UPDATE 1-Inmet profit drops despite better operating results
TORONTO Feb 21 (Reuters) - Canada's Inmet Mining Corp , the target of a hostile takeover bid by First Quantum Minerals Ltd, reported a 17 percent drop in quarterly profit on Thursday as foreign exchange losses and other costs offset stronger operating results.
Earnings from operations rose 26 percent in the fourth quarter to $112.4 million, boosted by results at the company's Las Cruces mine in Spain, which compensated for lower earnings at its Cayeli mine in Turkey.
A successful takeover would give First Quantum control of the massive Cobre Panama project. Inmet holds 80 percent of the deposit in Panama, expected to produce an average of 266,000 tonnes of copper annually over a 30-plus year mine life.
Cobre Panama, which will also produce sizable volumes of gold, molybdenum and silver, is about 9 percent through construction, slightly behind schedule.
Earlier this week Inmet waived its so-called poison pill takeover defense, saying that it has enough time to review First Quantum's C$5.1 billion ($5.01 billion) bid, and potentially execute strategic alternatives.
Before the results, Inmet's shares closed down 2.4 percent at C$66.93 on the Toronto Stock Exchange, below First Quantum's C$72-a-share offer.
In the fourth quarter, the base metal miner's revenue rose 11 percent to $259.9 million on higher copper and zinc sales.
Earnings attributable to shareholders dropped to $38.8 million, or 56 cents a share, in the quarter ended Dec. 31. That compared with $46.5 million, of 67 cents, in the year-ago period.
After-tax foreign exchange losses were $19 million, or 27 cents a share, the result of U.S. dollar cash holdings. The company said it plans to use those holdings to build Cobre Panama.
Results were also held back by general and administrative costs, which nearly doubled, as well as higher investment expenses and tax costs.