Zinifex 2008 Half Year Results
25 February 2008
Zinifex posts a record half year profit
Zinifex Limited today delivered a record half-year profit of $1,309.7 million for the period ended 31 December 2007 - a 74% increase over the profit for the corresponding half-year the previous year.
Zinifex's CEO, Mr Andrew Michelmore, said that this result was driven by the substantial proceeds raised from the sale of Zinifex's smelting
assets which contributed $960.6 million to net profit and $1,785 million of cash.
"Over the half, Zinifex successfully completed its transformation to a dedicated mining business. This has not only re-focussed the strategy of the organisation but resulted in a significant cash injection into the company.
"Zinifex's ongoing business, the Century and Rosebery mines together with our exploration and development activities, contributed a profit of $281.2 million, down some 43 per cent on the corresponding period last year.
"As a result, cash held increased six-fold to more than $2.2 billion at 31 December 2007," he said.
The Board also announced a dividend of 35 cents per share, fully franked payable on 21 April 2008. The record date for entitlement to this dividend is 7 April, and the exdividend date will be 1 April.
Production performance at both the Century and Rosebery mines was excellent with zinc output up 8% and lead output up 12 per cent
on the previous comparable half year resulting in stronger sales volumes.
However, Mr Michelmore said that despite this, overall revenue declined by 27 per cent to $788.6 million compared with the prior half-year.
"This was largely the result of a combination of significantly lower zinc prices and a stronger Australian dollar against the US currency. While zinc stocks remain at historically low levels, zinc prices have fallen on market expectations of more zinc supply in 2008 and 2009 shifting the zinc market from a deficit to a surplus position.
"Lead prices however were on average more than double that of the previous corresponding period," he said.
Mr Michelmore said that adding to the fall in revenue were increased costs.
"The majority of this increased expenditure was directly related to the increased production and our growth ambitions with exploration and development spending rising three-fold to $36.7 million.
"However, like
the rest of the resources industry, over the half year we experienced increased costs with freight rates in particular rising.
Mr Michelmore said that while cost pressures will undoubtedly remain while the resources boom continued, there is some evidence to suggest that the rate of increase may be starting to slow.
"Regardless though, controlling expenditure will continue to be an ongoing focus of the company and that, in the current environment, we will be particularly vigilant about costs," he said.
Mr Michelmore noted, however, that in times of global market uncertainties there is always opportunity and that Zinifex would certainly take advantage of this.
"We are in an enviable position with more than $2 billion in the bank. Cash that, in terms of buying power, is becoming more valuable every day.
"Our strategy going forward is to diversify our commodity base with a focus on copper, nickel and related metals such as lead, silver and
gold, while of course maintaining a significant interest in zinc and lead," he said.
Mr Michelmore outlined the progress Zinifex has made on its long-term growth strategy highlighting the launch last December of an all cash offer for Allegiance Mining, the owner of the Avebury nickel project located on Tasmania's north west coast.
"We also has attractive growth opportunities in the development pipeline including Dugald River, one of the world's largest and highest grade zinc lead silver deposits, and the high grade copper and zinc deposits in Nunavut, Canada.
"Exploration momentum is continuing to build around the globe with projects in Australia, Canada, Tunisia, Sweden, Mexico and China and we have also commenced drilling on the extensive ground holdings we have built up around Century Mine," he said.
For further information please contact Martin McFarlane, GM - Investor & Community Relations, on 03 9288 0479 or 0417 543 638 or Matthew Foran, Manager
Stakeholder Relations, on 03 9288 0456 or 0409 313 637.
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