27/02/2008 - 13:29

Dominion Mining reports lower interim profit

27/02/2008 - 13:29

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West Perth-based mineral explorer Dominion Mining Ltd has announced a $14 million net profit after tax for the six months to December 2007, off the back of strong operational performance by its Challenger Gold Mine in South Australia.

Dominion Mining reports lower interim profit


West Perth-based mineral explorer Dominion Mining Ltd has announced a $14 million net profit after tax for the six months to December 2007, off the back of strong operational performance by its Challenger Gold Mine in South Australia.

The profit result is 2.8 per cent down on the $14.4 million net profit the company achieved in the 2006 corresponding period.

Dominion said the results were underpinned by an 11 per cent increase in gold production for the six months to 56,026 ounces (2006: 50,306 ounces) at a cash operating cost of A$351/ounce.

Revenue from gold sales increased by 22 per cent over the previous corresponding period to $44.1 million (55,256 ounces sold at an average received price of A$797/ounce) which reflects both increased production and gold price received.

Operating EBITDA increased by 29 per cent to $22.4 million (2006: $17.3 million) and was achieved after exploration costs of $2.6 million, administration costs of $2.0 million and $2.1 million in royalty payments.

Depreciation and amortisation charges totalled $5.6 million for the period.

The Challenger mine generated a cash flow of $10.7 million after capital expenditure and development which has contributed to an increase in the company's cash and bullion position to $46.8 million.

Other than some minor hire purchase commitments the company remains debt free.

The interim net profit result, which was achieved despite taking into account a loss on the sale of the company's investment in Deep Yellow Ltd of $2.5 million and a negative mark to market adjustment of the hedge book of $2.9 million, has enabled the company's board to declare an interim unfranked dividend of 4 cents per share.

The record date for the dividend is the 14th March 2008 and the dividend will be paid on March 31 2008.

Dominion said the Challenger Gold Mine continued to deliver outstanding exploration results, with the company announcing a 23 per cent increase in gold reserves from 512,000 ounces as at 30 June 2007 to 625,940 ounces as at December 31 2007, after taking into account the gold production for the six months.

Dominion managing director Jonathan Shellabear, said it was very pleased to announce another strong financial result, which was underpinned by the high-grade, low-cost Challenger operation.

"Despite the current environment of rising costs in the industry, Dominion has achieved a very healthy cash operating margin of A$446 per ounce over the period. Clearly, there are cost challenges within the industry which we are not immune from but they will continue to receive focus at Challenger".

"The operation is performing well although structures associated with a lamprophye on the 660 and 640 levels have required us to slow high grade ore production in order to minimise dilution. This will impact production and costs in the current quarter. We do not expect this issue to impact on future production at Challenger and underground drilling has continued to demonstrate the continuity of high grade mineralisation in future mining levels. Production for the year ending 30 June 2008 is still on budget to exceed 100,000 ounces" Mr Shellabear continued.

"A 23 per cent increase in Challenger's gold reserves was achieved during the first half which now supports a mine life in excess of five years at current production levels and our exploration programs are continuing to deliver impressive results with a number of promising targets awaiting follow up".

"Our portfolio of prospective regional exploration projects across Australia is also yielding encouraging results," he said.

"With the combination of strong cashflow from Challenger, organic growth opportunities both at Challenger and within the regional exploration portfolio Dominion is very well positioned to continue to create value for shareholders".

Dominion shares gained 11 cents, or 2.52 per cent, to close at $4.48 each today.

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