A bit of a comment from a long term Oxiana shareholder. Held...

A bit of a comment from a long term Oxiana shareholder.



Held Oxiana shares from 2000-01. The share price has come down 35.7% since the merger announcement. From $3.97 to $2.55 today. (Surprised there was no clause to revisit agreement if share price came down certain %).



May be due to Michelmore taking over as CEO which I see a lot of Oxiana share holders not too happy with. Want to see CEO with runs on the board. (Was short period at WMC before takeover, a few months at ZFX before merger)



Michelmore has come out and said that by 2010 he wants the merged co. to be worth $20b or $6.50 and by 2012-13 $40b or $12.50. I hope he can back up these statements.



The Ox with be higher if stand alone company today. Michelmore has big challenge on his hands, here’s hoping he’s up to the task.



Regards,

(Optimist share holder! Hopefully, Mr Michelmore)



Thank-you for your email and we share your concerns at the recent fall in the share price given that, like you, most of us here are also shareholders.

A few things –

We have a volatile equity market and are not the only under-performer ie just a few months ago we were at similar levels to today. Just prior to the merger announcement Oxiana had a good run up at least partly based on market rumours of a bid by Zinifex so the market can be skittish in both directions. The broader financial markets remain sensitive and we believe there’s a short term disconnect with the fundamentals – which for our industry and our company remain strong.

The current zinc price is a key factor – it has halved from levels last year. Zinc dominates ZFX, but Oxiana produces more zinc than copper at present so we are not immune. We have been surprised by the size of the fall in the zinc price but, given the long term nature of our operations, our focus has been, and remains on, the bullish longer term fundamentals. Given the current price is now approaching the long term marginal cost of supply we would expect to see some mine closures which will ultimately restore the price back to a more reasonable level. Conversely, demand for zinc remains strong given the strength in demand for steel for buildings and infrastructure in China, India and the rest of the developing world which all means increased zinc usage.



We continue to believe in the rationale for the merger. A larger, stronger company with greater financial power to deliver on the existing pipeline of projects, to enter new ones and to acquire value adding “bolt-on” or major acquisitions. Oz Minerals will be capable of taking on projects and acquisitions that each company acting independently may have struggled to. As far as diversity is concerned – more and diverse operations bring “cushioning” when things get tough or one operation suffers a hiccup, for example, like the fire at Sepon or the power outage at Golden Grove. The merger gives us cash and financial strength at a time when the banks are tightening up – following the sub-prime and other fall-outs. A highly experienced Board and Management team determined to continue to grow and deliver value along with a great group of technical, professional and operational staff a time of very strong competition for people in our industry.



So yes, like you, we are disappointed to see the share price fall in the face of the merger but we are managing the company for the long term benefit of all stakeholders and continue to believe that ultimately the market will react more positively to the combined group and the strong commodity outlook.



Kind regards

Richard Hedstrom



Hi Richard,

Thanks for your prompt reply. I agree with your comments, as I follow the market closely (particularly the zinc price). I am still very confident that the merged entity will deliver growth for shareholders. My one main concern is the CEO, which I don’t believe was as good as Owen in providing information to share holders when at WMC. But still very optimistic in the future of Oz minerals. Thanks again.



Kind Regards,

P.S go the “mighty Ox” oops “mighty Oz”



Appreciate the feedback. Information to shareholders is one area that I am very focussed on having just been appointed to the combined group investor relations area and I think you will start to see some changes to how Zinifex have reported in the past.

Cheers

Richard