SOG posts record profit on gold, tantalum sales

PERTH-based gold miner Sons of Gwalia has posted a record consolidated operating profit after tax and prior to abnormals of $58.31 for the 1999-2000 fiscal year, its eighth straight profit increase.

Greg Tubby

“We are very pleased with this number, but it is actually a better underlying profit than it looks on the surface,” said executive chairman Peter Lalor.

The company’s operating profit before abnormals, interest and tax of $92.16 million was significantly better than last year but with a tax expense of 30% compared with the previous year’s 20% it was not fully reflected in its after tax profit.

Both the gold and advanced minerals divisions reported increased earnings compared to the previous financial year.

“But we are particularly pleased with the gold result,” Lalor said.

“Our gold division had a poor year last year, but this year it has improved markedly with lower costs.”

Total gold production for the year amounted to 413,184 fine ounces with a cash operating cost of $346 per oz, giving the division’s earnings before interest and tax a 27% boost to $73.7 million.

A booming tantalum market also saw the advanced minerals division increase its EBIT by 31% to $34.2 million on sales of 1.1 million pounds.

“The potential for ongoing development of the company’s tantalum assets is excellent,” said Lalor.

“The tantalum resources and tantalum market share are both significant in global terms and will continue to make substantial and increasing contributions to both cash flows and profits in the future.”

Sons of Gwalia plans to spend $100 million expanding its mineral sands projects at Greenbushes, in the south-west of Western Australia, and Wodgina, in WA’s Pilbara.

“We can’t produce enough. Our customers are telling us that even with the expansions it will not be enough in the medium term.”