Miner CBH Resources has more than doubled its annual loss on weaker lead and zinc prices, and lower output, and says it will now pursue a more ”simplified corporate strategy” after battling to survive 2008-09.
CBH on Monday posted a net loss of $93.4 million for the 12 months to June 30, up from the $40.9 million loss for 2008.
Shares in CBH fell yesterday in reaction to the report. They finished down half a cent at 9.5c as investors put the company on a watch list of sorts.
The latest result included an impairment loss of $87.7 million, but managing director Stephen Dennis said in a statement that he was confident "the worst is behind us”.
Revenue fell 27% to $133.2 million, thanks to the slump in lead and zinc prices and production cuts at its Endeavor mine in central NSW.
Those production cuts, and 480 job losses, helped slash costs and seem to have given CBH breathing room.
”Had we not undertaken severe production cutbacks at Endeavor, and implemented other drastic cost saving measures right across the company, then I am not sure we would have made it to here today,” Mr Dennis said in a statement .
But after the cuts and dark days when it looked as though the group may not survive, it can see some light.
Mr Dennis said in Monday’s statement:
"First, I can tell you that our main operation at Endeavor continues to run according to plan which it has done now for 15 months.
"In the first two months of the new financial year, we have produced 9800 tonnes of zinc concentrate and 5100 tonnes of lead concentrate which is well ahead of plan.
"Importantly we are keeping our costs down, and at current metal prices the operation is making money.
"Our target production numbers for the full year are 53,000 tonnes of zinc concentrate and 28,000 tonnes of lead concentrate.
"Second, we have just released our full year financial results which are not so good; however we are confident the worst is behind us.
"You can see that our Group loss for the full year before one off charges is $61 million, and after a number of one off impairment charges and other non cash adjustments, our bottom line loss for the full year is $96.6 million.
"Importantly our operating loss at Endeavor in the second half of the year was $6.2 million which is a substantial improvement compared to the first half loss of $30.8 million, confirming that at long last we are emerging from what has been a very dark period for this Company.
"Had we not undertaken severe production cutbacks at Endeavor, and implemented other drastic cost saving measures right across the Company, then I am not sure we would have made it to here today.
"Some 480 people, including contractors, lost their jobs at CBH in a one year period, and this is a sobering and regrettable number for a company of our size.
"Through our Share Purchase Plan and the institutional share top up facility we have raised $20.5 million, which is a pleasing result.
"I also would like to specifically acknowledge the contribution of our largest shareholder Toho Zinc, who has generously made available to us a $40 million standby loan facility which is the cornerstone to all of the recapitalization measures."
But despite that support the company also announced its largest shareholder, Japan’s Toho Zinc, will not be keeping its 28.6% under a placement agreement and will be diluted to just over 23% after other institutional placements and a share purchase plan.
CBH’s one time merger partner, Perilya had a similar experience to CBH.
The two companies looked as though they would merge in late 2008, then the situation went hostile and CBH’s offer failed in January.
Perilya, now 50.1% owned by China’s Zhongjin Lingnan, had a better second half, but that wasn’t enough to produce a profit for the year.
The company reported a net loss of $75.1 million, compared with a loss of $140.2 million in 2007-08.
It earned a second-half profit result of $2.1 million after cutting costs and getting a capital injection from its Chinese parent.
