Australia | Aug 27 2007
By Rudi Filapek-Vandyck
Management of Zinifex (ZFX) has this morning reignited market speculation a corporate tie-in with copper and gold producer Oxiana Resources (OXR) is likely to be considered once the planned smelter spin-off plan has been completed. The company’s partner in the smelter plans, Belgium’s Umicore, informed investors last week the earliest possible date for the proposed IPO was late October.
It would appear Zinifex management has big plans post the smelter’s spin-off with today’s management presentation to securities analysts indicating management sees a strong growth phase in three stages ahead. The first stage, indicated to last some four years, should see the company acquire additional assets at or near production.
Zinifex is specifically interested in acquiring assets that offer high margins and have extendible production lives. Core areas of interest are zinc, copper, silver, gold and lead, though management would also consider nickel and certain niche metals.
Other metals, including bulk commodities are not being considered.
The second growth stage, projected to kick in beyond the first four years and expected to last some six years, should see the company develop its Nunavut and Dugal River projects. Beyond the next ten years Zinifex’s future growth would be determined by developing brown field projects. (Meaning some infrastructure is already in place, as opposed to green field developments).
Earlier this morning the company reported a FY07 net profit of $1,334m, up 24% on the previous year. This well received by the market. Earnings forecasts by securities analysts had been in a wide range prior to the results release as varying expectations for metals prices, currencies and costs can lead to big differences in earnings forecasts.
The announced 70c in dividends takes total payout to shareholders for fiscal 2007 to $1.40 per share and this was much higher than what some analysts had expected.
This afternoon, Zinifex shares were trading 45c higher, up 2.7%, at $17.20. Shares of Oxiana were up 22c at $3.42. They hit $3.57 immediately after the presentation.