MEDIA RELEASE HALF YEAR RESULTS

Pasminco recorded a loss after tax of $184.4 million for the six months ended 31 December 2002 after providing for one-off significant items of $78.4 million.

The loss after tax in the corresponding six-month period in 2001 was $272.1 million, including significant items of $177.4 million.

One-off significant items for the six months ended December 2002 included restoration provisions of $57 million, administration and restructure costs of $26.7 million, asset writedowns of $2.9 million and gains on foreign currency debt of $7.6 million.

Commenting on the result Greig Gailey, Pasminco Chief Executive Officer said, "Our results for the six months reflect the difficult environment in which we have operated. Zinc and lead prices remain at historically low levels and the US/Australian dollar exchange rate has appreciated. Notwithstanding the difficult external environment our operations continue to perform well. Although a first half loss has been recorded, we have further lowered our costs, and increased output and achieved a break even operating cash flow.

"Importantly, we remain committed to our plans to restructure Pasminco’s asset base in preparation for a re-float of the company when market conditions are appropriate.”

Borrowing costs, which includes accruing interest on debts frozen by the administration, were $110.9 million for the period, an increase of $31.4 million over the previous corresponding six-month period, reflecting the higher interest rates, and the continuing build up of debt as interest is predominantly capitalised.

The company returned to an EBIT positive position in the half-year before one-off significant items. Earnings before interest, tax and individually significant items were $7.4 million, compared with a loss of $15.2 million for the corresponding period in 2001, an increase of $22.6 million.

The major variances to earnings were:

• 
  
• Lower costs - the ongoing benefit of improvement programs across the group, contributed $39 million to earnings.
  
• Lower amortisation and depreciation charges - write-down of asset values in recent previous periods, contributed $33 million to earnings.
  
• Higher production volumes - total production for the six months ended December 2002 was 2% higher than the corresponding period in 2001, excluding the impact of the sale of the Broken Hill mine in May 2002, which contributed $14 million to earnings.
  
• Lower metal premiums - reflecting weak demand in Pasminco’s major markets, which reduced earnings by $9 million.
  
• Lower metal prices - the zinc price averaged US$769 per tonne in the December half compared with US$796 per tonne in the previous corresponding period, while the lead price averaged US$432 in the December half compared with US$474 per tonne in the previous corresponding period. Lower metal prices reduced earnings by $13 million.
  
• Higher US/Australian dollar exchange rate - the US/Australian dollar exchange rate appreciated from US51.38 cents to US55.53 cents, reducing revenue by $38 million.
  
• The favourable impact of the sale of Broken Hill mine in May 2002, which is excluded from the current period earnings and expenses, but contributed a loss in the corresponding six-month period.
  

Total net cash outflows for the period before financing costs but after capital expenditure and administration and restructure costs were $27.3 million. Before administration and restructure costs, cash flow was approximately break-even for the period.

Cash flows from operating activities were $80.9 million, an increase of $139.5 million compared to the previous corresponding period. The operating cashflows for the comparative period were adversely impacted by the cessation of the debtors securitisation program which decreased receipts by approximately $100 million, and also by an increase in payments to suppliers of approximately $47 million on going into administration. Net receivables and payables are largely unchanged during the current period.

Restructure Initiatives
With regard to the restructure being implemented for Pasminco, the sale process for the Elura mine, near Cobar in New South Wales, is continuing. Consolidated Broken Hill Ltd (CBH) has completed its due diligence. Negotiations between Pasminco and CBH are now substantially complete and transaction documents are now being drafted.

In late 2002, Pasminco announced the closure of its US mines at Gordonsville and Clinch Valley, Tennessee and its Cockle Creek lead smelter at Boolaroo in New South Wales.

Market Outlook
Demand for zinc and lead continues to be weak in most developed economies and prices remain at historically low levels. Global zinc metal stocks remain steady at 1.1 million tonnes, which is about 8 weeks global consumption. Lead stocks are approximately 0.5 million tonnes, around 5 weeks consumption. Metal markets generally have been adversely impacted by fears of military conflict in Iraq. The announcement of a number of zinc/lead supply side cutbacks and closures was greeted positively by the market and should lend support to a price rally when demand conditions improve.

Click here to download Pasminco Limited - Half Year Results to 31 December 2002 Deed Administrators Report

Click here to download Pasminco Limited - Half Year Results to 31 December 2002 Appendix 4B

For further information contact:
Trevor Shard
General Manager - Investor and Community Relations
++ 61 (3) 9288 9186 or 0419 584 515

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