PASMINCO LODGES 2002 ANNUAL REPORT
Pasminco and its Deed Administrators, John Spark and Peter McCluskey of Ferrier Hodgson, today lodged Pasminco’s annual report for the year ending June 30, 2002 with the Australian Securities and Investments Commission.

The company reported a loss of $411 million in the year to June 30, 2002, which included further asset writedowns, an additional provision for environmental liabilities and a one-off gain after the revaluation of foreign exchange hedge contracts and debt.

At an operational level, events triggered by Voluntary Administration negatively impacted the company’s cash flow in the first half. In the second half the company was cash flow positive at $19.1 million.

Pasminco Chief Executive Officer, Greig Gailey said much had been achieved at Pasminco since it was placed into Voluntary Administration in September 2001.

"The 2002 accounts reflect more about the Pasminco that was, than the Pasminco that will be. During the period of administration we have continued to reduce costs and improve productivity such that in the second half Pasminco was cash positive despite extremely low metal prices.

"Restructure of the asset base was progressed with the sale of Broken Hill and the announced decision to close Cockle Creek between 2006 and 2008. We are confident that Pasminco will not only emerge from Administration but will do so as a more tightly focused and efficient company," Mr Gailey said.

Pasminco’s 2002 accounts reflect the fact that under the restructure proposal approved by Pasminco’s creditors, Pasminco Limited will cease to operate and its assets will be transferred to a new company, Pasminco Resources Limited.

This means the consolidated group financial report has not been prepared on a going concern basis.

The results also reflect the continuing weakness in metal prices due to subdued world economic growth. The LME zinc price averaged US$792 per tonne in 2002 compared with $1,052 per tonne in 2001. The lead price averaged US$474 per tonne in 2002, in line with the previous year.

Financial Summary
Despite increased mine and metal production, operating revenue was $2.06 billion in the 2002 financial year, down from $2.32 billion in 2001, reflecting the continuing weakness in zinc prices.

Depreciation and amortisation costs were reduced to $243.3 million in 2002 from $356.0 million in the 2001 financial year, reflecting further asset writedowns.

Asset writedowns totalled $161.8 million in the 2002 financial year from $1.18 billion in 2001. An additional $79 million was provided for environmental liabilities reflecting Pasminco’s future strategy for some of its sites including Cockle Creek.

Foreign Exchange and Hedging
Foreign exchange movements relating to foreign exchange hedge contracts and debt contributed a profit of $14.1 million compared to a loss of $843.2 million in 2001. The profit was determined after allowing for the close out and maturity of hedge contracts at a loss, offset by a revaluation of foreign currency debt as a result of favourable exchange rate movements.

Entering into Voluntary Administration led to the termination of most of Pasminco’s foreign exchange contracts. While the majority of the losses associated with this were provided in the June 30, 2001 accounts, further losses were crystallised on contracts closed out and maturing during the year.

A provision of $94.1 million remains with respect to foreign exchange hedge contracts that are yet to mature. This represents the balance of the provision at 30 June 2002 and does not represent additional losses.

Restructuring Proposal
Pasminco was placed into Voluntary Administration in September 2001. On 30 August 2002, creditors approved the Pasminco restructure proposal known as the equity and float option, under which Pasminco’s assets are to be transferred to a new holding company, known as Pasminco Resources Limited.

This option would see a percentage yet to be determined of the share capital of Pasminco Resources offered to investors in Australia and overseas under various disclosure documents, which will be made available at the time of the proposed offer. The proposed public float of Pasminco Resources is currently planned for early next year.

Provisions for costs associated with the restructuring have been reduced by $7.7 million from last year’s provision of $34.2 million.

Operational Developments
Pasminco achieved further unit cost reductions and operational efficiencies during the year as a result of restructure initiatives implemented since the beginning of 2001.

Pasminco’s management structure was simplified during the year. The mining, Australian smelting and International smelting divisions were streamlined into a single operating entity under the leadership of the Chief Operating Officer.

The number of executive positions was reduced from five to three. Further reviews were undertaken of the Group’s technical, sales and marketing and procurement functions.

Ramp up at the Century mine continued successfully, while higher production was achieved at the Elura, Rosebery and Clinch Valley mines. The Hobart and Port Pirie smelters achieved record production levels, while Cockle Creek’s production performance was the best since 1996. Production rates were slowed at Budel during the year to deal with issues associated with treatment of Century zinc concentrates and Clarksville production was marginally lower.

For the 2002 financial year, total zinc and lead production was 6% higher than the previous year, despite the impact of the Broken Hill sale.

Click here to download Pasminco Limited (Subject to Deed of Company Arrangement) - Annual Report 2002 (212Kb)

For further information, please contact:

Trevor Shard
General Manager - Investor and Community Relations
++61 3 9288 9186 or 0419 584 515

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