results out & great outlook

check out asx announcement released yesterday

also this article: http://www.miningweekly.co.za/min/news/today/?show=82078

Aussie miner forecasts rising production
--------------------------------------------------------------------------------

Australian Stock Exchange-listed base metal producer Kagara Zinc today announced a 31% increase in interim net profit to $5,4-million and forecast a strong increase in full-year earnings on rising zinc and copper production at its Mt Garnet operations in Queensland.

The first half result reflected the impact of an extended period of commissioning on two new ore feeds at Mt Garnet and adjustments relating to Australian International Financial Reporting Standards amounting to $7,4-million worth of lead and copper hedging outstanding at the end of the period.

Chairperson Kim Robinson said the outlook for the second half was positive with the company expected to produce approximately 23 000 t of contained zinc, representing a 50% increase on the first half, at an estimated cash cost of $0,30 to $0,35/lb, together with strongly increasing copper production and other by-product credits.

“The first half represented a transition period for Kagara, as we commissioned ore feed from the new Dry River South underground mine and the nearby Balcooma open pit, located some 120 km south of the Mt Garnet plant, together with a trial parcel of high-grade supergene copper feed from the Balcooma,” Robinson said.

“The central processing facility at Mt Garnet was temporarily unavailable for normal processing of zinc ore after being reconfigured to process copper supergene ore for a six week campaign, which resulted in the production of 2 591 t of copper metal at a cash cost of $0,89/lb of payable copper,” he added.

“The second half will see strongly increasing zinc, copper and lead production, with the main Mt Garnet facility now reconfigured for zinc production and the recent commissioning of the new Mt Garnet copper circuit.”

The copper circuit has been constructed to provide a dedicated treatment facility for high-grade copper ore from Balcooma, with expected production of 4 000 t of copper metal by financial year-end at a cash cost of less than $1/lb of payable copper.

This is expected to make a substantial contribution to Kagara's full-year financial results.

Robinson said the forward production growth profile for the company was good, following its recently announced option agreement to purchase the Thalanga base metal treatment plant for $2-million, located 300 km south of Balcooma near Charters Towers.

“This represents a very important strategic acquisition for Kagara, with the capacity to produce a further 20 000 t/a of copper metal for the company with ore sourced from our high-grade Balcooma resources,” he said.

In addition to its strongly growing zinc production, Kagara is forecasting copper metal production of 9 000 t for 2005/6, rising to 25 000 t for 2006/7, and subsequently to 35 000 t/a from 2007/8 once the Thalanga facility is fully integrated with the broader Mt Garnet operations.

It is proposed to use the Thalanga plant to treat the bulk of the resource of 3,3-million tons at 3,9% copper already defined at Balcooma, with mining and processing expected to start as soon as the necessary environmental and statutory approvals are in place.

Production is expected to commence at an annualised rate of 20 000 t of payable copper metal in concentrate per annum by October 2006.

The first half net profit, which compared with a net profit of $4,1-million for the previous corresponding period, was struck on increased sales revenue of $31,3-million, based on lower polymetallic production from Mt Garnet of 15 689 t of contained zinc, 7 171 t of contained lead and 1 025 t of contained copper.

At the December 31, 2005 balance date, Kagara had cash on hand plus receivables of $15,3-million, providing a solid platform for its continued growth - including the ongoing intensive exploration and feasibility program at the proposed new Mungana/Red Dome production centre, 150 km north-west of Mt Garnet.

It expects to announce an upgrade of its zinc resources at Mungana within the next few weeks, with an exploration decline scheduled to commence in April 2006 to access the Mungana orebody.