Base metals miner Kagara has returned to profitability with a $100,000 net profit for the first half of the 2010 financial year, compared to a loss of $34.4 million in the previous corresponding period.
Base metals miner Kagara has returned to profitability with a $100,000 net profit for the first half of the 2010 financial year, compared to a loss of $34.4 million in the previous corresponding period.
During the half year, a recapitalisation of the company was completed following a successful A$257 million capital raising and the full
repayment of bank debt. A strategic alliance was entered into with Guangdong Foreign Trade Group taking a 19.9 per cent interest in Kagara.
Pre tax profit was A$0.1 million for the half year (Dec 2008: A$49.9 million loss) and cash on hand plus receivables was $39.2 million as at 31 December 2009 (Dec 2008: $43.4 million). Sales revenue increased to A$116.6 million (Dec 2008: $76.9 million) as a result of improved base metal prices.
Zinc production increased significantly during the half year to 23,186 tonnes of metal in concentrate from the Mt Garnet polymetallic plant, (Dec 2008: 12,213 tonnes) and copper production was lower at 11,208 tonnes (Dec 2008: 21,300 tonnes) as a result of Thalanga operations moving to tailings retreatment.
Zinc cash operating costs after by-product credits for the half year from the polymetallic plant was US$0.48 per pound of payable zinc (Dec 2008: US$0.49) produced against an average realised zinc price of US$0.84 per pound of payable zinc (Dec 2008: US$0.64). The cash margin from operations was US$0.36 per pound of payable zinc (Dec 2008: US$0.15).
Copper cash operating costs after by-product credits for the half year from the Mt Garnet copper plant was US$1.36 per pound of payable copper produced (Dec 2008: US$1.33) against an average realised copper price of US$2.61 per pound of payable copper (Dec 2008: US$2.27). The cash margin from operations was US$1.25 per pound of payable copper (Dec 2008: US$0.94).
OUTLOOK
Production forecasts remain on target at 46,000 tonnes of zinc and 23,000 tonnes of copper metal contained in concentrates for the full year. Current metal prices are in excess of 20% higher than that received for the December half year and should these prices persist for the remainder of the year, EBITDA and profitability are expected to increase substantially in the second half.
Several significant developments are expected during the June half, including first production, from the Lounge Lizard nickel deposit in Western Australia with the project progressing inexorably towards full production for the 2010/11 financial year.
The results of the prefeasibility study for the very large Admiral Bay zinc-lead-silver-barite deposit in the Canning Basin of Western Australia will also be announced in advance of reviewing development alternatives.
