(The following statement was released by the rating agency)
Oct 8 - Fitch Ratings has today assigned OzMinerals Limited
(OzMinerals) a 'BBB-' (BBB minus) Long-term foreign currency
Issuer Default Rating (IDR) with a Stable Outlook.
Simultaneously, the agency has withdrawn Zinifex Limited's
(Zinifex) 'BB+' Long-term IDR and removed it from Rating Watch
Positive.
The rating review follows the completion of the merger
between Oxiana Limited (Oxiana) and Zinifex - which resulted in
the formation of OzMinerals - and the release of financial
reports to 30 June 2008.
The 'BBB-' (BBB minus) rating reflects Fitch's view that the
diversification from Zinifex's historic narrow focus on zinc and
OzMinerals' lead into copper, gold and nickel is positive. In
addition, OzMinerals benefits from a broader portfolio of
producing, near production and prospective mining assets.
"Fitch recognises that the recent sharp fall in mineral
prices and the uncertain global outlook is likely to erode
OzMinerals cashflow," says Maurice O'Connell, Director in the
agency's Corporate team. "However, the 'BBB-' (BBB minus) rating
is supported by a robust balance sheet with around AUD300m net
cash as at 30 June 2008 as well as the imminent commencement of
copper and gold mining at Prominent Hill, which has seen over
AUD1bn in development expenditure," added Mr. O'Connell. Cash
production costs are generally well below current market prices
for minerals and should continue to support positive cash
generation throughout the cycle.
The agency views that any debt-funded acquisitions could
result in downward rating pressure, as could a material weakening
in credit metrics, in the event the cyclical commodity downturn
proves to be deeper than anticipated.
OzMinerals is a mid-tier Australian mining company with a
market capitalisation of AUD4.5bn. Its major producing assets are
the former Zinifex Century zinc mine in Queensland, the Rosebery
zinc and lead mine as well as the Avebury nickel mine in
Tasmania. Former Oxiana mines include the Golden Grove zinc,
copper and gold mines in Western Australia and the Sepon Gold and
Sepon Copper mines in Laos.
Contacts: Maurice O'Connell, Sydney, +61 2 8256 0379; Dan
Ong, Sydney, +61 2 8256 0310.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65
6796 7215.
Keywords: OZMINERALS AUSTRALIA/RATINGS
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