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Bullish Oxiana to consider new buys

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* Jamie Freed, Sydney
* January 24, 2008
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THE wobbly state of global markets has not dampened the enthusiasm of Oxiana managing director Owen Hegarty about the base metal miner's prospects.

After reporting fourth-quarter production results in line with expectations, Mr Hegarty said customers' copper demand was as strong as ever and his company continued to examine suitable acquisition opportunities, including Rio Tinto's Northparkes copper-gold mine in NSW.

"In some ways, you've got a better (acquisition) environment because (prices) have actually come off," Mr Hegarty said.

"But with equity markets where they are, people are a bit cautious. We're still looking at the same things and people are pretty much bringing the same (opportunities) to us."

RBC Capital Markets analyst Geoff Breen said it was possible Oxiana would again consider purchasing Zinifex. Zinifex's share price has halved since late October, due to the weak near-term outlook for zinc in addition to the general worries facing the rest of the market.

Mr Hegarty said Oxiana was not scared off by the weakening zinc market.

"We don't think the longer-term outlook is weak," he said.

"It might be in the shorter term. It might be a buying opportunity."

Oxiana's fourth-quarter zinc production from its Golden Grove mine in Western Australia was slightly lower than expected due to unplanned mining schedule changes.

The company said the development of its $1.1 billion Prominent Hill copper-gold mine in South Australia was on schedule for first production in the third quarter. Prominent Hill should produce 25,000 tonnes of copper, 15,000 ounces of gold and 75,000 ounces of silver this year.

"Prominent Hill being on time and budget is vital for Oxiana," Mr Breen said.

"The company's suggested cash flow from Prominent Hill of $700 million a year exceeds current cash flow. It is very material indeed."

Including an expansion to its Sepon copper operations in Laos, Oxiana expects copper production to rise to 200,000 tonnes by 2009, compared with 68,000 tonnes this year.

Mr Hegarty said the company would consider a spin-off of its gold operations after its Martable gold mine in Indonesia started production in 2010.

Oxiana shares closed 32¢ higher at $2.90, after having been sold off on Tuesday.