ACN 072 745 692
CHAIRMAN'S ADDRESS TO THE FIFTEENTH ANNUAL GENERAL MEETING OF MINCOR RESOURCES NL TO BE HELD ON WEDNESDAY, 9 NOVEMBER 2011 AT 11.30AM AT THE CELTIC CLUB, 48 ORD STREET, WEST PERTH
I am pleased to report that your Company has operated to a
high standard of safety in the year under review, and to date
in the current financial year.
The 2011 annual report gives details of our safety procedures
and the continuing action being undertaken to maintain our
excellent safety record.
Our financial results for the 2011 financial year were not
satisfactory and were adversely affected by a costly seismic
event at Mariners Mine in July 2010 and ground stability
problems which occurred at Otter Juan in March 2011; as well
as the under-performance of our Miitel Mine.
These factors, combined with a lower nickel price and high
Australian dollar led to the Company incurring a non-cash
impairment charge of $24,994,000 relating to our mining
properties, plant and equipment.
As a consequence of this non-cash charge, a consolidated loss
attributable to our shareholders reserves of $23,391,000 was
recognised
Our earnings before interest, tax and depreciation and
amortisation (EBITDA) were $16,290,000.
Net positive cash inflow from operating activities was
$26,201,000 compared to $99,491,000 in the previous year.
After the investment of $49,023,000 in property, plant,
equipment and exploration, evaluation and development, and
the payment of $16,049,000 (2010: $14,012,000) in dividends
to shareholders, our cash balance reduced from $126,797,000
at 30 June 2010 to $87,342,000 at 30 June
2011.
Our working capital position at 30 June 2011 was sound at
$92,973,000 and we carry no debt. This is an important
prudent attribute in the uncertain and volatile circumstances
currently evident in the global financial markets and in the
economic conditions applying in most developed economies.
In light of our strong liquidity position the directors
declared a 2 cent per share fully franked interim dividend in
March 2011 and a 2 cent per share final dividend for the year
ended 30 June 2011.
We took strong strategic and executive action throughout
2011, and the benefits of these decisions are seen in the
highlights of our quarterly report for the period ended 30
September 2011:
• Nickel production is up 28% to 2,797 tonnes (June quarter 2,181 tonnes)
• Nickel grade up 39% to 3.4% nickel (June quarter 2.44% nickel)
• Cash costs down 35% to A$5.71 per pound of nickel (June quarter A$8.86 per pound)
• Operating surplus up 378% to A$18.9 million (June quarter A$3.9 million)
We are confident our new management structure and streamlined
operational plans, will enable us to produce at satisfactory
rates at Kambalda for the foreseeable future.
Our September 2011 report to the market also showed exciting
new strikes of high-grade nickel sulphides at our South
Miitel mine, which included:
• 6.10 metres @ 7.85% nickel (estimated true width);
• 6.80 metres @ 5.95% nickel (estimated true width);
• 4.93 metres @ 7.59% nickel (estimated true width)
At September 2011 quarter end, working capital was
A$85,630,000 with cash at bank of A$79,340,000 which is after
providing for investments in capital works and exploration of
A$9,100,000, dividends to shareholders A$4,000,000, share
buy-back payments A$3,500,000 and a A$5,000,000 investment in
Niuminco Ltd, our partner in our new PNG project.
Our community participation, particularly in the Kambalda and
Kalgoorlie Boulder communities continues to be strong. We do
all we can to train our staff in all aspects of their work
and in particular, safety training and the prevention of harm
to our people.
We continue to invest in substantial and necessary
exploration work, using the most sophisticated electronic and
mechanical systems available. This is to ensure we maintain
our nickel resources and reserves. In addition we are
searching for new discoveries in a wide range of minerals in
many Australian and overseas locations. Investment funds
included in the 2011/2012 budget amount to A$13,000,000 and
excellent progress is being made in the projects described in
the exploration segment of the Annual Report.
Your CEO and Managing Director, David Moore will refer to
these ongoing projects in his address, and will refer in some
detail to our exciting new copper, gold and silver venture in
Papua New Guinea.
We believe we manage a well run business which is of great
benefit to the Australia wide economy. These benefits are
produced by way of nickel production and by way of careers
and salaries paid to our people, and to our contractors. Our
operations, and exploration and development projects, include
the procurement of operating supplies and equipment from
largely, Australian suppliers. We pay out a range of
royalties, state and federal taxes, and 30% of all profits is
paid out as income taxes to the federal government. Last but
not least; our shareholders benefit from regular payment of
significant cash dividends.
We will be subject to the effects of the 'clean energy tax'
(the carbon tax) and this tax will result in increased costs
being passed on to us via the inflationary aspects of the
tax, and, an additional and onerous administrative cost
burden. These costs will cascade into an ever increasing tax
burden.
No benefit to the environment or the Australian people will
arise, in our view, from the new tax.
By the government's own figures the vast majority of tax
raised will be passed on as subsidies to selected companies
and to the wider population. Very little will go directly to
any CO2 gas abatement or any emissions
limitations by regulation, or direct action innovation
programs or incentives. This, and other proposed taxes on the
mining industry, will make it more difficult for Australian
mines to compete internationally in world markets. We will
tend to lose our wealth to those overseas businesses and
governments which operate under a less costly and more
efficient regime.
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Shareholders can be assured that your Board and management
will continue to grow your company through careful and
innovative investment in a wide range of excellent mining
projects, as well as continuing to develop the great
potential of our main area of operations; in the Kambalda
nickel fields.
I thank our staff and the Board for their energy and ongoing
commitment to the success of Mincor
Resources.
Thank you
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