Fourth Quarter Activities Report
Document date:
Tue 21 Jul 1998
Published:
Tue 21 Jul 1998 00:00:00
Document No:
119072
Document part:
B
Market Flag:
Y
Classification:
NORMANDY MINING LIMITED 1998-07-21 ASX-SIGNAL-G
HOMEX - Adelaide
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The 1997-98 year finished with a strong June quarter operational
performance from the core gold division and from base metals.
Attributable gold production at 371,650 ounces was a record, driving
annual production to 1.43 million ounces, a 6.9% increase and also a
record. Importantly, the total cash cost was lower again, without
compromising reserves, at $311 per ounce.
Year on year, the average total cash cost was down 4.5% and,
combined with the improved production level and a realised gold
price of $612 per ounce (up 1.8%), resulted in an improved operating
margin of $291 per ounce, up 9.8%.
For the June quarter, record gold production was achieved at Pajingo
and Mt Leyshon and, for the year, at Mt Leyshon, Tennant Creek, Big
Bell Underground, Martha, Ariab and Ity.
The new year will, however, commence with operational challenges at
our most important operation, Kalgoorlie, where early production
will be marginally affected by equipment failure.
In metals, inaugural production from Gossan Hill contributed to an
increase of 29% in zinc concentrate for the quarter. The positive
impact was diminished by lower prices for zinc and copper.
Annual zinc output at 132,800 tonnes was up 23% on the previous
year. The Golden Grove treatment plant expansion, due for
completion in October, will partially replace production from
Woodcutters where current reserves will be depleted late next year.
BUSINESS MOMENTUM
The strategy to focus on fewer, larger operations continued.
Interests in the Lero (Guinea) mine was sold and Bow River is
subject to a sale agreement. Equity in Big Bell Consolidated was
reinstated to 100%. The net result was consideration neutral, two
joint ventures were terminated and annual attributable production
increased by 60,000 ounces.
On the exploration front, Normandy and subsidiary Normandy NFM
combined their respective tenements in Central Australia totalling
49,100 sq km. The resultant rationalisation will achieve superior
target prioritisation.
FINANCE
The company took advantage of interest rates at near thirty year
lows to successfully refinance its syndicated bank debt in US
capital markets.
The Guaranteed Unsecured Note Issue comprising a raising of $US100
million ($160 million) of seven year maturity and US$150 million
($240 million) of ten year maturity at 7.5% and 7.625% coupon
respectively. Two important features are the bullet repayment at
maturity and freedom from financial covenants over borrowings in the
future.
The coupon is believed to be the second lowest ever achieved by a
gold company.
Investment grade credit ratings (Standard and Poor's BBB-, Moody's
Investment Services Baa3)- stable outlook, have been assigned to the
issue.
The proceeds plus minor cash resources have been used to totally
repay the syndicated loan which has re-established full access to
the domestic market for future funding requirements.
CORPORATE
BRGM Perou (Normandy 49%) advised of an unfavourable decision by the
Lima Supreme Court seventh judge in the Yanacocha gold mine
pre-emptive rights dispute.
The equity interest in Queensland Metals Corporation increased to
36%.
SHARE PRICE
In 1997-98 year the Normandy share price outperformed the Australian
Stock Exchange Gold and All Resources Index and the international
Toronto and FT gold indices by between 23% and 33%. This, however,
is of little comfort to Normandy shareholders, as the share price
retreated by 11% in line with the US$ gold price.
If the share price remains at current levels at the time of the
final dividend declaration on 19/08/1998, the Board may either
review the share price discount applicable to the Dividend
Reinvestment Plan and Share Investment Plan or temporarily suspend
both Plans.
R Champion de Crespigny
EXECUTIVE CHAIRMAN
MORE TO FOLLOW
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