Perilya says it will look further into cost reduction initiatives as a falling lead price threatens to increase the Perth-based miner's production cash costs.
Perilya says it will look further into cost reduction initiatives as a falling lead price threatens to increase the Perth-based miner's production cash costs.
In its December quarterly released today, the company reported a drop in net cash costs from $US1.36 per pound of zinc in the September quarter to US83c/lb at its Broken Hill lead-zinc operation in New South Wales.
The average price received during the period was US57c/lb of payable zinc, down from US87c/lb zinc.
The cash operating margin improved from a loss of US49c/lb zinc in the previous quarter to US26c/lb in the red.
Over the quarter, Perilya completed the transition to the new operating plan after flagging in August that it will downsize its operations to cope with falling demand and lower commodity prices.
The company had previously announced that it expects net cash costs to be around US60-65c/lb of payable zinc from March this year assuming a lead price of US65c/lb.
However the current lead price is US50/lb which, given Broken Hill's significant lead production, "will reduce the value of the operations by-product credits and consequently increase the cash costs of production", the company said.
"The Company continues to look at further initiatives to reduce operating costs to mitigate this adverse impact to meet its targeted cash costs," Perilya said in its quarterly.
"Revised expected net cash costs of production will be confirmed when the current negotiation of treatment charges are concluded and it is expected that these will be commented upon in the March 2009 Quarterly Report."
During the quarter, Perilya produced 15,800 tonnes of contained zinc and 10,000t of contained lead, down from 24,300t and 10,400t, respectively, from the previous quarter.
At the end of the quarter the company had $19 million in cash, including a $10 million deposit from Shenzhen Zhongjin Lingnan Nonfemet Co for the Mount Oxide copper project.
Next month, Perilya shareholders will vote on a $45.5 million placement by Zhongjin, which will give the Chinese company control of the miner.
Last week, suitor CBH Resources dropped its takeover bid for Perilya following a decision by the Takeovers Panel not to delay the shareholders meeting.
