayeli. This was partly offset by the closure of Troilus, and lower costs at Pyhäsalmi because of a stronger Canadian dollar relative to the euro.

Inventory changes

Inventory at Çayeli was higher this quarter end because of the timing of shipments, and at Las Cruces because we stockpiled ore before the rainy season. For the year, these increases were offset by the impact of the closure of Troilus in the second quarter of 2010.

Charges for reclamation, accretion and other non-cash charges

These charges include an accrual for asset retirement obligations, provisions for severance and retirement and other non-cash expenses. We recorded an additional $8 million this year for closure liabilities at Troilus to reflect the longer time we expect will be required for post-closure monitoring, as well as higher owner and other costs. In 2009, we recorded an additional $6 million for closure liabilities at our closed sites to reflect the longer time we expected to treat water at certain sites, and because of escalating costs.

2011 outlook for cost of sales

We expect consolidated direct production costs to be lower in 2011 because of the closure of Troilus mid-year in 2010 and the disposition of our 18 percent interest in Ok Tedi. These lower costs will be somewhat offset by production costs at Las Cruces that will be recognized in the income statement for the entire year.

Our budget for 2011 assumes our costs at Çayeli and Pyhäsalmi will be similar to 2010.

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

• royalties at Çayeli are affected by its net income
• royalties at Las Cruces are affected by its net sales.

Higher depreciation

Depreciation was higher this year mainly because Las Cruces began to depreciate its operating assets in the income statement on July 1, 2010. Depreciation decreased at Troilus because the mine concluded operations in June 2010. Depreciation at Ok Tedi was higher this year because it increased the assets related to asset retirement obligations at the end of 2009 and began amortizing the cost of storage pits it constructed to store the sulphur concentrate the tailings management plant produces.

2011 outlook for depreciation

We expect depreciation to be higher in 2011 mainly because we will recognize Las Cruces' operating results in earnings for the entire year. Depreciation will be higher at Çayeli as a result of the impact of adoption of IFRS (see Plan on transition to International Financial Reporting Standards – Impairment of assets on page 30). This will be offset somewhat by the closure of Troilus and the sale of our 18 percent share of Ok Tedi.

Corporate costs

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

General and administration

General and administration costs are largely for management remuneration, governance and strategy. Costs in 2010 were $3 million lower than 2009 ($5 million in the fourth quarter) mainly because of the costs associated with the changes to the board and executive management in 2009. This was somewhat offset by higher human resource and other costs in 2010 in preparation for moving forward with Cobre Panama.

Investment and other income

Gain on sale of investment in Premier Gold Mines Ltd

We sold 9.45 million common shares of Premier Gold Mines Ltd. this quarter for $61.4 million in cash and recognized a gain of $50.5 million, taking advantage of favourable market conditions.

Recognition of interest rate swap contract and foreign currency forward contract in 2009

In the third quarter of 2009, we repaid 100 percent of Las Cruces' US dollar denominated bank credit facility (see also Long-term debt repayments and settlement of interest rate swap contract - 2009 on page 27), and replaced it with intergroup debt using the proceeds from our equity offering earlier that year. In conjunction with this, Las Cruces terminated its interest rate swap contracts, paying out $16 million for early termination. This had the following effects on investment and other income in 2009:

• when we converted the Las Cruces debt from euro to US dollars in 2008, Las Cruces settled a foreign exchange forward contract and received proceeds of $52 million. We deferred the proceeds in accumulated other comprehensive income, and were amortizing them to income over the term of the debt. When we repaid the debt, we realized the remaining deferred gain of $36 million in investment and other income.
• when we repaid the debt, we recorded the $15 million interest rate swap loss that we had deferred in accumulated other comprehensive income in investment and other income.

Foreign exchange loss

We have foreign exchange gains or losses when we:

• revalue certain foreign denominated assets and liabilities
• distribute funds from our self-sustaining operations and recognized the foreign exchange we previously deferred on our original investment and on funds as they accumulated.

Our foreign exchange gains (losses) were from:

We recognized foreign exchanges losses of $23 million this year on the repatriation of cash from Çayeli, Pyhäsalmi and Ok Tedi. In 2009, we recognized foreign exchange losses of $14 million from revaluing US dollar denominated cash we held at Corporate to repay Las Cruces' US dollar denominated debt under its credit facility.

2011 outlook for investment and other income

Investment and other income is affected by our cash and held to maturity investment balances, and by interest rates and exchange rates. In 2011, we will stop recognizing foreign exchange gains and losses when we repatriate funds that represent the accumulation of earnings at our operations. See Plans on transition to International Financial Reporting Standards on page 30 for more information. We also expect to recognize a significant gain as a result of the disposition of our 18 percent investment in Ok Tedi.

Stand-by costs

We could not mine ore at Las Cruces in the first quarter of 2010 because of the water levels in the pit. We expensed $6.8 million in operating and maintenance costs for the water purification plant because they did not relate to production activities.

Asset impairment

We made a decision in 2008 not to proceed with the Cerattepe project. All work ceased on the project and we took a $34 million charge to write down the assets to its net realizable value. In 2009, we took an additional impairment charge of $10 million, as well as a $6 million tax recovery (reflected in income taxes), to adjust to current net realizable value.

Income tax expense (recovery)

Our tax expense changes as our earnings change.

The consolidated effective tax rate fell this year compared to 2009 mainly because Las Cruces recognized a tax recovery on a foreign exchange loss from its intercompany US dollar denominated debt. The foreign exchange eliminates on consolidation, but the tax recovery does not as there is no corresponding tax expense on the foreign exchange gain. Additionally, mining duties for Troilus were lower as operations concluded during 2010.

2011 outlook for income tax expense

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

Results of our operations

2011 estimates

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

Çayeli

Another year of strong production

Çayeli's mine production reached a record 1.16 million tonnes this year, and set several new records in the fourth quarter of 2010 for milling, including best daily tonnage of 3,850 tonnes, and best weekly tonnage of 26,600 tonnes. The mine also placed a record amount of pastefill and shotcrete during the year.

Despite this, mill production was slightly lower than 2009 production as well as our objective for 2010 of 1.2 million tonnes. This was due to higher rehabilitation requirements in the highest producing areas during July, and two lesser ground falls this quarter.

Copper grades were consistent with our 2010 target and zinc grades were slightly above our 2010 target despite the mine plan changes incurred due to the July rehabilitation requirements.

Copper recoveries for 2010 were below our target and last year's recoveries due to more difficult metallurgy from the increased presence of secondary copper minerals and less than optimal blending conditions from low blending stockpile volumes during several periods over the course of the year.

Copper production was therefore below 2009 and our target this year, while zinc production was essentially on target.

Over the year, we conducted a thorough ground control audit evaluating all aspects of the mine's ground control program. We also completed a shotcrete ground support audit, continued developing a life of mine sequence stress model and commissioned a microseismic event analysis, all to reduce the geotechnical risks associated with a maturing ore body.

We completed the second and final phase to correct the misalignment of the Çayeli headframe this year (the result of local ground movement over the years). The headframe is now aligned with the concrete collar and under normal stresses. A formal program has been established to monitor the facility in the future and adjust it, if necessary.

Cost per tonne of ore milled was higher this year mainly because of higher royalties from higher realized metals prices and labour cost increases.

2011 outlook for production

In 2011, production levels should remain at approximately 1.2 million tonnes, and the copper grades should remain essentially unchanged at 3.2 percent. We expect zinc grades to decrease to 5.6 percent, reflecting lower zinc grades in the deeper areas of the mine.

With the commissioning of the new copper column flotation cell and high quality copper concentrate thickener, we expect improvements in copper and zinc recoveries as well as improved zinc depression in the copper concentrate. We therefore expect recoveries to increase to 80 percent for copper and 73 percent for zinc.

Financial review

Lower earnings for the quarter because sales volumes were lower due to timing of shipments

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

The table below shows what contributed to the change in operating earnings and operating cash flow between 2010 and 2009.

Capital spending consistent with 2009

We spent $15 million to upgrade underground mobile equipment, remediate the headframe, install a new double deck screen for the crusher and a copper column flotation cell and thickener in the mill and add to our mine development. In 2009, we spent $15 million to upgrade underground mobile equipment, remediate the headframe and continue mine development.

2011 outlook for capital spending

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

Las Cruces

Progress update

Significant progress has been made to date with the production process. Initially, our efforts were directed at correcting equipment deficiencies and materials selection for the plant. During this "1st Phase" of commissioning, frequent breakdowns prevented the ramp up and stable operation of the plant until April 2010. Plant reliability has since greatly improved and no substantial mechanical downtime was experienced in the second half of the year. In a "2nd Phase", we addressed bottlenecks in the plant design and shifted our main focus to increasing throughput while working to balance plant runtime with the process chemistry. In July and August 2010, throughput rose to 50 percent of design capacity.

In mid-September, we entered the "3rd Phase" dedicated to metallurgical optimization. We made a strategic decision to lower plant throughput to implement measures to reach and maintain our design recovery rates (above 90 percent). This was a necessary step to achieve the proper leaching conditions before further increasing the copper feed and potentially sacrificing copper recoveries. In the fourth quarter, we reached recovery levels of over 86 percent and we plan to continue to raise throughput in step with maintaining recovery levels. We are now focused on two key remaining issues:

• copper recovery through sulphide leaching is dependent on achieving and maintaining the correct chemical and physical conditions to effectively leach the copper from the ore during the leach cycle. Late in the year, we succeeded in improving oxygen distribution with new distributors in the bottom of two of the eight leach reactors. We plan to install distributors in the remaining six leach reactors in 2011 and we anticipate maintaining the required iron levels as we increase the cooper feed rate into the plant.
• to reach maximum throughput, Las Cruces must also operate the grinding thickener reliably at the design underflow density. Design work is underway to modify the thickener in mid-2011. This modification will triple the available torque in the thickener and improve the rake geometry to prevent the temporary blockages that have hampered operating at high solids density. To improve near-term thickener performance, we have adjusted the slope of the rakes and put in place a new distribution system which has had encouraging results with minimal process interruptions, which were common before the change.

We produced 28,500 tonnes of copper cathode this year. Cathode quality remains excellent and we are working towards our LME Grade A certification. Notwithstanding the significant improvements achieved this year, production fell short of our target.

Consolidation of ownership interest in Las Cruces to 100 percent

On December 15, 2010, we acquired Leucadia National Corporation's 30 percent indirect equity interest and subordinated sponsor loans in Las Cruces for value of $497 million. This included US $150 million in cash and US $330 million in Inmet common shares (5.4 million shares). At the same time, Leucadia was released from its guarantee of US $72 million of the debt Las Cruces took on in 2009 to re-finance its project facility. The loan is owed to an Inmet affiliate. Beginning December 15, 2010, we have included 100 percent of Las Cruces' results in our consolidated statement of earnings.

2011 outlook

We expect throughput and recoveries to continue to improve in 2011 and that production will follow a "saw-toothed" pattern. By the end of the year, we expect to be producing at a rate of 6,000 tonnes per month – full plant production capacity – and we expect to produce a total of 50,200 tonnes of copper cathode in 2011.

A number of process improvements are underway and will be completed in 2011 including:

• adding a large surge tank between leaching and filtration to further smooth out the leaching operation
• adding a clarifier to remove solids from the leach solution, greatly reducing maintenance requirements
• redesigning and installing grinding thickener components to improve underflow density to the leaching process
• improved filtration performance through the removal of fines prior to grinding
• improved reactor reliability with the addition of 8 stainless steel agitators.

Las Cruces has mined and stockpiled high grade ore to ship directly to smelters. We have not received the permit we need to move the material offsite and, therefore, have not included any direct ore shipments in our objectives. We will use this high grade ore for blending with lower grade ore to optimize feed grades processed through the plant during the first half of 2011. We anticipate mining additional high grade ore in 2011 which could be utilized for direct ore shipments if a permit is received.

Financial review

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

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

Capital spending

Capital spending this year was mainly on the permanent water purification plant, plant improvements and mine development. In 2009 it was mainly for construction capital.

2011 outlook for capital spending

We expect to spend $52 million on capital projects in 2011 including $18 million for mine development and $25 million for plant improvements.

Pyhäsalmi

Higher zinc and pyrite production this year

Throughput continued at record levels in 2010 – Pyhäsalmi processed 1.4 million tonnes of ore through the mill, and had an excellent 96 percent availability with copper recoveries of 96 percent and zinc recoveries of 90 percent. It also successfully reduced the amount of open void by 10 percent year over year, improving geotechnical stability. Additionally, we improved the reliability of the backfill supply by keeping the fill raise system full, increasing stability and minimizing raise failures and blockages.

Copper production in 2010 was higher than target and higher than 2009 because grades were higher. Zinc production was higher than 2009 but lower than target because we moved some higher zinc grade stopes that were due to be mined late in the year into 2011. We produced 40 percent more pyrite this year than planned to meet increasing demand.

Cost per tonne of ore milled was significantly lower than last year mainly because of Canadian dollar appreciation against the euro.

2011 outlook

Pyhäsalmi expects to mine 1.4 million tonnes of 1 percent copper and 2.6 percent zinc in 2011, and produce 13,300 tonnes of copper and 31,900 tonnes of zinc. Zinc production will increasingly come from fewer higher grade zinc stopes on the periphery of the orebody and this may result in zinc grade fluctuations if mine plans are modified during the year to respond to operational factors.

Pyrite sales enhance Pyhäsalmi's financial performance, so we will continue our efforts to enter new markets in Europe and Asia. Combined with a long term agreement reached with a Finnish customer this year, we are well positioned for ongoing pyrite sales for the longer term.

Financial review

Higher earnings because of higher metal prices and sales volumes

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

The table below shows what contributed to the change in operating earnings and operating cash flow between 2010 and 2009.

Capital spending lower

2011 outlook for capital spending

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

Ok Tedi

Production lower for quarter due to lower mill throughput

Mill throughput was lower this quarter compared with the fourth quarter of 2009 because Ok Tedi carried out mill maintenance that had originally been scheduled for early 2011, which reduced copper and gold production. Mill throughput, copper and gold production for the year were slightly lower than 2009.

Gold grades and production in 2010 continued to be lower than plan because of deferrals made in the mine plan to avoid processing high sulphur, high gold areas of the mine. Although the mine waste management plant has been significantly redesigned and modified, its performance continues to be challenged. To control sulphur, the ore is blended in the mine before it goes to the mill. Ok Tedi mined lower benches that contain more copper and less sulphur and gold. The higher grade gold ore can be mined but will not be processed until after the mine waste management plant is performing to expectations. A team of in-house and consulting specialists are working on the plant's technical and operational issues. Ok Tedi is also exploring other alternatives for neutralizing the impact of sulphur.

Our involvement in Ok Tedi

On December 2, 2010, we announced an agreement with Ok Tedi Mining Limited for it to repurchase our 18 percent equity interest in Ok Tedi for US $335 million. Our net proceeds after withholding taxes in Papua New Guinea were US $307 million. The transaction closed on January 28, 2011. At December 31, 2010, our interest in Ok Tedi was classified as held for sale on our consolidated balance sheet.

Financial review

Higher earnings this quarter due to higher copper and gold prices

The table below shows what contributed to the change in operating earnings and operating cash flow between 2010 and 2009.

Capital spending

In 2010, Ok Tedi spent $91 million (our share is $16 million), mainly on a mining fleet specifically designed for limestone mining, and to construct storage pits for sulphur concentrate produced by the tailings management plant. In 2009, spending was mainly on the pit drainage project.

Status of our development project

Cobre Panama

Environmental and community affairs

Autoridad Nacional del Ambiente (ANAM), the Panamanian environmental regulatory authority, continued its review of Minera Panama's Environmental and Social Impact Assessment (ESIA) this quarter, on schedule. ANAM has engaged external experts to assist in its review of the ESIA and they are fully deployed.

We held a public forum in November to present the ESIA to the local community, as required by legislation. More than 1,000 people from all over Panama, but mostly from local communities, attended the five-hour forum, which we held in the village of Coclecito, close to the project site. We provided all of the time necessary to respond to written questions and listen to presentations from interested parties, and the forum was well received by all participants.

We received the first formal request from ANAM for additional information in early February as expected, and we are preparing responses. We continue to estimate that approval for the ESIA and permitting to begin construction could take as long as 15 months from the time the ESIA report was submitted in September 2010. After we receive the approvals, site capture, preparation and construction should take approximately 48 months.

Engineering

In November, Minera Panama awarded a contract for engineering, procurement and construction management (EP+CM) to Joint Venture Panama Inc. (JVP), a joint venture led by SNC-Lavalin Group Inc. (70%) with partners GyM S.A. (a member of Graña y Montero Group) (15%) and Techint International Construction Corp. (15%).

The award concluded an eight-month competitive process involving a team of more than 60 professionals from Inmet, Minera Panama and external consulting firms who performed a detailed and exhaustive evaluation of bidders. The initial phase of the EP+CM contract will involve basic engineering for all facilities except the power plant, and should take approximately 12 months to complete. The power plant, as previously announced, is to be developed under a separate agreement with GDF Suez Central America.

Work also continued to upgrade and improve access roads to the site. We completed two new bridges by year end, over rivers that are prone to flooding, and continued routine road maintenance. The bridges will benefit both the project and local communities. Additional improvements to access roads are in the engineering and permitting stage.

Drilling

We drilled a total of 20,000 metres this year in 119 holes. More than half of these holes were for geotechnical purposes, while most of the remaining holes focused on further defining existing resources. We have also begun testing additional exploration targets on the property.

2011 outlook for development

We plan to:

• continue our dialogue with stakeholders at the community, regional and national levels, to enhance understanding of the project and its benefits to Panama, and the concerns of stakeholders 
• continue to work with ANAM to ensure a thorough ESIA review process 
• continue to improve site access and infrastructure
• complete additional drilling for geotechnical and hydrological purposes and to improve our understanding of mineralization not currently included in the project base case 
• complete basic engineering and prepare to initiate site capture upon receipt of the main permits 
• continue to work with GDF Suez Energy Central America to select an EPC contractor for the development of a 300 megawatt thermal power plant to supply power for the project 
• spend $224 million to carry out the work described.

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.

OPERATING ACTIVITIES

Key components of the change in operating cash flows

Operating cash flows this year were higher than in 2009 because our operating earnings and depreciation were both higher. This was partly offset by the payment of more taxes.

2011 outlook for cash from operating activities

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

2011 estimated operating cash flow by operation

INVESTING AND FINANCING

Capital spending

Please see Results of our operations and Status of our development project for a discussion of actual results and our 2011 objective. Capital spending in 2010 was mainly for Cobre Panama.

Purchase of long-term investments

We bought $229 million in medium-term Canadian government and corporate bonds with credit ratings of A to AAA this year. The bonds mature between February 2011 and December 2015 and have a weighted average annual yield of 1.8 percent. This will increase our return on the cash we have set aside for capital spending at Cobre Panama.

Çayeli also bought $67 million in US Treasury bonds with credit ratings of AAA, for a higher return on cash that we believe will not be repatriated within the next 5 years. The bonds mature in 2015 and have a weighted average annual yield to maturity of 1.24 percent.

Acquisition of non-controlling interest in Las Cruces

We paid $151 million in cash this quarter as part of our acquisition of Leucadia's 30 percent indirect equity interest and subordinated sponsor loans in Las Cruces.

Sale of investment in Premier Gold

We sold our 9.45 million common shares of Premier Gold for $61.4 million in cash this quarter.

Proceeds from public offering – 2009

In the second quarter of 2009, we completed a public offering of 7.825 million common shares of Inmet Mining, for total gross proceeds of $348 million ($334 million net of transaction costs).

Long-term debt repayments and settlement of interest rate swap contract – 2009

In the first half of 2009, Las Cruces made its first scheduled repayment of US $12 million under Tranche A of its credit facility. It also repaid €42 million under Tranche B (an amount equal to the subsidies received).

In July 2009, Las Cruces repaid the remaining US $203 million under Tranche A, €5 million under Tranche B and cash collateralized $32 million in letters of credit that had been secured under the credit facility. This eliminated the Las Cruces project credit facility. We funded 100 percent of the repayment through an intercompany loan.

Las Cruces also paid $16 million in July 2009 to terminate its interest rate swap contract, in connection with the decision to repay the credit facility.

Government subsidies – 2009

Las Cruces received $71 million in subsidy grants in 2009 to build the mine and process plant, under government assistance programs in the European Union.

2011 outlook for investing and financing

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

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

On March 31, 2010, we entered into a subscription agreement with a subsidiary of Temasek Holdings (Private) Limited (Temasek), under which Temasek agreed to buy 9.26 million subscription receipts at a price of $54.0049 each, exchangeable on a one-for-one basis for Inmet common shares, for total proceeds of $500 million.

On December 23, 2010, the agreement was amended such that each subscription receipt will now be exchangeable for 0.840283 of an Inmet common share, representing a subscription price per Inmet common share of $64.2699, or a 15 percent discount to the five day volume-weighted average price of Inmet common shares on the Toronto Stock Exchange as at December 22, 2010. The subscription receipts will now be automatically exchanged no later than 150 days after the coming into effect of legislation to amend the Code as described below. Upon exchange of the subscription receipts, Inmet's issued and outstanding shares will increase to 69.3 million common shares. Temasek will receive 7.78 million Inmet common shares, that would represent approximately 11.2 percent of Inmet's issued and outstanding common shares at that time, on a non-diluted basis.

The subscription receipts are exchangeable into Inmet common shares, subject to the satisfaction of certain conditions, including the coming into effect of legislation passed by the legislative assembly of the Republic of Panama amending Panama's Mineral Resources Code (the "Code") to permit entities in which foreign governmental bodies or authorities have an interest to hold direct or indirect interests in mining concessions in Panama.

Inmet and Temasek have also amended the investor rights agreement previously executed between them that will take effect upon exchange of the subscription receipts for common shares. Under the amended investor rights agreements, subject to certain conditions and exceptions, Temasek and members of its group will now be permitted to divest their Inmet common shares (or economic interest therein), or increase their ownership of Inmet common shares, after a period of four months following the exchange of the subscription receipts for Inmet common shares.

The subscription receipt proceeds will remain in escrow pending exchange of the subscription receipts for common shares. On completion of the exchange, the escrowed funds will be released to Inmet and the proceeds will be used by Inmet for the development of its Cobre Panama project and for general corporate purposes.

The legislation to amend the Code passed final reading in the Panamanian Assembly and came into effect in February 2011. We expect to exchange the Temasek subscription receipts for common shares before June 30, 2011.

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, 2010, we had $699 million in cash, including $326 million of cash and short-term investments and $373 million invested in long-term bonds.

Cash

At December 31, 2010, our cash and short-term investments of $326 million included cash and money market instruments that mature in 90 days or less, and short-term investments that mature in 91 days to a year.

Our policy is to invest excess cash in highly liquid investments of the highest credit quality, and to limit our exposure to individual counterparties to minimize the risk associated with these investments. We base our decisions about the length of maturities on our cash flow requirements, rates of return and other factors.

The economic downturn appears to be reversing, but we are still monitoring the potential for a second downturn. We have moved some of our government funds to prime funds and have created a bond portfolio that should provide better yields with little change to our investment risk. At December 31, 2010, we held cash and short-term investments in the following:

• AAA rated treasury funds and money market funds managed by leading international fund managers, who are investing in money market and short-term debt securities and fixed income securities issued by leading international financial institutions and their sponsored securitization vehicles.
• Cash, term and overnight deposits with leading Canadian and international financial institutions that are benefiting directly and indirectly from support programs by various governments and central banks.

See note 4 on page 48 in the consolidated financial statements for more details about where our cash is invested.

Long-term bonds

As at December 31, 2010, the bond portfolio of $373 million (Held to maturity investments), comprised 17 percent US Treasury bonds, 8 percent Government of Canada bonds, 65 percent Provincial Government bonds and 10 percent corporate bonds. The bonds mature between February 2011 and December 2015.

Restricted cash

Our restricted cash balance of $71 million as at December 31, 2010 included:

• $17 million in cash collateralized letters of credit for Inmet
• $52 million related to issuing letters of credit to suppliers and the local water authority at Las Cruces, for a reclamation bond and for its labour bond to the government
• $2 million for future reclamation at Pyhäsalmi.

COMMON SHARES

Accounting changes

Plans on transition to International Financial Reporting Standards (IFRS):

The Accounting Standards Board has confirmed that International Financial Reporting Standards (IFRS) will replace current Canadian GAAP for financial periods beginning on and after January 1, 2011. IFRS is based on a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and disclosure.

While the adoption of IFRS will not change our business activities, it will result in changes to our reported financial position and net income.

We have prepared a comprehensive IFRS convergence plan that addresses the changes in accounting policy, restatement of comparative periods, internal control over financial reporting, modification of existing systems, the training and awareness of staff, and other related items. Senior financial management, who report to and are overseen by Inmet's Audit Committee, are responsible for planning and implementing the conversion.

To date, we have determined all of our significant accounting policies, prepared sample financial statements and assessed the impacts on our systems and processes. We have put a dual reporting solution in place to maintain our accounting records according to both Canadian GAAP and IFRS for our 2010 dual reporting year. We have been working alongside our auditors while determining our accounting policies, to ensure they agree with our choices, and that we are choosing policies that are consistent with our peers in the industry. While documenting our new policies, we have documented the related internal controls.

We have prepared a reconciliation of our historical Canadian GAAP balance sheet to IFRS balance sheet as at January 1, 2010 and for our financial statements for the first, second and third quarters of 2010. We will focus next on preparing financial statements for the year ended December 31, 2010 in accordance with our expected IFRS accounting policies.

We do not expect our key controls to change during and after our transition to IFRS. We believe our training program and the preparation of reconciliations to IFRS, have given our staff an appropriate understanding of IFRS as it applies to our financial reporting.

The paragraphs that follow list the major differences between our current accounting policies under Canadian GAAP and the accounting policies we currently expect to apply when we transition to IFRS. We have also provided quantification for the most significant differences in our balance sheet as at January 1, 2010 and our statement of earnings for the nine months ended September 30, 2010. We currently expect these changes will increase the equity attributable to common shareholders of Inmet Mining on our January 1, 2010 opening balance sheet under IFRS by approximately $50 million, or $0.90 per common share, compared to our December 31, 2009 balance sheet under Canadian GAAP. We may choose to adopt different IFRS accounting policies, or we may choose to apply them only to certain transactions or circumstances, so our conversion to IFRS may be different from what we are currently expecting.

The standard-setting bodies that determine IFRS also have significant ongoing projects that could affect the ultimate differences between Canadian GAAP and IFRS, and their impact on our consolidated financial statements. The impact IFRS has in future years will depend on circumstances at the time. We will continue to monitor changes to IFRS and adjust our convergence plan as necessary.

Impairment of assets

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

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

IFRS uses a one step approach to test for and measure impairment, and compares asset carrying values directly with the higher of fair value less costs to sell and value in use (which uses discounted future cash flows).

This approach will lead to write-downs when carrying values of assets supported under Canadian GAAP on an undiscounted basis are not supported on a discounted basis under IFRS. IFRS also requires a full or partial reversal of previous impairment losses when circumstances have changed and the impairments have been reduced. Impairment losses cannot be reversed under Canadian GAAP.

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

Business combinations

Under Canadian GAAP, mining companies that are acquired in the early development stage often do not constitute a business, and instead are accounted for as an acquisition of assets without any goodwill. The definition of a business under IFRS is broader, and most acquisitions represent business combinations, so goodwill is recognized more frequently.

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

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

In addition, most identifiable assets, liabilities, non-controlling interests and goodwill acquired in a business combination are recorded at full fair value under IFRS. Under Canadian GAAP, only the ownership percentage acquired is recorded. Non-controlling interests are recognized at book value.

Asset retirement obligations

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

Under IFRS, we will measure asset retirement obligations using a risk free interest rate and revalue when market risk free interest rates change. We expect to increase January 1, 2010 asset retirement obligations by approximately $40 million on transition to IFRS.

Revenue

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

Under IFRS, we will recognize revenue when all significant risks and rewards of ownership of our products are transferred to the purchaser. We expect to increase January 1, 2010 accounts receivable by approximately $25 million and decrease inventories by $6 million on transition to IFRS.

Foreign exchange gains and losses

Under Canadian GAAP, dividends, including those related to the accumulation of earnings and repayment of intercompany debt, are considered a return on investment, and we recognize the deferred foreign exchange gains or losses on these amounts in investment and other income.

Under IFRS, only dividends that represent a return on capital invested in a foreign operation require recognition of previously deferred foreign exchange gains or losses. For the nine months ended September 30, 2010, we expect to reverse foreign exchange losses of $23 million related to the repatriation of accumulated earnings from our operations as a result of our transition to IFRS.

Future income taxes

We will need to recognize the corresponding tax asset or liability based on the resultant differences between the new carrying value of assets and liabilities under IFRS and their associated tax bases.

First time adoption of IFRS

First time adoption of International Financial Reporting Standards (IFRS 1) lists specific exemptions that we can use when we first adopt IFRS. The most significant exemptions we expect to apply are as follows:

• Business combinations – for business combinations that occurred before the transition date, we can choose to restate all of them under IFRS, restate all of them after a particular date, or not restate any of them. We expect to use this exemption and not restate any business combinations under IFRS.

• Cumulative translation adjustment – IFRS requires an entity to determine the translation differences in accordance with IFRS from the date a subsidiary was formed or acquired. IFRS 1 allows an entity to consider the cumulative translation differences for all foreign operations to be zero at the date of transition, and to reclassify the previous amount to retained earnings. We expect to use this exemption and reset our cumulative translation adjustment (unrealized losses of $61 million at January 1, 2010) to zero on transition to IFRS with a corresponding reduction in retained earnings.

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

We can use an optional transitional calculation to determine the property, plant and equipment associated with our provision for asset retirement obligations. Under the transitional calculation, we measure the provision at the transition date and discount it to the date the liability first arose. The result becomes the initial asset value. Depreciation is applied to this value. We expect to apply this exemption for certain mines and not determine property, plant and equipment associated with asset retirement obligations retrospectively and anticipate an increase of approximately $10 million to property, plant and equipment on transition to IFRS.

Supplementary financial information

Pages 34 and 35 includes supplementary financial information about cash costs. These measures do not fall into the category of generally accepted accounting principles.

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 measures under Canadian generally accepted accounting principles they should not be considered in isolation of earnings or cash flows. There is also no standard way to calculate cash costs, so they are not a reliable way to compare us to other companies.

About Inmet

Inmet is a Canadian-based global mining company that produces copper and zinc. We have interests in three mining operations in locations around the world: Çayeli, Las Cruces and Pyhäsalmi. We also have a 100 percent interest in Cobre Panama, a development property in Panama.

This press release is also available at www.inmetmining.com.

Fourth quarter conference call

Will be held on

• Thursday, February 24, 2011

• 8:30 a.m. Eastern Time

• webcast available at http://events.digitalmedia.telus.com/inmet/022411/index.php or www.inmetmining.com

You can also dial in by calling

• Local or international: +1.416.340.9432

• Toll-free within North America: +1.877.440.9795

Starting at approximately 10:00 a.m. (ET) Thursday, February 24, 2011, a conference call replay will be available

• Local or international: +1.905.694.9451 passcode 6763143

• Toll-free within North America: +1.800.408.3053 passcode 6763143

                       

INMET MINING CORPORATION

Notes to the consolidated financial statements

1. Significant accounting policies

Our interim consolidated financial statements do not include all of the disclosure required for annual financial statements under generally accepted accounting principles (GAAP). These statements do, however, follow the same accounting policies and methods of application used in our most recent annual consolidated financial statements. You should read our interim statements in conjunction with our annual statements, which you can find in our 2009 Annual Report.

These statements have been approved by Inmet's board of directors and have been reviewed by our external auditors.

2. Acquisition

On December 15, 2010, we acquired Leucadia National Corporation's (Leucadia's) 30 percent indirect equity interest and subordinated sponsor loans in Las Cruces for total value of $496.9 million. The purchase consideration was comprised of $150.6 million cash and the issuance of 5.4 million Inmet common shares. In addition, Leucadia was released from its guarantee of US $72 million debt owed by Las Cruces to an affiliate of Inmet as a result of the re-financing of its project facility in 2009.

The tables below show the fair value of the assets we acquired and the liabilities we assumed on the date of acquisition based on the consideration paid.

We recognized goodwill of $76.4 million as a result of the requirement to record future income tax liabilities calculated as the difference between the tax effect of the fair value of the assets and liabilities acquired and their tax bases. This goodwill will not be deductible for tax purposes and has been allocated to the Las Cruces segment.

We have included 70 percent of Las Cruces' earnings in our consolidated statement of earnings to December 15, 2010 and 100 percent thereafter.

3. Statement of cash flows

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

4. Cash and short-term investments

5. Restricted cash

6. Sale of our interest in Ok Tedi

On December 2, 2010, we reached an agreement with Ok Tedi Mining Limited for it to repurchase our 18 percent equity interest in Ok Tedi for US $335 million. Our net proceeds after withholding taxes in Papua New Guinea were US $307 million. The transaction closed on January 28, 2011. At December 31, 2010, we have recognized our interest in Ok Tedi as held for sale.

The table below shows the components of our assets held for sale relating to Ok Tedi at December 31, 2010:

The table below shows the components of our liabilities associated with assets held for sale relating to Ok Tedi at December 31, 2010:

7. Investments in equity securities

8. Held to maturity investments

In 2010, we purchased $229 million of long-term Canadian and Provincial government bonds, Çayeli purchased $67 million of US Treasury bonds, and bonds with a face value of $26.1 million matured and were converted to cash. The bonds, with credit ratings of A to AAA, mature between February 2011 and December 2015 and have a weighted average annual yield to maturity of 2.0 percent. We have designated these bonds as held to maturity, measuring them initially at fair value and subsequently at amortized cost.

9. Long-term debt

On December 15, 2010, we acquired Leucadia's portion of these loans for $173.7 million, eliminating these loans from our consolidated balance sheet (note 2). Prior to this, we classified Leucadia's portion of the advances as long-term debt.

10. Asset retirement obligations

In 2010, we recorded additional liabilities at Las Cruces of $5.7 million mainly as a result of mining and pit development activities during the year. We also recognized additional liabilities at Pyhäsalmi of $5.7 million mainly as a result of a change in our mine waste and tailings reclamation approach.

In 2010, we concluded operations at Troilus and this operation is accounted for as a closed site. We recognized additional liabilities of $7.8 million at Troilus mainly for environmental monitoring, owner and other closure costs.

11. Commitments

Capital commitments

Our operations have the following capital commitments as at December 31, 2010:

• Las Cruces committed $5.1 million for the purchase of plant equipment.
• Cobre Panama committed $136.5 million for the design and supply of two SAG mills, four ball mills and the related gearless drives, and for basic engineering.

12. Subscription agreement with Temasek Holdings

On March 31, 2010, we entered into a subscription agreement with a subsidiary of Temasek Holdings (Private) Limited (Temasek), under which Temasek agreed to buy 9.26 million subscription receipts at a price of $54.0049 each, exchangeable on a one-for-one basis for Inmet common shares, for total proceeds of $500 million.

On December 23, 2010, the agreement was amended such that each subscription receipt will now be exchangeable for 0.840283 of an Inmet common share, representing a subscription price per Inmet common share of $64.2699, or a 15 percent discount to the five day volume-weighted average price of Inmet common shares on the Toronto Stock Exchange as at December 22, 2010. The subscription receipts will now be automatically exchanged no later than 150 days after the coming into effect of legislation to amend the Code as described below. Upon exchange of the subscription receipts, Inmet's issued and outstanding shares will increase to 69.3 million common shares. Temasek will receive 7.78 million Inmet common shares, that would represent approximately 11.2 percent of Inmet's issued and outstanding common shares at that time, on a non-diluted basis.

The subscription receipts are exchangeable into Inmet common shares, subject to the satisfaction of certain conditions, including the coming into effect of legislation passed by the legislative assembly of the Republic of Panama amending Panama's Mineral Resources Code (the "Code") to permit entities in which foreign governmental bodies or authorities have an interest to hold direct or indirect interests in mining concessions in Panama.

Inmet and Temasek have also amended the investor rights agreement previously executed between them that will take effect upon exchange of the subscription receipts for common shares. Under the amended investor rights agreements, subject to certain conditions and exceptions, Temasek and members of its group will now be permitted to divest their Inmet common shares (or economic interest therein), or increase their ownership of Inmet common shares, after a period of four months following the exchange of the subscription receipts for Inmet common shares.

The subscription receipt proceeds will remain in escrow pending exchange of the subscription receipts for common shares. On completion of the exchange, the escrowed funds will be released to Inmet and the proceeds will be used by Inmet for the development of its Cobre Panama project and for general corporate purposes.

The legislation to amend the Code passed final reading in the Panamanian Assembly and came into effect in February 2011. We expect to exchange the Temasek subscription receipts for common shares before June 30, 2011.

13. Accumulated other comprehensive loss (AOCL)

The table below shows the components of the beginning and ending balances of AOCL.

The table below shows the breakdown of the currency translation adjustments included in AOCL.

The Canadian dollar to US dollar exchange rate was $0.99 at December 31, 2010 and $1.05 at December 31, 2009. The Canadian dollar to euro exchange rate was $1.33 at December 31, 2010 and $1.50 at December 31, 2009.

14. Investment and other income

Investment and other income are summarized as follows:

On November 12, 2010 we sold our 9.5 million shares of Premier Gold Mines Ltd. for cash proceeds of $61.4 million.

Foreign exchange

For transactions with foreign currencies we use the exchange rates in effect:

• at period-end for monetary assets and liabilities
• on the date of the transaction for non-monetary assets and liabilities
• on the date of the transaction for income and expenses

Foreign exchange (loss) is a result of:

15. Income tax expense

For the year ended December 31, 2010

16. Net income per share

17. Income tax recovery (expense) included in other comprehensive income

18. Subsequent event

On January 12, 2011, we entered into an arrangement agreement with Lundin Mining Corporation (Lundin) to merge, and create Symterra Corporation (Symterra), an international copper producer.

The proposed merger will be effected by way of a Plan of Arrangement completed under the Canada Business Corporations Act. It will feature a common share exchange through which Inmet common shareholders will receive 3.4918 common shares of the merged company for each common share of Inmet they own and Lundin common shareholders will receive 0.3333 common shares of the merged company for each common share of Lundin they own. The exchange ratio represents no premium to either party based on the 30 day volume weighted average price on the Toronto Stock Exchange for each of Inmet and Lundin to January 11, 2011.

Inmet and Lundin shareholders must both approve the proposed merger by two thirds of the votes cast at special shareholder meetings held to consider it. The joint information circular was mailed to shareholders on February 18, 2011. The shareholder meetings will be held on March 14, 2011.

The arrangement agreement includes customary reciprocal deal protections. Each party has agreed not to solicit any alternative transactions, and furthermore has agreed to pay the other a break fee of $120 million in certain circumstances. In addition, each company has granted the other a right to match any competing offer.