OZ, the company formed from the merger of Oxiana and Zinifex earlier this year, reported a pro-forma profit of $70.9 million for the previous six months with add-back of asset value adjustments and other non-recurring items.

The Oxiana loss was some $543,000, down from a profit of $173.45 million in the same period last year.

Zinifex, meanwhile, reported a net profit of $896 million, but excluding one-off items and discontinued operations, this figure dropped to $226.7 million for the entire 2007-2008 financial year.

Chief executive Andrew Michelmore attributed the disappointing financial results to volatile commodity prices in the first half of 2008, which has seen copper move 6.2% higher, but zinc prices plummet 31.7%.

This resulted in Zinifex operating, officially, at a loss for the first half of the year.

"In the second half of the year with the drop of the price of zinc in particular and the strengthening dollar there was a net loss [for Zinifex]," Michelmore admitted to journalists this morning.

The former Zinifex chief executive also admitted the company's financials were "messy".

With zinc and copper off the boil and the exchange rate taking its toll, the market agreed this morning, pushing OZ's share price down by 9% or 16.5c to $1.655.

"People are reacting to it and I think a number of parties were expecting a buyback and maybe a number of those people bailed as a result of that," Michelmore said.

However, he added that the company was trying to demonstrate it still had strong cash flow and was reviewing its operations.

He also denied any suggestion the timing of the merger between Zinifex and Oxiana was unfortunate.

"You've got to take the window when it is open," he said.

"At the time when it was done, it was appropriate. The fundamentals haven't changed."

Other negative impacts for the company have come from write-downs of its projects in Canada and the Avebury nickel project in Tasmania.

In Canada, Dugald River's value has dropped from $598 million - as valued pre-merger - to $304 million, while Avebury's value has plummeted from $915 million to $466 million.

Michelmore attributed the write-downs to accounting practises and the fall in the Oxiana share price in the six weeks between the valuation time of May and the time the merger between Oxiana and Zinifex was completed in July.

He added that the true value of these assets had not changed, even with falling nickel and zinc prices.

Also taking its toll on the company's balance sheet was the drop in value of some investments, including uranium play Toro Energy.

Despite the bruising financial results, Michelmore continued to spruik the company's prospects in the medium to long-term, saying all of OZ's businesses were cash flow positive and remained in a strong position with low cash costs.

"The bulk of the [financial] impact came from the external pricing environment," he said.

"It has been a difficult six months, but we're delivering on our production. The short-term outlook remains challenging but the longer and medium-term fundamentals remain robust, and we're in a great position to take advantage of that."

The company was still spending up on its development projects such as Martabe, Prominent Hill and Avebury.

Michelmore also said OZ had identified $27.5 million in synergies from the merger, focusing on a one-year pay-back for the merger implementation costs, which came to $41 million.

Michelmore also remained optimistic on the future for the company's key commodities - zinc and copper, with nickel an emerging focus - pointing to Asian growth and increasing demand.

"The fundamental long-term [zinc] price is significantly better than where we're at, at the moment," he said.

The company also decided not to pursue a share buyback but will instead use some of its excess cash to pay a 5c dividend to shareholders, worth around $156 million.

While remaining relatively tight-lipped on potential acquisitions, Michelmore made it clear the company still considered itself a predator with $1.2 billion in cash in the bank.

"At the current moment, with the prices across the resources industry, we're getting lots of knocks on the door about opportunities," he said.

However, the change in the economic landscape also meant the company would be carefully doing its sums on potential buys to ensure they would add value to OZ's bottom line.

"We're not going to squander our strong cash position in a hurry just to do something," Michelmore added.

Michelmore also said he expected to see the exploration side of the combined entities' portfolio decreasing, with the company looking at prioritising its greenfield prospects and reducing spending on exploration.

The combined entity's spend on exploration came in at $100 million for the last financial year, a figure that the company could slash drastically in its efforts to reduce costs.

OZ would also review all of the company's minority shareholdings, including Toro, but Michelmore said he still liked uranium as an asset.

"We're a long consumer of energy, we're short of supply of it, it would fit in as a natural hedge in our portfolio … uranium is a commodity we'd look at seriously."

Despite zinc operations at Broken Hill looking worse by the day, with CBH Resources the first to slash jobs and Perilya now also scaling back its operations, Michelmore said there were no immediate plans for OZ to curtail any of its operations but that this was always under review.