Kagara announces $35.9m first half profit

  Diversified resources group, Kagara Limited has reinforced its position as a low-cost, high-margin base metals producer, yesterday announcing a A$35.9m net profit after tax for the six months to December 31, 2007, despite the significant pull-back in metal prices seen during the latter part of 2007.Kagara said the solid financial result was underpinned by strong operating margins at its flagship North Queensland base metal operations, where a combination of higher production volumes, particularly in copper, high grades and significant by-product credits contributed to low cash operating costs.Kagara’s sales revenue increased by 22% to $150.8m and earnings before interest, tax, depreciation and amortisation (EBITDA) were $65.3m, reflecting lower metal prices. The net profit translated to earnings per share of 16.7 cents.Kagara’s North Queensland base metal operations generated net cash flow of $85m for the first half, providing a strong foundation for the company’s aggressive organic growth and exploration programs.The company’s copper production increased by 76% to 11,409 tonnes of contained copper, while its zinc production increased by 9.5% to 22,848 tonnes of contained zinc and lead production fell by 6% to 6,150 tonnes of contained lead.Kagara’s Executive Chairman, Kim Robinson said that although the company saw a 30% reduction in the realised zinc price during the half, the continued diversification of its production provided a solid buffer against the adverse commodity price movements.“We are very pleased overall with the result, which really highlights the robust nature of our operations and their ability to generate strong cash flow and profits at all phases of the commodity cycle,” Mr Robinson said. “The operational improvements we implemented last year, including the change to owner-operator mining and increased operational flexibility arising from the re-commencement of mining at Mt Garnet, has also given us greater capacity to withstand seasonal rainfall events and other operational challenges,” he said.Mr Robinson said Kagara’s strongly growing production profile was set to continue, with production of copper and zinc respectively on target to exceed levels of 30,000 tonnes and 40,000 tonnes of copper metal and zinc metal for the 2007/08 financial year.