HIGHLIGHTS
The three months ended 31 December 2008, represented a significant transitional period for Perilya’s Broken Hill Operations:
Corporate
· Share placement to raise $45.5 million in cash and strategic alliance with Zhongjin Lingnan, China’s third largest zinc producer to be put to shareholders for approval on 5 February 2009, with FIRB approvals in progress.
· Cash on hand at 31 December 2008 of $19.0 million (31 October 2008: $10.9 million) including $10.0 million deposit received from Zhongjin Lingnan. No corporate debt.
· Independent expert values Perilya (post Zhongjin Lingnan transaction) at 28 cents to 30 cents per share.
· CBH withdrew its unsolicited takeover offer (on 21 January 2009).
Broken Hill
· Implementation of new operating plan completed.
· Quarterly combined metal production of 25,800 tonnes of contained zinc and lead exceeded new plan targets.
· Continuous improvement in productivity (tonnes mined per employee) and costs achieved throughout the quarter.
· Pillars development expected to increase average grades in the March quarter in line with longer-term range leading to further unit cost improvement.
· Resource and Ore Reserves update completed leading to an increase in the Life of Mine to approximately 8 to 9 years.
· Net cash costs per pound of payable zinc down 39% from prior quarter. Unit mining and processing costs in line with plan.
· Current negotiations on treatment charges are signalling strong movements in favour of miners.
Beltana
· Positive cash flow contribution from sales of 24,018 tonnes of DSO ore during the quarter.
Mount Oxide Copper Project
· A resource update is in progress and expected to show both an increase in contained tonnes of copper and an improved resource confidence level as a result of the drill program completed.
CEO’s COMMENTS
“The December quarter experienced further major turbulence in the financial and commodity markets and this was reflected in significant falls in metal prices for both zinc and lead.
I am pleased to report that against this backdrop the resizing of the Broken Hill Operations to a lower cost and production profile has been fully implemented during the quarter. This new operating plan builds on major productivity improvements already achieved and has enabled Perilya to significantly reduce our historically high fixed costs and puts the Broken Hill Operations in a strong position to endure these difficult economic and market conditions.
The effort of all employees at Broken Hill in bringing this new plan into operation and the achievement of a number of productivity improvements is a credit to the strength of the Broken Hill Operations. Having said this the Board and management recognises that there is further work required to enhance productivity and lower the cost basis in order to be operating on a cash positive basis in the current low metal price environment.
The Board and management have also acted pro-actively in response to the turbulence in world markets through the introduction of a strong strategic partner. After discussions with a number of companies the selection of Zhongjin Lingnan, China’s third largest zinc producer, and the proposed $45.5 million share placement, brings cash and a strong partner to Perilya which will both help put the Company in the best possible position to weather a prolonged period of low metal prices.
Zhongjin Lingnan is an ideal strategic partner and one that shares our confidence in Perilya’s production plan which has been re-sized in response to the current market challenges. Zhongjin Lingnan conducted a due diligence on Perilya’s Broken Hill Operations and is supportive of the current operating plan and committed to the long-term future of Broken Hill.
I encourage all shareholders to consider and support this important transaction and to register your proxy vote for the Extraordinary General Meeting on 5 February, 2009.”
Paul Arndt
Managing Director and CEO
The three months ended 31 December 2008, represented a significant transitional period for Perilya’s Broken Hill Operations:
Corporate
· Share placement to raise $45.5 million in cash and strategic alliance with Zhongjin Lingnan, China’s third largest zinc producer to be put to shareholders for approval on 5 February 2009, with FIRB approvals in progress.
· Cash on hand at 31 December 2008 of $19.0 million (31 October 2008: $10.9 million) including $10.0 million deposit received from Zhongjin Lingnan. No corporate debt.
· Independent expert values Perilya (post Zhongjin Lingnan transaction) at 28 cents to 30 cents per share.
· CBH withdrew its unsolicited takeover offer (on 21 January 2009).
Broken Hill
· Implementation of new operating plan completed.
· Quarterly combined metal production of 25,800 tonnes of contained zinc and lead exceeded new plan targets.
· Continuous improvement in productivity (tonnes mined per employee) and costs achieved throughout the quarter.
· Pillars development expected to increase average grades in the March quarter in line with longer-term range leading to further unit cost improvement.
· Resource and Ore Reserves update completed leading to an increase in the Life of Mine to approximately 8 to 9 years.
· Net cash costs per pound of payable zinc down 39% from prior quarter. Unit mining and processing costs in line with plan.
· Current negotiations on treatment charges are signalling strong movements in favour of miners.
Beltana
· Positive cash flow contribution from sales of 24,018 tonnes of DSO ore during the quarter.
Mount Oxide Copper Project
· A resource update is in progress and expected to show both an increase in contained tonnes of copper and an improved resource confidence level as a result of the drill program completed.
CEO’s COMMENTS
“The December quarter experienced further major turbulence in the financial and commodity markets and this was reflected in significant falls in metal prices for both zinc and lead.
I am pleased to report that against this backdrop the resizing of the Broken Hill Operations to a lower cost and production profile has been fully implemented during the quarter. This new operating plan builds on major productivity improvements already achieved and has enabled Perilya to significantly reduce our historically high fixed costs and puts the Broken Hill Operations in a strong position to endure these difficult economic and market conditions.
The effort of all employees at Broken Hill in bringing this new plan into operation and the achievement of a number of productivity improvements is a credit to the strength of the Broken Hill Operations. Having said this the Board and management recognises that there is further work required to enhance productivity and lower the cost basis in order to be operating on a cash positive basis in the current low metal price environment.
The Board and management have also acted pro-actively in response to the turbulence in world markets through the introduction of a strong strategic partner. After discussions with a number of companies the selection of Zhongjin Lingnan, China’s third largest zinc producer, and the proposed $45.5 million share placement, brings cash and a strong partner to Perilya which will both help put the Company in the best possible position to weather a prolonged period of low metal prices.
Zhongjin Lingnan is an ideal strategic partner and one that shares our confidence in Perilya’s production plan which has been re-sized in response to the current market challenges. Zhongjin Lingnan conducted a due diligence on Perilya’s Broken Hill Operations and is supportive of the current operating plan and committed to the long-term future of Broken Hill.
I encourage all shareholders to consider and support this important transaction and to register your proxy vote for the Extraordinary General Meeting on 5 February, 2009.”
Paul Arndt
Managing Director and CEO
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