Back in the black
Friday, 12th February, 2010
CBH Resources is back in the black after posting an after tax profit of $18.9 million for the half year - and said the outlook continued to improve. The result, which compares with a $90 million loss for the previous year's first half, comes despite a 24 per cent drop in revenue to $61m.
CEO Stephen Dennis said the result was primarily driven by the excellent performance at its Endeavor mine at Cobar, along with strengthening base metal prices. It also included the reversal of an impairment loss of $9m after a scoping study confirmed the economic viability of the company's Panorama Project in Western Australia.
The company also realised $9.7m on a convertable note buy back. Mr Dennis said the result was a significant turnaround for the company. "Our main priorities now are to ramp up production at Endeavor and to commence mining operations at Rasp, and we are confident both of these developments will contribute strongly to CBH's operational and financial performance," he said.
"The outlook for the company continues to improve, and upon completion of the recently announced transactions with Toho, we will be well positioned to deliver a sustainable improvement in our overall performance." The zinc and lead miner said the reduction in revenue was in line with the high grade/low tonnage operating plan brought in during 2008/9 in response to deteriorating economic conditions.
CBH sold 87,400 tonnes of zinc and lead in the six months to December 31, almost half the amount it sold in the previous year. Group operating profit of $3.5m, up 110 per cent, was mainly due to an increase in base metal prices and excellent operating performance at the Endeavor Mine. CBH said Endeavor, which had an operating profit of $7.5m, operated above plan and achieved an effective annualised production rate of 462,000 tonnes.
The company's Newcastle Shiploader contributed operating profit of $1.2m. Average cash costs at Endeavor of US$0.66 per pound zinc equivalent for the first half of 2009/10, were significantly below the first half of the previous financial year. Group debt reduced to $117.2m, along with an improved cash position of $47.1m at December 31 2009, excluding $12m of "restricted" funds.
Mining activities necessary to double the production rate at Endeavor to 850,000 tonnes per year from July 2010 were progressing according to plan, said the company. All government approvals for first stage mining activities at the Rasp Mine had also been received, with mining operations expected to commence during the second half of 2010.
It said with economic viability of underground mining at the Panorama Project in Western Australia now confirmed, a world wide search for a suitable partner to develop this Project was also currently underway.