Inmet Mining Corp.'s (OTC:IEMMF) second-quarter results came in well below street estimates, and analysts were quick to cut their targets.
Toronto-based Inmet reported earnings per share of C$1.40 compared to C$2.86 in the same quarter last year. Desjardins Securities analyst John Redstone noted that much of the variance is related to foreign exchange losses. But he also wrote that C$0.31 of it is a result of higher-than-expected operating costs as Inmet deals with many of the same problems plaguing the rest of the industry.
He cut his target on Inmet to C$97.70 a share, down from his previous forecast of C$102.00 a share.
That is still well above the current level of about $62.00. Inmet shares has been dragged down by delays at its Las Cruces and Cerattepe projects. The company has also launched a hostile bid for joint venture partner Petaquilla Copper Ltd. (OTC:PTQLF) that needs to play out.
Fraser Phillips of RBC Capital Markets also cut his outlook on Inmet, lowering his target to C$78.00 (from C$85.00). That reflects lower-than-expected production in 2008 and higher-than-expected costs going forward. He also anticipates a start-up at Las Cruces in late 2009, which is about a year later than Inmet anticipates (the project has been held up by a water permit suspension).
In a note, he wrote:
We believe uncertainty around [Inmet's] key projects will likely limit its share price potential in the near term.
Mr. Redstone rates Inmet a "buy" and Mr. Phillips calls it a "sector perform."