Sales revenue and earnings before income tax, depreciation and amortisation were higher than fiscal 1999, but a myriad of project and market issues managed to take the gloss of the final result.
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WESTERN METALSAt a glance
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||
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2000$'000
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1999$'000
|
|
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Lennard Shelf
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4,405
|
6,552
|
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Mount Gordon
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(1,576)
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7,713
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Hellyer
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16,829
|
18,162
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Unallocated expenditure
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(12,017)
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(7,782)
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TOTAL
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7,641
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24,645
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Net Interest Expense
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(26,079)
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(11,566)
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Abnormals
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(23,540)
|
--
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Income tax
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12,287
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(6,835)
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OPERATING profit/loss
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(29,691)
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6,244
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As expected the Mt Gordon copper mine in Queensland was the biggest trouble spot, running at 60% of capacity during the March quarter while its SX tanks were relined with fibreglass.
In the March quarter the mine’s plant was down to just 50% of capacity for eight weeks after the failure of the main cell house rectifier.
WestMet’s Lennard Shelf mine in the Pilbara region of Western Australia performed to expectation but profits were hit by rising fuel prices and increased smelter treatment charges in the second half.
Work is continuing on rationalising milling infrastructure at the project by closing the Cadjebut plant and expanding Pillara to a rate of 2.4 million tonnes per annum at a cost of $11 million
As a group the company was hit by hedging losses and higher interest charges arising from the lower $A/US exchange rate. The result also included abnormal losses from commodity option premium expenses worth $13.5 million and the writedown of exploration expenditure at the Eucalyptus Bore nickel project to the tune of $10 million.
Eucalyptus Bore was pushed into GME Resources with WestMet taking a 60% stake in the merged entity. The new-look company has a global nickel laterite resource of more than 109Mt grading 1.02% Ni and 0.7 Co.
Unlike last year, WestMet was unable to turn to Hellyer. The Tasmanian zinc and lead mine was closed in June due to the exhaustion of the orebody. Studies continue into the viability of re-treating the mine’s vast tailings dam, which is still highly rich in metal.
During the year WestMet shed a number of its shareholdings. In March it sold its Pacmin Mining Corporation stock (part of the cash and shares deal for the sale of the Khartoum gold project) and made $5.4 million.
This followed a move at the end of last year to sell its 30% interest in a Murray Basin minerals sands project to partner RZM for $2.65 million plus a deferred payment of $2.35 million at the start of mining.
In June this year it sold its remaining 13% in Thai zinc smelting group Padaeng Industry Plc to Union Miniere of Belgium for $11.1 million.
At the end of last month WestMet announced the successful completion of a US$120 million unsecured Senior Note issue. The notes carry a coupon of 9.59% and are repayable in three equal installments on August 31 2005, 2006 and 2007.
The funds received were used to refinance the secured BankWest acquisition facility of $130 million and the amount drawn down in a secured Chase working capital facility of $46 million.
As a result, all of Western Metals’ financing arrangements are now unsecured.
