Thursday, February 21, 2008

Oxiana touts Thai iron ore discovery

GOLD and copper producer Oxiana has flagged an "outstanding" iron ore discovery in Thailand after the company delivered a drop in full year earnings.

Oxiana (oxr.ASX:Quote,News) managing director Owen Hegarty said it was still "early days'' for the discovery, in the south east of Thailand, but was upbeat about its potential.

"The workers uncovered what we believe is some outstanding iron ore potential there, and we'll be following that up as you would expect with great gusto,'' Mr Hegarty told analysts in a conference call.

Oxiana has lodged applications over the prospective area and is permitted to do basic work, but not yet allowed to conduct drilling.

Mr Hegarty said the iron ore was "mostly'' high grade hematite and located in "good proximity to infrastructure''.

"It is good geographics, but the problem with Thailand at the moment is the political situation,'' Ord Minnett analyst Peter Arden told AAP.

"Kingsgate (Consolidated) is still trying to get its gold mining leases granted.''

Gold miner Kingsgate has been waiting for a number of years for the Thai government to grant mining leases on northern edge of its Chatree mine to allow the operation to expand.

Mr Arden said, however, that there was enormous interest in iron ore at the moment and Oxiana would likely find "some pretty willing partners'' to fund some of the development.

Oxiana today reported net profit of $305.8 million for the 12 months to December 31, a 45 per cent drop on the previous corresponding period's result of $553.17 million.

The result was short of the average analyst consensus of $320 million.

Oxiana said strong production was offset by a "stronger Australian dollar, a weaker zinc price, and a higher effective tax rate''.

The company has started paying tax at the full corporate rate in Laos where its flagship Sepon copper and gold operation is located.

Mr Hegarty was bullish on the outlook for global economic growth, despite a slowing in the United States, and the strength of prices and demand for commodities this year.

He said China was showing "powerful'' growth and said "the demand for all of the material and commodities that we are interested in continues to grow''.

The company reported earnings before interest, tax, depreciation and amortisation (EBITDA) of $595.1 million, down from $827.18 million.

Oxiana declared a dividend of 4 cents per share, taking total dividend repayments for the year to 8 cents. Shares in the company were 13 cents higher at $3.50 by 12.47pm (AEDT).

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