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Miner’s millions

Tuesday, 1st March, 2011

By Gina Wilson

Perilya has made a full year after-tax profit of $74.2 million.

The 2010 profit was 260 per cent better than its previous year and came as the majority Chinese-owned miner acquired the Canadian-listed GlobeStar Mining Corporation.

Mining production at the Broken Hill operations was almost 20 per cent greater than planned as it continued to improve, according to Perilya's full year financial results, released yesterday.

A restructure in 2008, in which 400 people lost their jobs, had paid off for the company with managing director Paul Arndt reporting it resulted in continual productivity improvement and tight cost control.

"Broken Hill operations continued to perform strongly where notwithstanding lower than plan grades being achieved, the Company maintained its tight control on costs with costs for the year being well below guidances," Mr Arndt said as the report was released.

"Further, mine production significantly exceeded plan and another record year in terms of safety performance.

"All of these accomplishments reinforce that the new operation plan implemented in 2008/2009 is delivering sustained productivity improvement and tight operation cost control, and places the Broken Hill Operations in a far stronger position to both endure difficult market conditions as they occur and to generate solid cash flow and profitability as economic situations improve."

Perilya changed its reporting period in 2009 to align with the financial calendar of its new majority owner, the giant Chinese zinc producer Shenzhen Zhonjgin Lingnan Nonfemet.

The full year report, which covered up to December 31, also said Potosi was on track to begin before June.

"The mine development will commence during the first half 2011 and will initially target mining approximately 1.6 million tonnes of ore at an average grade of

8.3 per cent zinc, 3.1 per cent lead and 38 grams/tonne of silver," the report said.

"Capitalising on existing infrastructure and a highly experience mining workforce at Broken Hill, the Potosi/Silver Peak project has relatively competitive fundamentals in the current metal price environment and is expected to increase combined metal production (zinc and lead) from broken Hill by approximately 30,000 tonnes per annum in subsequent years.

"Ore mined from the Potosi/Silver Peak operation will be trucked to Southern Operations concentrator for processing.

"The Potosi project which originally commenced development in March 2007, was put on care and maintenance in September 2008 due to rapidly falling commodity prices at the time and uncertainty in global financial markets.

"The Potosi/Silver Peak project development will require approximately 18 months prior to the stoping operation which, under the initial plan, will continue for approximately an additionally 40 months and will be funded out of Perilya's existing cash reserves, including its working capital facilities, and from operating cashflows."

The 2010 year was dominated by a "very intense period of mergers and acquisitions activity", the report said, with more to come.

"We will continue to actively look for further acquisition opportunities."

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