2nd qtr performance....

ASX announcements.....

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.