TSX Commentary

Inmet Mining Corporation (IMN): $68.62 – Downgrading on Continuing Start-Up Problems at Las Cruces
Sector Perform (prev: Outperform), Above Average Risk, Price Target: $65.00 (prev. $70.00)
RBC CM believes that the ongoing start-up problems at Las Cruces will be a drag on share price performance in the near term and have downgraded the shares to Sector Perform from Outperform as a result. RBC CM expects a further update on Las Cruces when Inmet reports financial results on February 9. However, it expects the shares to underperform their copper peers until Inmet can demonstrate some improvement in results at Las Cruces. IMN produced 83,600 tonnes of copper in 2009,
below guidance of 87,400 tonnes. Delays at Las Cruces are largely to blame. Zinc and gold production were above guidance.
Costs were largely in line with expectations. See page 2 for details. IMN failed to achieve its goal of commercial production at Las Cruces in Q4/09, as equipment failures and operational issues caused delays. The company believes these problems to be short-term in nature, and expects resolution in Q1/10. A shut-down is now planned for 10 days in March to add filtration equipment and improve the performance of the press filter, which has been identified as a key bottleneck.
IMN now expects to achieve commercial production in May 2010 and design capacity in August 2010. As a result of the delay start-up, RBC CM revised its estimates to reflect Q4/09 results and new guidance. The base case NAV has decreased from $62.26 to $59.35 and the 2010 EPS estimate from $6.62 to $5.18. The NAV at forward curve prices has declined from $64.27 to $61.12.