Total production in the December quarter exceeded both the September quarter and the same quarter last year by more than 3%, lifting year to date production above the corresponding period last year. Zinc in concentrate was similarly ahead of both corresponding quarters due largely to better management of the higher silica levels in Century ore that have been encountered so far this year. Lead in concentrate, while well above last year’s levels, could not match the exceptional first quarter when production was augmented by the trucking of stored concentrate from Century to the Karumba port. Zinc metal output was also comfortably ahead of both corresponding quarters recovering a large part of the first quarter deficit that arose due to smelter maintenance shutdowns. Clarksville’s record zinc output for the December quarter reflected ongoing improved performance from this site. Port Pirie recovered strongly from the September shutdown and lead production is on target to reach last years levels. Both zinc and lead prices rose strongly during the December quarter reflecting amongst other things confidence in the outlook for Zinifex’s major metals. We expect to see the benefit of these higher prices flow through to Zinifex’s earnings in the second half given the one to two month lag inherent in our pricing terms. In the case of zinc, tightening fundamentals were reflected in falling concentrate treatment charges and rapidly reducing London Metal Exchange (LME) zinc stocks. These fundamentals were reinforced by an inflow of investor funds, which combined to drive zinc prices to 16 year highs. Lead prices, already high, further strengthened largely in line with other base metals. Cost pressures continued to be felt but were more than offset by higher zinc and lead prices. Budel continues to incur dramatically higher electricity charges, approaching double last year’s levels. While higher European premiums have provided some offset, Government intervention on electricity pricing will be needed to provide substantive relief in the short term. Project Productivity manpower reductions are slightly ahead of target with 209 of the planned 450 reductions now achieved. Positive drilling results continued in two areas beyond the current resource at Rosebery resulting in an increase in the mine resource in one of those areas. We expect to ramp up our exploration efforts over the remainder of this financial year with approximately 60,000 metres of drilling planned at Century, Rosebery and the Menninnie Dam Joint Venture in South Australia. If zinc prices continue at today’s levels, Zinifex’s second half financial performance is likely to substantially exceed its first half result.
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