Copper miner Kagara has announced a $32.2 million net loss after significant write-downs in the carrying value of two of its underground mines and a strategic review of the company’s operations.
Kagara said a pre-tax impairment charge of $48.5 million was the main reason behind the loss, booked on the write-down in value of its Mungana and Mt Garnet mines in Queensland, and a conservative re-valuation of its resources and reserves.
Around $10 million of that charge was attributable to the decision to place Mt Garnet on care and maintenance.
Kagara said the mine would be reactivated once the zinc price rises to a level that makes further development of the deposit viable.
At Mungana, a negative reconciliation of mine production against reserves resulted in an impairment charge of $31.6 million.
Kagara’s underlying net profit after tax, excluding non-recurring items, was $2.1 million.
The company said it had budgeted around $31 million for exploration in Queensland and Western Australia over FY12, with business improvement and optimisation programs continuing across the organisation.
Managing director Geoff Day said financial year 2011 was a turning point for the company in many respects.
“The financial performance of the business for the year was clearly disappointing, and we have had to make a number of tough decisions, particularly with respect to the carrying value of the Mt Garnet and Mungana operations,” Mr Day said in a statement.
“We believe this to be a prudent and responsible measure, which will effectively clear the decks and reposition the company for future growth.
“The company is currently preparing a comprehensive 5-year strategy update and outlook, which will include detailed production guidance for FY12.”
At close of trade today, Kagara’s stock had lost nearly 2 per cent, to trade at 55.5 cents.
