Analysts are slashing their ratings on Inmet Mining Corp. after a disappointing production report and outlook.
Toronto-based Inmet continues to be plagued by start-up problems at Las Cruces, it's oft-delayed copper project in Spain. It was supposed to reach commercial production in late 2009, but now it has been pushed back to May of this year as the company faced a number of operational and equipment problems (and heavy rainfall didn't help, either).
UBS Securities analyst Onno Rutten noted that Las Cruces' production in the fourth quarter (3,300 tonnes of copper cathode) missed the company's expectations by 60%, and missed his own more cautious outlook by 40%.
"Strong performances at Cayeli and Ok Tedi [mines] were entirely offset by exceedingly weak results at Las Cruces," he wrote in a note to clients.
Analysts Fraser Phillips at RBC Capital Markets and Greg Barnes of TD Newcrest both suggested that the problems at Las Cruces could continue to be a drag on Inmet's share price until the company demonstrates some improvement in the operation. And that could take some time.
"Inmet has retained a team of third-party consultants to help determine whether operational issues could further delay the ramp-up — which suggests to us that management is not fully confident that it fully understands the problems at the operation," Mr. Barnes wrote.
All three analysts downgraded the stock to "hold" from "buy" (or their equivalents). Mr. Rutten has a price target of $75.00 share, Mr. Phillips' target is $65.00 a share, and Mr. Barnes' target is $70.00 a share.