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talented and highly experienced new executives.
“Above all, one of my key objectives was to ensure a
renewed focus on health and safety across the organisation,
as I believe a strong safety performance for a mining company
shows that it has its house in order in all other respects,”
says Mr Day.
“In terms of our strategic focus over the next five years, we
have also developed a clear road map for our key focus areas
in the short, medium and longer term. We have three growth
horizons in place.
“The first is really about getting our existing house in order,
optimising our operations and establishing a more robust
and longer-life resources base. The second is about using
the improved resources position to grow our zinc and copper
production. And the third is about spreading our wings and
diversifying the organisation, including the potential to grow
outside Australia.
“It is great to be on board at Kagara,” Mr Day says. “I’ve
joined a company that has an incredibly experienced team, a
very loyal workforce, a highly impressive portfolio of copper,
zinc and nickel tenements across Australia and, importantly,
no debt.”
The first part of Mr Day’s plan was revealed at a site visit for
analysts in September. It hinges around a massive exploration
commitment for a mid-tier company – a planned $50 million
spend over two years – to rebuild the company’s zinc and
copper resource inventory in North Queensland.
The second part of the plan is to steadily grow zinc and copper
output while at the same time implementing a raft of business
improvement initiatives designed to drive its operations down
the cost curve – restoring margins which have been squeezed
in recent years.
Kagara is targeting a 30% increase in zinc production
for FY12 to around 52-57,000 tonnes of zinc metal (from
40,125 tonnes in FY11) while copper production is targeted
to remain steady at around 20-21,000 tonnes of copper metal
(22,530 tonnes in FY11).
On the back of the increased production, the company will
also be focused on driving its unit costs down the cost curve
from current relatively high levels of US$0.80/lb for zinc and
US$1.75/lb for copper.
In the longer term, as drilling proves up a resource position
for both metals capable of supporting an 8-12 year production
outlook, Kagara is aiming to more than double zinc production
again to an annualised rate of 120,000 tonnes per annum and
lift copper production to 30,000 tonnes per annum.
The Chillagoe region looks set to become the engine room
of this growth, driven by large polymetallic deposits such as
King Vol, the recently discovered Red Cap/Victoria-Morrisons
prospect and the equally exciting Red Hill area – each of which
have resource exploration targets of +5 million tonnes.
“At this annualised production rate of 120,000 + 30,000
tonnes per annum, Kagara should be one of the largest ASX-
listed base metals producers on a zinc equivalent basis and in
the top five on a copper equivalent basis,” says Mr Day. “We
would also expect to be a top-20 zinc producer in global terms.
“The task ahead for us is to achieve our targets and deliver
results reliably, consistently and sustainably – and, most
importantly, safely,” he added. “If we are successful, the prize
for shareholders will be significant, as we have a very optimistic
outlook about the future for both zinc and copper.
“We believe these are the right metals to be in during the
next few years, and we are very much looking forward to the
challenges ahead.”
A DAY OF CHANGES
Fresh focus from Kagara’s new head
GEOFF DAY (CENTRE) AT MT GARNET OPERATIONS
JUMBO OPERATING UNDERGROUND AT MT GARNET, QUEENSLAND
MINESITE 2011
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