Dear Shareholder,

A copy of my address to the Pasminco Annual General Meeting held in Melbourne on 25 October is enclosed together with a list of responses to some frequently asked questions about the Company’s recent performance. The Annual General Meeting was the longest since Pasminco was formed 12 years ago and reflected the depth of shareholders concern about the Company’s share price and future outlook.

I share the understandable concern of shareholders that our performance must improve. I am convinced that we have put in place the organisational structure and the business improvement programs to reduce debt and deliver sustainable improvement during the current year and beyond. The Board is confident of a return to dividend payment in the current year as the benefits of our investments in Century and Savage Resources are realised. Pasminco has also undertaken significant borrowings to fund these investments and reduction in our debt levels is now a high priority.

The volatility of metal prices and exchange rates continue to be the main external factors impacting our performance. The Company’s management of foreign exchange exposure was a major focus of questioning at the Annual General Meeting. I want to emphasise that the Board considers that the decision taken two years ago to protect our revenue stream from an expected strengthening of the Australian dollar, was a prudent one. The cost of this protection has been to forgo a significant part of the benefit from the present weakness in the Australian dollar but it is important to stress that Pasminco nonetheless is benefiting from the current low exchange rate

Directors and the management remain focused on delivering a sustainable improvement in our overall performance and take seriously the feedback from the recent Annual General Meeting.


Yours faithfully,

Mark Rayner
Chairman

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