Pasminco Limited PASMINCO LIMITED · Zinc 291,187 324,205 Lead 168,341 177,925 Silver (kg) 180,730...

In our 10th anniversary year, we take stock of a decade of progress, a year of major development and a futurefull of opportunity.

(Above) Exploration was maintained at ahigh level on the Benagerie Ridge in SouthAustralia. In this aerial photo, the Portiaexploration camp can be seen in thebackground.

(Above Right) By end June 1998, more than1300 people were employed on PasmincoCentury Project and the mine prestripoperation was well advanced.

(Front Cover Left) Scott Lehman, PreciousMetals Superintendent, at the Port Piriesmelter.

(Front Cover Right) EZDA-branded zinc isloaded onto one of the three dedicatedvessels which now operate between theAustralian smelters and the four majorports of Pasminco’s Asian markets.

The Company’s Share Register is maintained by Corporate Registery Services Pty Ltd.Shareholders’ enquiries about their shareholdings should be addressed to:

Corporate Registery Services Pty LtdCollins Wales HouseLevel 12, 565 Bourke StreetMelbourne, 3000, AustraliaGPO Box 2975EEMelbourne, 3001, AustraliaTel: 61 3 9611 5711Fax: 61 3 9611 5710

PASMINCO LIMITEDACN 004 368 674

Registered OfficeLevel 15 380 St Kilda RoadMelbourne 3004 AustraliaTelephone61 3 9288 0333Facsimile 61 3 9288 [email protected]: www.pasminco.com.au

Pasminco Annual Report 1998

Pasm

inco

Lim

ited

Annual R

eport 1

998

117318.175P.M5.PASMINCO 18/9/98 10:41 AM

In a tough year, we made great progress in modernising existing assets and building our newCentury. Annual General Meeting

11.30am Wednesday, 28 October 1998ANZ Pavillion Victorian Arts Centre St Kilda Road, Melbourne.A notice of meeting and a proxy form are included with this Annual Report.For further information on investor servicesplease refer to page 71.

Other 10% (96/7:7%)

Battery 71% (96/7:75%)

Chemicals 11% (96/7:10%)

Solder 2% (96/7:2%)

Alloy Castings 1% (96/7:2%)

Lead Sheet 5% (96/7:5%)

Pasminco Lead Sales by End Use 1997/8

Galvanising 59% (96/7:56%)

Pasminco Zinc Sales by End Use 1997/8

Diecasting 24% (96/7:20%)

Battery Can Alloy 5% (96/7:7%)

Zinc Oxide 2% (96/7:4%)

Other 8% (96/7:10%)

Brass and Bronze2% (96/7:3%)

Casting OperatorDarren Gillies strapsEZDA diecasting alloy as it comes off a castingmachine at the Hobartsmelter. Forklift driverPeter Jarvis can be seenin the background.

During the year, Pasmincosuccessfully launched new leadproducts, “VRLA Refined Lead”and “MF Refined Lead”, whichsignificantly enhance theperformance of valve-regulatedand maintenance-free lead-acidbatteries, by both enhancingbeneficial Bismuth levels and also guaranteeingmanufacturers that chemicalelements deleterious tosuccessful battery performanceare at optimum low levels. This innovation, the result of more than five years ofresearch, represents asignificant technologicaladvance on previous leadspecifications for this growinghigh-tech battery sectorsupplying the automotive andtelecommunications industries.

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Pasminco is a founding member of the International Zinc Association (IZA), established in 1990 to promote the benefits of Zinc.

117318.175P.M5.PASMINCO 18/9/98 10:41 AM

Financial Highlights 1998 1997 % Variance

Gross sales revenue $1,370.1m $1,352.8m 1.3%

Cost of sales (including exploration & research) $1,152.5m $1,104.2m 4.4%

Depreciation $131.7m $121.5m 8.4%

Operating profit after tax & before abnormals $39.6m $70.0m (43.4)%

Operating profit after tax & after abnormals $63.3m $64.7m (2.2)%

Earnings per share-before abnormals 3.9c 8.8c (55.7)%

-after abnormals 6.2c 8.1c (23.5)%

Dividend per share 4.0c 4.0c 0.0%

Return on shareholders’ equity 4.3% 8.3% (48.2)%

Paid up capital as at 30 June $1,124.6m $795.1m 41.4%

Shareholders’ equity $1,490.7m $778.5m 91.5%

Economic entity (Group) net debt $166.5m $239.1m (30.4)%

Capital expenditure $445.3m $196.5m 126.6%

Total assets $2,411.4m $1,569.3m 53.7%

Profit After Taxand after Abnormal and Extraordinary Items

1 9 9 4 5 6 7 8

$m

(20)

(10)

0

10

20

30

40

50

60

70

( 14.

4 )

12.2

40.8

64.7

63.3

1

10 Years p.10

People p.16

Projects p.12

Chairman & MD p.2

Financial Summary p.6

Markets p.8

Operations p.23

Contents1 Financial Highlights

2 Chairman & MD Letter

4 Operations at a Glance

6 Financial & Market Summary

10 10 Years of Progress

12 Development Projects 1998

16 People

18 Safety

20 Environment

23 Exploration

24 Technology

25 Mining

27 Australian Smelting

28 European Smelting

30 Management Team

31 Board

32 Ore Reserves

34 Production 5 Year Summary

36 Performance 10 Year Summary

38 Glossary

39 Directors’ Report,

Financial Statements,

Key Financial Dates

& Shareholder Information

Pasminco’s VisionTo be the Best from Mine to Market through Performance,Quality and Respect.

Pas A/R Final Text 18/9/98 8:12 AM Page 1

2

1997/8 was a difficult but constructive year.

Profit after tax and abnormals of $63.3 million was marginally below the previous year’s $64.7 million; however this result was assistedsignificantly by an abnormal gain of $23.7 million. At $39.6 million,profit after tax and before abnormals reflected lower production volumes and higher costs during the second half, as we implemented a comprehensiveprogram to improve the competitiveness of existing operations.

The economic downturn in a number of Asianeconomies continues to create uncertainty in product and equity markets in our region and wider afield.

With production facilities in Australia andEurope, and customers in some 45 countries,Pasminco performed well in 1997/8 in terms ofaggregate sales compared with the previous year.

Perceptions about future demand, however,depressed world prices for our products despitethe fact that global zinc and lead demandcontinue to exceed supply.

Amid the year’s volatile economic conditions, our break-even zinc price increased to US$998/tonne from US$934/tonne.

Our top priority and expectation for the currentyear is to reduce this key measure by liftingproduction and revenue and driving down costs.The development projects outlined in this reportwill assist these objectives.

Chairman Mark Rayner (left)and Managing Director and

Chief Executive DavidStewart looking over plans at

the construction site forCentury’s concentrator

facility.


The completion of the Century acquisition in September 1997 openedmajor opportunities for the company.With a world-class cost structure,Century will reduce our dependence on existing mines and give us moreflexibility in their operations and has the potential to contributesignificantly to shareholder value.Your Board welcomes the support givenby shareholders and banks to the Century fund-raising program.The project is ahead of schedule and under budget.

Your Board is confident of the strong underlying value of Pasminco’sbusiness and its future potential. In the climate of uncertainty created by the Asian downturn, we are disappointed that current share prices do not appear to recognise fully the underlying value of many resourcescompanies, including our own.

As an integrated, focused zinc and lead producer and supplier,we will continue to seek opportunities to add to our asset base throughexploration, acquisition and internal growth. Our objective is to ensurethat all assets in the portfolio are among the world’s most competitive.

The outlook is for improved production performance and lower costs.Global supply-demand remains in deficit, and with London MetalExchange inventories falling, metal prices are considered to havepotential for improvement.

In conclusion, we extend our thanks to all Pasminco’s employees.Ours is a tough, performance-oriented business and we wish to acknowledge the significant contribution of our people who thrive in this environment.

Return on Shareholders' EquityReturReturn on Sharn on Shareholders' Equityeholders' Equity

1 9 9 4 5 6 7 8

( 2.0

)( 2

.0)

8.3

4.3

8.3

4.3

%%%

(3)

0

3

6

9

((33))

00

33

66

99

1.6

5.4

1.6

5.4

AUG 97 SEP 97OCT 97NOV 97 DEC 97JAN 98 FEB 98MAR98 APR98 MAY98 JUN 98JUL 97

Pasminco Share PricePasminco Share Price Other MetalsOther Metals

1.0

1.5

2.0

2.5

3.0

500

1,000

1,250

1,500

750

Index IndexPoints

1.01.0

1.51.5

2.02.0

2.52.5

3.03.0

500500

1,0001,000

1,2501,250

1,5001,500

775050

Index IndexPointsPoints

Profit After TaxBreak-Even Zinc PricePrProfit After Tofit After TaxaxBrBreakeak--Even Zinc PriceEven Zinc Price

1 9 9 4 5 6 7 8

942

1,00

3

934

998

900

942

1,00

3

934

998

US$/t

800

900

1,000

1,100

1,200

1,300US$/tUS$/t

900

800800

900900

11,000,000

11,,110000

11,200,200

1,3001,300

3

David M Stewart Managing Director and Chief Executive

Mark R RaynerChairman


Following commissioning of the Century mine in late 1999,Pasminco will become the world’slargest zinc producer and the thirdlargest silver producer.

4

ExplorationPasminco Exploration is coordinated by the Group office in Melbourne, inconjunction with our operations in the Netherlands. Major bases arelocated at Broken Hill and Cobar in Australia and at Karachi in Pakistan.Project generation is a global effort with particular emphasis on Australia,Asia and South America.

MiningPasminco Mining has three major underground zinc-lead-silver miningoperations in Australia: Broken Hill, Elura and Rosebery. It also operates anopen-cut mine, Potosi, at Broken Hill.

Financials 1998 $m 1997 $m

Expenditure - expensed (Exploration group only) ▲ 16.8 18.1

Expenditure - expensed (Mine sites only) 5.1 5.4

Total expenditure - expensed ▲ 21.9 23.5

Expenditure - capitalised 5.9 8.7


EBIT ✚ 15.1 25.7

Gross sales revenue ≈ 377.4 365.3

Cost of sales ◗ 300.7 280.0

Depreciation & amortisation 61.6 59.6

Capital expenditure 71.9 68.9

Total assets 512.4 495.9

Production

Tonnes (Contained Metal)

Zinc 312,358 319,798

Lead 164,425 185,959

Silver (kg) 165,462 202,105

Gold (kg) 530 625

Total ore Treated 4,387,000 4,395,088

Sales

Tonnes (Contained Metal)

Zinc ❍ 291,187 324,205

Lead ❍ 168,341 177,925

Silver (kg) ❍ 180,730 192,104

Gold (kg) ❍ 499 566

Budel

In 1997 Pasminco embarkedon an exciting growth phase

with the acquisition of twoundeveloped world-class zinc

deposits, Century and Dugald River.

▲ includes research and development expenditure and depreciation of $0.7m (1996/7-$0.8m)

✚ includes unrealised profit on consolidation from intra-group sales 1997/8-nil, 1996/7-$6.8m

≈ includes sales to Group smelters of $258.6m in 1997/8 and $226.4m in 1996/7

◗ includes exploration and research and development

❍ includes sales to Group smelters

▼ includes research and development

● includes purchased zinc

◆ includes sales from Cockle Creek to Port Pirie

‡ includes 50% ARA production

Operations at a Glance

Headquartered in Melbourne,Pasminco has production

facilities in Australia and theNetherlands and marketing

offices in Australia, theNetherlands, the UK, Hong

Kong and China.


Australian Smelting

Pasminco operates and markets the output from three primary and twosecondary smelters in Australia: the Cockle Creek ISF zinc and leadsmelter, the Hobart electrolytic zinc smelter, the Port Pirie lead and zincsmelter and ARA lead recycling plants in Sydney and Melbourne. ARA isa 50-50 joint venture with Simsmetal. Sales and marketing offices arelocated in Melbourne, Hong Kong and Guangzhou.

European Smelting Pasminco Budel Zink operates and markets the output from the electrolyticzinc smelter in the Netherlands.


EBIT 78.7 74.5

Gross sales revenue 868.8 907.7

Cost of sales ▼ 732.8 784.3





EBIT 77.3 42.9

Gross sales revenue 382.6 306.2

Cost of sales ▼ 295.0 252.5




Production

Tonnes (Metal)

Zinc 303,576 319,747

Refined lead and alloys 185,061 201,755

Lead bullion 25,149 28,795

Secondary lead 13,889 13,971

Silver (kg) 112,030 231,756

Production

Tonnes (Metal)

Zinc 215,385 204,626

Sales

Tonnes (Metal)

Zinc 217,792 211,832

Sales

Tonnes (Metal)

Zinc ● 300,245 324,220

Refined lead and alloys 187,887 194,991

Lead bullion ◆ 22,304 30,034

Secondary lead 14,497 13,379

Silver (kg) 104,700 251,540

5

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100,000

150,000

200,000

250,000

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ProductionProductionProductionProduction


■ Pasminco recorded a profit after tax and abnormals of $63.3 million for 1997/8, a decrease of $1.4 million from the previous year.

■ The result was assisted by an abnormal gain of $23.7 million relating to a reduction of the environmental provision at Budel Zink.

■ Results were favourably influenced by a higher zinc price and weaker Australian dollar, offset by a lower lead price.

■ Operating performance was below potential, with lower production volumes, higher costs and lower metal premiums in Asia impacting unfavourably on the result.

■ The Group maintained a conservative balance sheet, given the uncertainties surrounding commodity prices and exchange rates.

6

1998 1997 ChangeFav/(Unfav)

Zinc Prices*(US$/t) 1192 1124 68

Lead Prices*(US$/t) 562 724 (162)

A$/US$▲

(cents) 70.0 76.8 6.8

A$/Nlg▲

(cents) 138.0 140.3 (2.03)

1998 1997 ChangeFav/(Unfav)

Zinc Prices*(US$/t) 1192 1124 68

Lead Prices*(US$/t) 562 724 (162)

A$/US$▲

(cents) 70.0 76.8 6.8

A$/Nlg▲

(cents) 138.0 140.3 (2.03)

External FactorsExterExternal Factorsnal Factors

Realised *LME PriceRealised ▲

exchange rate

Financial & Market Summary

External FactorsAt US$1,192, the average realised zinc price in 1997/8 increased 6%compared with US$1,124 in 1996/7. The realised lead price wassignificantly lower in 1997/8, averaging US$562 compared with US$724in 1996/7. The average realised AUD/USD exchange rate for 1997/8 including theimpact of the Group’s natural revenue hedge was 70.0 cents comparedwith 76.8 cents in 1996/7. The natural revenue hedge allows the Groupto match movements in its US dollar debt against future revenue. The Dutch guilder was marginally stronger in 1997/8, with the Australiandollar/Dutch guilder exchange rate averaging 138 cents compared withthe previous year’s 140.3 cents. As approximately 15% of the Group’scost base is in Dutch guilders, a stronger guilder has an unfavourableimpact on the Group’s results.The higher zinc price and weaker Australian dollar contributed $26 millionand $68 million respectively to earnings. The lower lead price and strongerDutch guilder reduced earnings by $40 million and $2 million respectively.

Operating Performance The Group undertook a number of major capital improvement programsduring the year. These included the refinery replacement andmodernisation at Port Pirie, commissioning of the co-treatment process atHobart and Port Pirie and the four-week campaign maintenance shutdownat Cockle Creek. Each of these impacted production and costs during thecourse of the year. Budel’s production performance improved.Mine production for the year was affected by lower ore grades at BrokenHill, a ground fall at Rosebery in January 1998 which restricted productionuntil June, and the availability of only a single production stope at Elura formost of the year. Lower production volumes and higher costs in 1997/8 reduced earningsby $44 million and $32 million respectively.

Lower metal premiums reduced earnings by $16 million in 1997/8. Reflecting operating performance during the year and the impact of thelower lead price, the Group’s break-even zinc price increased fromUS$934/tonne in 1996/7 to US$998/tonne in 1997/8. Excluding theimpact of abnormal items in each of the two years, the break-even zincprice rose from US$919/tonne in 1996/7 to US$1,061/tonne in 1997/8.Return on shareholders equity was 4.3% after inclusion of new equityraised for the Century project.

Objective:Sustain profitability at all pointsin the metal cycle Progress:Construction of the Century mine

is on time and on budget to improve Pasminco’s break-even zinc price

(see page 12). New business systems will lead to improved

productivity, make the most of combined purchasing power and

improve decision tools (see page 14). The Port Pirie upgrade will

increase production and reduce operating costs per tonne (see page 13).

1998 Progress Against Objectives


0

200

400

600

800

1,000

1,200

1,400

00

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600600

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*Cash flow from operating activities plus movement in operating working capital

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A. Impact of US$25/t change in zinc priceB. Impact of US$25/t change in lead priceC. Impact of A$:US$ 1 cent changeD. Impact of A$:Nlg 1 cent change

A B C D

7

Cash FlowThe Group generated cash from operations of $220 million in 1997/8. From this, capital expenditure of $445 million was funded. Major projectsincluded the Port Pirie refinery replacement ($16 million), Budel’sconversion to Century concentrates ($15 million), and installation of thePasminco Business Systems ($28 million). Capitalised mine developmentexpenditure was $35 million. Capital expenditure on the Century projectwas $255 million.A dividend of 4 cents per share, franked to 96%, was paid in November1997, the dividend payment totalling $32 million. Financing costs in1997/8 were $14 million, $4 million lower than in 1996/7 due to loweraverage net debt levels during the year.

Currency OptionsA currency option program was recommenced in 1997/8 to protect theGroup’s US dollar revenue stream against adverse movements in theAUD/USD dollar exchange rate. When the exchange weakenedsignificantly in the latter part of 1997, and in periods of weakness sincethen, call options were purchased and put options were soldsimultaneously. This is referred to as a collar option strategy. As at 30 June1998, collar options to the value of US$940 million were in place over theperiod January 1999 to December 2001. The average strike price of thecap is US67 cents and the average strike price of the floor is US59 cents.The effect of this strategy is to protect US$940 million of revenue againsta rise in the AUD/USD exchange rate above US67 cents while forgoingthe benefit of a fall in the exchange rate below US59 cents. It should benoted that for the six month period to 31 December 1998 the Group is fullyexposed to the prevailing AUD/USD dollar exchange rate.Full details of this position are contained in Note 22 to the accounts on page 59.

Although no tax was paid in Australia during the year because of theGroup’s carried forward tax losses, the Group’s effective tax rate was 38%,5% above the previous year’s rate. The higher tax rate was due to thereduction in eligible development, and research and development,allowances. In November 1997, the Group completed an equity raising for the Centuryproject totalling $669 million, net of expenses. The equity was raisedthrough a 10% book-build placement to institutions of 79.5 million sharesat $2.30 per share, immediately after the completion of the Centuryacquisition on 24 September 1997. The placement, which raised $183million, was followed by a 2 for 7 rights issue to shareholders at $2.00 pershare, which raised $500 million. Acquisition costs of $345 million (includingDugald River) were funded from the raising, and for the short term the balanceof new equity was used to retire existing debt facilities. A review of progresson the Century project is contained on page 12.

Financing ActivitiesThe major financing activity during 1997/8 was the finalisation of aUS$600 million facility to fund development of the Century project. Otherfinancing activities were undertaken in relation to funding of ancillaryprojects associated with Century. The credit watch negative announced by ratings agency Standard andPoors after the Century acquisition in January 1997 was removed inJanuary 1998. Pasminco maintains its BBB credit rating.During the year maturing bilateral debt facilities to the value of US$50million and A$120 million were renegotiated. As at 30 June 1998, the Group had committed facilities of A$1,590 millionof which A$1,366 million was undrawn. Net debt at 30 June 1998 wasA$167 million. The Group maintained a conservative balance sheet with anet debt to debt plus equity ratio of 10%. Although debt will rise in the coming year as funding commitments forCentury build up, the Group’s balance sheet and gearing ratio do notpreclude it undertaking other development projects or acquisitions.

Malcolm Wilson(left) FinanceManager, Centuryand Steve Pearce,Group Treasurer,worked withPasminco’s banks on the debtcomponent of the funding forCentury and theancillary projects.


Zinc Metal MarketZinc prices showed great volatility during 1997, despite the steadyreduction in London Metals Exchange (LME) stocks. The LME cash price for zinc ranged from a high of US$1,725 per tonnein September 1997 to a low of US$988 per tonne in late June 1998.Pasminco’s average realised base LME zinc price for the year wasUS$1,192, up 6% from the previous year’s US$1,124. Despite the zinc market being slightly in surplus at the beginning of the firsthalf, zinc reached its highest cash price for many years (US$1,725) inSeptember 1997 before tumbling to an average of US$1,060 for thesecond half.

External 29% (96/7:37%)

Port Pirie 28% (96/7:26%)

Cockle Creek 7% (96/7:5%)

Hobart 36% (96/7:32%)

External 29% (96/7:37%)

Port Pirie 28% (96/7:26%)

Cockle Creek 7% (96/7:5%)

Hobart 36% (96/7:32%)

Pasminco Concentrates Sales 1997/8 Pasminco Concentrates Sales 1997/8 Pasminco Concentrates Sales 1997/8

North Asia 34% (96/7:37%)

Other 1% (96/7:1%)

Africa 7% (96/7:5%)

West Asia 15% (96/7:10%)

Australasia 21% (96/7:23%)

SE Asia 22% (96/7:24%)

North Asia 34% (96/7:37%)

Other 1% (96/7:1%)

Pasminco Lead Sales by Region 1997/8Pasminco Lead Sales by Region 1997/8Pasminco Lead Sales by Region 1997/8

Africa 7% (96/7:5%)

West Asia 15% (96/7:10%)


SE Asia 22% (96/7:24%)

Europe 35% (96/7:33%)

North Asia 22% (96/7:21%)

Other 3% (96/7:6%)

SE Asia 14% (96/7:16%)

West Asia 7% (96/7:7%)


Europe 35% (96/7:33%)

North Asia 22% (96/7:21%)

Pasminco Zinc Sales by Region 1997/8Pasminco Zinc Sales by Region 1997/8Pasminco Zinc Sales by Region 1997/8

SE Asia 14% (96/7:16%)

West Asia 7% (96/7:7%)


Other 3% (96/7:6%)

8

Lead Metal Market Average London Metal Exchange (LME) stocks of lead for 1997/8remained at the previous year’s level of 112,000 tonnes.At year end, LME lead stocks combined with approximate consumer andproducer stocks are estimated to represent just above four weeks’consumption.Despite historically low stocks, Pasminco’s average realised LME baselead price for the year was US$562, down 22% from the previous year’sUS$724. Western world lead production grew by almost 4% in 1997/8, but isexpected to reduce gradually to around 1% during the next few years.Primary lead production accounted for most of the growth in 1997/8,due to rising concentrate supplies and some smelter capacity upgradesand de-bottlenecking. Growth in secondary lead production especiallyin Europe and North America was restricted by the tight supply of scrap. Western world lead consumption is forecast to grow at 1.4% (70,000tonnes) p.a. over the next five years, with the Americas showing thestrongest growth rates. Estimates of Asian demand growth during thenext 12 months range from 1.4% to negative 3%.

With the strengthening zinc price and record Chinese exports during the first half,LME stocks rose from 424,000 tonnes to peak at 495,000 tonnes. Once the zincprice collapsed, stocks decreased steadily from December 1997. On the back ofstrong European demand and slower Chinese exports, the average draw-down at the end of the period was more than 1,000 tonnes per day. At yearend, LME stocks totalled 367,000 tonnes, an overall decrease for the year of 57,000tonnes or 13%.Year-end LME zinc stocks are estimated to represent 6.6 weeks of consumptionwhen combined with approximate consumer and producer stocks.

The zinc demand/supply equation is expected to be generally balancedduring 1998/9. No new supply capacity will become available while muchlower metal exports are expected from the People’s Republic of China.Continuing strength in European and North American consumption will beoffset by slower Asian demand.

Regional impacts on Pasminco metal salesPasminco exports to more than 45 countries around the world. Core marketsare in Europe and the Asia Pacific Rim.In the European zinc metal market, demand and premiums strengthenedsteadily throughout 1997/8. Increasing demand from the general andcontinuous galvanising sectors was the key driver. In Pasminco’s core Asian markets, the economic slowdown saw a decreasein demand for all commodities in the main affected countries (Indonesia,Malaysia, South Korea and Thailand). For Pasminco, decreased demand inthese markets was largely offset by the strong demand in North Asian countriessuch as Taiwan and Hong Kong/China, West Asian countries such asBangladesh and India, and South Africa. Having the advantage of operations in both the southern and northernhemispheres, Pasminco can adjust its sales effort to maximise returns. Duringthe report period, the mix of European and Asian sales was fine-tuned; but thecompany continued to ship zinc metal from Europe into Asia throughout the year. The Asian downturn had the greatest impact on Pasminco markets catering todomestic demand in the weakened economies, such as general galvanisingin the case of zinc and domestic battery supply in the case of lead. In contrast,export-oriented areas such as diecasting in some cases actually increasedconsumption of Pasminco zinc. In aggregate, Pasminco retained most of itsshare of the zinc and lead metal import market in the Asian region.

Objective:Be the supplier of choice by

meeting or exceeding customer expectations

Progress:Pasminco’s new distribution

system will significantly improve the

company’s competitiveness in the critical

Asian market by providing a faster, more

flexible service. See page 15.



To optimise feed mix, Pasmincopurchased some zinc and leadconcentrates from other Australianand overseas mines. The largestsuppliers to Pasminco’s Australiansmelters were the Hellyer mine inTasmania, the Woodlawn mine inNew South Wales (prior to its closure in March 1998) and the McArthur Rivermine in the Northern Territory. Shipments of lead concentrate from the newCannington mine in Queensland to the Port Pirie smelter commenced inJanuary 1998 and will increase in future years.When Century begins production late in calendar 1999, Pasminco’s Budeland Hobart smelters will be given priority in initial zinc concentrate deliveries.As Century’s production will increase rapidly beyond these smelters’requirements, significant external sales will follow. Strong demand isemerging for Century concentrates and negotiations to secure long-termcontracts have reached an advanced stage. The zinc concentrate market is expected to trend toward surplus in the nextfew years but anticipated mine closures, new smelter start-ups andincremental capacity increases during the early part of the next decade arelikely to reverse this situation. The lead concentrate market is likely to remainin surplus for some time.

9

US$ LME Price LME Stocks

0

350,000

700,000

1,050,000

1,400,000

US$

0

500

1,000

1,500

2,000

US$ LME Price LME Stocks

JUL 93 JUL 94 JUL 95 JUL 96 JUL 97 JUN98

US$

0

350,000

700,000

1,050,000

1,400,000

0

500

1,000

1,500

2,000

US $ LME PriceUS $ LME Price LME StocksLME Stocks

JUL 93 JUL 94 JUL 95 JUL 96 JUL 97 JUN980

250

500

750

1,000

US$

0

100,000

200,000

300,000

400,000

US$

0

250

500

750

1,000

0

100,000

200,000

300,000

400,000

Pasminco Zinc PremiumsUS$/t

JUL 93 JUL 94 JUL 95 JUL 96 JUL 97 JUN 980

50

100

150

Pasminco Lead PremiumsUS$/t

JUL 93 JUL 94 JUL 95 JUL 96 JUL 97 JUN 980

50

100

150

Concentrates MarketsConcentrate treatment charges moved in favour of smelters during the reportperiod, particularly in the case of lead concentrate.Approximately 61% of Pasminco’s zinc concentrate sales in 1997/8 wereto the Group’s own smelters, up from 52% in the previous year. Export saleswere reduced in line with lower production from Pasminco mines andincreased demand from Cockle Creek after the closure of the Woodlawnmine. Most zinc concentrate export sales continued to be directed to Japanand Korea, where demand remained strong. The percentage of internal lead concentrate sales increased slightly to93% in 1997/8, compared with 89% in the previous year.

European Smelting’scommercial division,which has been builtup progressivelysince Pasminco’s100% ownership of Budel, was againstrengthened and is now fully staffedwith experiencedpeople. Here, twomarketing employees,Sander de Leeuw (left) and Maarten de Leeuw,are pictured in thezinc storage area.

Zinc prices showed great volatility during 1997, despite thesteady reduction in London Metal Exchange (LME) stocks.

Despite historically low stocks, Pasminco’s average realisedLME base lead price for the year was US$562, down 22% fromthe previous year’s US$724.


10

10 Years of Progress

1988/9 Pasminco is formed through the merger,effective from July 1988, of the zinc-lead-silvermining, smelting and international marketingactivities of CRA Limited and North Broken HillPeko Limited. A public share issue raises $203million, with subsequent listing on the AustralianStock Exchange in March 1989. Ownership is CRA 40%, North 40%, other 20%.Mr Donald S Carruthers is Founding Chairman and Mr Peter C Barnett is Founding MD&CEO.$217 million is spent on modernisation programs.

1989/90 The PasmincoExploration Unit andPasminco Research Centre areformed. Major modernisationand environmental programscontinue at Broken Hill,Hobart and Port Pirie,including construction of a surface decline (pictured) at Broken Hill which enablesdirect vehicular access fromthe surface to undergroundworkings.

1990/1 Pasminco records a loss as world economicgrowth slows down and metalprices fall sharply. Operationsat Elura are scaled down.Following a benchmarkingstudy, programs are introducedto improve key operatingfactors at all sites.The Mining,Metals and Corporate officesare consolidated at onelocation in Melbourne.Pasminco begins earning 40% of CRA’s Dugald River(pictured) deposit in NW Queensland.

1991/2 The effluenttreatment plant at Hobart(pictured) is commissioned.Pasminco participates in newcommunity health programs at Broken Hill and Port Pirie to address elevated blood lead levels.

1992/3 Mr Mark R Raynerbecomes Chairman. CRA Limitedand North Broken Hill PekoLimited reduce their shareholdingsfrom approximately 40% each toaround 31% and 20% respectively.Pasminco’s Vision & Values areadopted.The northern operationsat Broken Hill are closed. Pasmincocommits to cease ocean disposal ofjarosite at Hobart; investigationscontinue into finding permanentlong-term solutions to jarositedisposal at both Hobart and Budel.The new gas purification plant iscommissioned at Hobart and 36 houses adjacent to the Cockle Creek smelter arepurchased to develop anenvironmental buffer zone.

1 9 8 900

500500

1,0001,000

1,5001,500

1,12

3

1,17

4 1,40

9

1,29

3

1,22

5

942

1 9 9 0 1 9 9 1 1 9 9 2 1 9 9 3 1 9 9 4

Pasminco was formed from assets of varying quality and cultures. In the past 10 years, we have reshaped and developed the business into one of the world’s leading resource companies. With the Century acquisition, we can now go forward with a cohesive base for future growth as the world’s leading zinc supplier.


11

1996/7 In January 1997,Pasminco announces theacquisition of the Century and Dugald River deposits from CRA for $345 million,subject to the necessaryQueensland Governmentapprovals being issued.In May 1997, the GulfCommunities Agreement is signed, clearing the way for these approvals. Dutchauthorities extend Budel’sjarosite licence to end June2000. Pasminco signs a Greenhouse CooperativeAgreement with the Australian Government.The Port Pirie refineryreplacement and modernisationcommences. Pasminco’s sitesadopt new names to reflectGroup identity.

1995/6 Pasminco adopts the break-even zinc price as a key performance indicator in its goal of being profitable at all points of the metal pricecycle. In August 1995, CRAdisposes of its remaining 10% shareholding in Pasminco.Following delays to the Centuryproject (as it commences the“right to negotiate” processunder the Native Title Act),Budel seeks an extension to its jarosite licence from theDutch authorities. Capital workscommence at the Hobart(pictured) and Port Piriesmelters for the co-treatmentproject. Sixty per cent ofemployees take up options when the Pasminco LimitedEmployee Option Plan isintroduced in November 1995.

1997/8 In September 1997, Pasmincocompletes the Century acquisition. Funding is raised through US$600 million of debt facility,a $183 million global placement to institutions,and a $490 million rights issue.The co-treatmentprocess to eliminate jarosite production iscommissioned at the Hobart and Port Piriesmelters. Pasminco sells its railway business inTasmania. Port Pirie’s expanded silver refinerybegan operating.

942

1,00

3

900

934 998

1 9 9 4 1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8

1993/4 Pasminco’s UK-basedoperations (Avonmouth, Bloxwich)are sold to MIM Limited for $111million. In May, 38.9% of Pasminco’sstock is placed with institutionalinvestors, reducing CRA’s holding to 10% and removing North fromthe register. In November,$88 million is raised through the placement of 10% of Pasminco’sequity with institutional investors.In December 1993, agreement is reached with Dutch authoritiesfor Budel to cease production ofjarosite from mid-1998. In February1994, the Australian Governmentissues the final permit for Hobart’socean disposal of jarosite until end 1997 to enable the co-treatmentprocess to be implemented.Pasminco begins implementing itsLead Strategy, focusing on employeeexposure and emission control.

1994/5 Pasminco returns toprofitability and resumes dividendpayments. Shell’s 50% interest in the joint venture zinc smelter atBudel (pictured) is acquired for Nlg 14 million (A$10 million)giving Pasminco 100% ownership,and the supply of low-iron zincconcentrates from CRA’s plannedCentury mine in NW Queensland is negotiated. Pasminco’s firstexploration project offshore fromAustralia is initiated whenagreement is reached with thePakistan Mineral DevelopmentCorporation and BalochistanDevelopment Authority wherebyPasminco may earn a 75% interestin the Duddar zinc deposit andsurrounding exploration areas by completing a feasibility study on the project.The fertiliser plant at Hobart is sold. Mr Peter Barnettretires on 30 June 1995 and issucceeded by Mr David M Stewart.


Century construction beginsThe Century project is ahead of time and under budget to begin production in the final quarterof 1999 and build up quickly thereafter to full production. By end August 1998, major contracts had been let, the mine engineering design was 60%complete, and the administration centre, workshop facilities and new accommodation villagewere completed and operational. Work is now well advanced on the mine prestrip and the construction of the concentratorprocessing facility, pipeline, port and new air strip. More than 1300 people are employed onthe project and Century’s core operations team is in place.

Development Projects 1998

12

The project engineer and manager is Century Minenco Bechtel Joint Venture. Aseven-year contract for the mining operation, including the prestrip, has been signedwith a joint venture of Roche Bros and Eltin Pty Ltd and power will be supplied undercontract by CS Energy’s Mica Creek power station at Mt Isa. More than $600 millionin value of goods and services has been provided from Australian sources.

Gulf Communities Agreement Century’s partnership agreement with the local Gulf communities and theQueensland Government is based on several key themes:■ Indigenous employment: At 30 June 1998, 65 local people (31%

women) were employed on the Century project. A centralised recruitment process is used whereby all new job descriptions are checked against a database of local people seeking work. Training programs are being conducted on site, with funding coming from Pasminco and government agencies.

■ Business development: Century has established a trust fund and will contribute $1.0 million p.a. to provide financial assistance for local businesses. The trustees are elected by the communities. Century is also helping to establish local businesses and has employed anindigenous business adviser to identify and assist in further opportunities.

■ Cultural and environmental protection: Comprehensive procedures are in place to ensure identification and management of sites of cultural significance. The Century Environment Committee, consisting of local indigenous community members and Century representatives, overviews the project’s performance.

■ Pastoral properties: Discussions have commenced with local indigenous groups to develop a business planning approach to the fivepastoral properties that Century will transfer over time to local Aboriginal groups.

View of the Century project developmentarea, showing the steel framework forthe concentrate processing facility in the distance at centre. The warehouse is just right of the centre and at left are the mine workshop, temporarypower station and fuel storage.

Last year, we continued a vigorous and extensivedevelopment program to realise the potential of ourpeople, markets and resources.


Encouraging Groupwide cross-culturalawareness and diversityWhile Century faces the most immediate challengesin working effectively with indigenous employeesand communities, Pasminco recognises the need todevelop awareness and capability across the entirecompany and to work with indigenous people at thelocal project and community level. In September 1997, a Group Manager IndigenousAffairs was appointed. A three-year plan forindigenous affairs focuses on implementingsystems which can be transferred to growthinitiatives anywhere in the world. Culturally sensitiveexploration procedures with objectives foremployment, business development andcommunity relations are being prepared. In addition to Century’s extensive program, othersite-level initiatives are being piloted. For example,the Hobart smelter is working with the regional officeof the Aboriginal and Torres Strait IslanderCommission (ATSIC) to increase indigenousemployment, building on relationships developedthrough activities in conserving Aboriginal middenson the site. A Groupwide cross-cultural awareness program isnow under way, with initial emphasis onthose dealing directly with indigenouscommunities but ultimately extending toPasminco as a whole.

13

Waanyi Elders andstudents from DoomadgeeSchool IndigenousEducation Unit performthe Dance of the Brolga during the visit to Century of PasmincoDirectors and Executives,May 1998.

Port Pirie transformation on trackPort Pirie’s replacement and modernisation is on track to increase leadproduction refining by 15% and more than double silver production by endcalendar 1998. In late May 1998, the expanded silver refinery began operating and by endJune a significant part of the major engineering work for the modernised andupgraded lead operation was completed. The old continuous lead refineryceased operation in mid-June, with the changeover to the new batchrefining technology being phased in from June to October 1998. The upgrade will ■ increase lead production to

250,000 tonnes p.a.■ increase silver production from

220 to 450 tonnes p.a.■ reduce the plant’s operating

costs per tonne■ enable Australian value-adding

of lead bullion previously refined offshore

■ allow more flexibilityin feedstock requirements

■ improve occupational health and safety and environmental performance.

“It’s been worth it,” says ScottLehman, Precious Metals

Superintendent, of the newlyexpanded silver operation.

“We had some difficultiesproducing, constructing anddemolishing all at the same

time and place, but we’re seeing the benefits now. The

new equipment is easy to operate, we’re lifting

output and it’s a much nicer, cleaner place to work.”


Development Projects continued

14

Co-treatment ends jarosite production at HobartAfter a five-year, $12 million research and development program, followedby capital investment of approximately $85 million, in 1997/8 Pasmincocommissioned the co-treatment program at the Hobart and Port Pirie smelters. At Hobart, a partial changeover commenced in May 1997, with completeconversion occurring after August. Circuit changes are still being fine-tuned and a program is in place to accelerate the plant along the learningcurve of the new process.

Port Pirie is one of the first sites to introduce Pasminco’s new businesssystems. In preparation for “go-live” in September 1998, a team drawn frommaintenance people across the plantcleansed and converted data for the new SAP platform. They are (from left) Dean Butler, Brian Broadfoot, Richard Mallaby, Darby Munro, Malcolm Davis, Steve Rohrsheim, Brian Demarco, Geoff Taylor and John Quin.

Port Pirie also experienced some production disruption due to thechangeover. An innovative engineering solution involving the upgrade ofthe sinter plant was completed in the third quarter of 1997/8. By year-end, leadproduction had improved and all paragoethite product was being processed.(See also page 22 of Environment.)

New business systems will improve efficiency In a project called Pasminco Business Systems (PBS), the company ismoving to an integrated business system utilising SAP software andencompassing sales and marketing, asset management, maintenance,finance, purchasing and human resources processes across the Group.Benefits will accrue through increased utilisation of plant and equipment,leveraging of combined purchasing power and improved decision-makingtools. PBS will also largely mitigate the risks associated with the Year2000 problem for Pasminco’s commercial systems. The PBS “roll-out”process commenced shortly before 30 June 1998 and will be completedat all sites by the third quarter of calendar 1999.Representatives from all sites have helped develop the system andcomprehensive training and change management programs are in placeto support people throughout implementation (see page 17).

Port Pirie upgraded its sinter plant to improve processing of parageothiteproduct. Tony Wise,Sinter Plant Develop-ment Metallurgist,adjusts equipment as part of thecommissioning process.


15

Addressing Y2K issuesAn initial risk and inventory audit of Pasminco’s exposure to the Year 2000(Y2K) problem, conducted in mid 1997, identified the need to focus on riskmitigation in two areas, commercial systems and technical systems. As the implementation of PBS is addressing the former, the Year 2000project management structure is focusing on technical systems riskmitigation as well as coordinating Pasminco’s overall Year 2000 complianceeffort. The compliance definition is set down in the Pasminco Year 2000Organisational Compliance Standard, which exceeds the British StandardsInstitution’s Year 2000 compliance rules as described in DISC PD2000-1.

Value Added 1997/8 1996/7

Gross sales made by Group to external customers 1,370.1 1,352.8

Less goods & services bought in from outside the Group 870.3 935.0

Value added by Group companies 499.8 417.8

Distribution

Salaries & wages to employees 222.0 220.6

Reinvested in the business 197.4 127.6

Interest to lenders of funds 13.5 17.1

Dividends to shareholders 31.8 23.8

Taxes and other government charges 35.1 28.7

Total 499.8 417.8

Salaries and wagesto employees 44%

Taxes and other government charges 7%

Reinvested in the business 40%

Dividends provided for shareholders 6%

Interests to lenders of funds 3%

Each Pasminco site has established a Year 2000 team, responsible foridentifying and mitigating Year 2000 risks at site. This includes investigating thecompliance status of critical vendors (such as electricity, transport andconcentrate suppliers) and establishing appropriate contingency plans. Project progress is reported to the Board as a standing agenda item. To obtain an independent view of its Year 2000 compliance plan, costing andprocesses, Pasminco has also established an audit schedule with its internal auditor.As at June 1998, the estimated cost for Pasminco’s Year 2000 project is $7 million.

Innovative distribution system set to deliver competitive edge in AsiaNear year-end, Pasminco launched an innovative distribution system for itsfinished metal into Asia which will significantly improve the company’scompetitiveness in the critical Asian market by providing a faster, more flexible service. The result of a complete overhaul of distribution processes, thearrangements maximise synergies across the Group and establish a totallynew distribution logistics operation in Asia. Three dedicated vessels, capable of both break-bulk and containerloading, now operate between the Australian smelters and the four majorports of Pasminco’s Asian markets (Hong Kong, Kaohsiung, Port Kelangand Jakarta). Distribution centres at the destination ports have beenestablished to fast-track order fulfilment and give customers the choice of door-to-door or ex-warehouse delivery.In the wake of Asia’s economic turbulence, the improved system providescustomers with welcome flexibility in inventory and credit management. The service also gives a major boost to the regional ports of Port Pirie andNewcastle, with an additional 24 vessels calling annually.

Pasminco zinc is unloaded at Port Kelang,which is the distribution point for Malaysia and trans-shipment to West Asia in Pasminco’s improved Asiandistribution system. The warehouse facility can be seen in the background.

Objective:Deliver supplier relationships

for mutual benefit

Progress: Century’s partnership approach

with contractors is benefiting the project budget and

schedule (see page 17). Pasminco’s new Asian distribution

strategy is based on alliances with three suppliers responsible

respectively for metal handling and distribution within

Australia, shipping between Australia and Asia, and

warehousing and delivery to customers in Asia.


Objective: Ensure quality is built into

all our processes, systems and practices

Progress: All sites should be accredited

to the ISO14001 environmental standard

by June 2001.



Developing frontline leaders The site leadership program commenced in 1997. Its aim is to helpfrontline supervisors enhance their skills and abilities within theorganisation. It seeks to develop supervisors so that they can bettersupport their teams within the business. Each participant focuses on a job-relevant project throughout the program,ensuring the practical application of the knowledge gained. The programemphasises skills and methodology in performance management, in keeping with the importance Pasminco places on this task.Facilitated by eight specially trained frontline employees from across the company, the program has been very well received and supported by site management.

After 10 years of change, Pasminco is a leaner, more focused and integratedorganisation. We recognise the value ofdeveloping our people and engagingthem in the development and living out of a shared vision and values.

People

16

Employee Numbers 1998 1997 1996 1995 1994

Mining* 1242 1214 1339 1320 1295

Metals 1814 1835 1926 1989 2078

Europe 579 575 592 596 18

Exploration/Group Office/GTS 184 173 180 166 161

Total 3819 3797 4037 4071 3552

*includes 51 for Century

The majority of local peoplewho complete Century’semployment skills preparationprogram find full-time jobs onthe project.From left: Gavin Wilson, Lance Rapson and facilitatorDebbie Hanna attend theprogram.

Improving organisational climate Since 1996, Pasminco has conducted six-monthly employee surveys toidentify the factors affecting work climate. In 1997/8, focus groupdiscussions were introduced at sites to obtain more detailed feedbackabout the drivers of perceptions and the changes needed to achieveimprovement.

Objective:Ensure an understanding and

commitment to Pasminco’s Vision & Values

Progress:The Vision & Values program

was extended to the Budel smelter and

Century Project. Employee participation in

Pasminco’s 1997/8 share option scheme was

77%, up from 56% the previous year. More

than 80% of employees now hold options.


Objective:Develop high-performance

leadership and employee capability

Progress:The new and highly

successful site leadership and systems

training programs are facilitated by

specially trained employee volunteers.


Development through inter-site transfers and promotionsAn interesting aspect of Pasminco’s approach to employee developmentis illustrated in the increasing number of inter-site transfers, secondmentsand promotions. These internal moves benefit the company as well as theindividuals concerned, by helping to integrate the business andtransferring both skills and best practice.


17

Pasminco Exploration increasedexpenditure on the Broken HillBlock from $3.3 million in 1996/7to $4.8 million in 1997/8. SeniorGeologist Tim Green andGeophysicist Noelene Dorn of the Broken Hill Explorationteam compare a geology map of the Broken Hill Block Map with an aeromagnetic image to identify potential anomalies.

About a third ofCentury’s employeesfrom local communitiesare female.Century traineesEdwina O’Keefe (left)and Melanie Brandonwith Phil Rolfe.

Laboratory IndustrialChemist Ian Broganprepares samples in theanalytical laboratory atCockle Creek, which testsprocess control samples,product quality and airand water samples as part of the site’s quality and environmentalmanagement systems.

A teamwork approach to Century’s developmentIn keeping with evolving industry practice over the past decade, Century isoutsourcing many activities. Direct employment will focus on those ‘core’activities which only Century itself can perform or which can provide acompetitive edge by being developed in-house.Pasminco, Century Minenco Bechtel Joint Venture (CMBJV) and majorcontractors currently employ over 1,300 people on the mine site, pipeline andport construction areas. Project construction is taking place across the Gulfregion from the Century mine site to Karumba while design and projectmanagement offices are located in Brisbane and Melbourne.

Involving people in new business systemsPreparing people for change is critical to introducing new businesssystems successfully (see Pasminco Business Systems on page 14).Extensive review, consultation, communication and training are under wayso that the company’s employees are ready for the changeover. Around 100 frontline employees will be trained as facilitators and virtuallyeveryone in the company, including senior managers, will receive training.A comprehensive on-line ‘Help’ facility has been developed in-house toensure a smooth transition to the new systems.

Objective:Achieve and maintain trust

through fair, honest and consistent

behaviour

Progress:Employee focus groups

have helped to clarify issues and ensure

that suggestions raised in the Vision &

Values program and climate surveys are

followed up.


To deliver the project on time and budget, Century is pursuing apartnership approach between owners, project management andcontractors emphasising team-building and commitment. Teamworkdevelopment programs will ensure all teams work together effectively.Local employment is a primary objective of the Gulf CommunitiesAgreement which forms the basis of Century’s partnership with localcommunities. Opportunities are maximised through the use of a Centuryrecruitment database. Each contractor is required to develop a localemployment management plan. All project employees undertake a cross-cultural awareness program and the business ensures that seniormanagers keep up to date on the progress of both the Agreement andother related regional issues.Century has initiated a four-week employment skills preparation programfor local people who may have limited work experience. The program hasbeen successful, with the majority finding full-time employment. Additionalsupport through mentoring programs also helps trainees deal with thedifficulties of separation from family and social networks. New traineeshipprograms include the areas of mining, engineering production, hospitality,pastoral management and clerical/administration.Building relationships within the Gulf region is fundamental to the successof the project. Links have been established with local government,community groups and educational institutions who have all made strongcontributions to the development and implementation of the trainingprograms.


Pasminco Safety SystemPasminco’s safety standards were expanded during the year. A mandatory procedure was introduced for investigating potentially fatalaccidents. Someone independent of the operation is now involved in such investigations.The Pasminco Safety Policy was reviewed and enhanced, with theobjective of achieving zero incidents becoming a fundamental principle.A timetable of annual audits (by both internal and external parties) of sites’safety and health management systems was agreed, and all operationswere audited during the year.

The focus of measurement to monitorsafety performance was broadenedfrom the traditional emphasis on losttime injuries to encompass any injuriesthat result in medical treatment or selected/restricted duties, whether or not there is losttime (a measure called “serious injuries”). There were 615 serious injuries in 1997/8, of which 95 resulted in lost time. Thiscompares with 835 serious injuries and 80 lost time injuries in 1996/7. The Serious InjuryFrequency Rate (SIFR, the number of serious injuries per million hours worked) showedsteady improvement during the report period, falling from 118 to 77. The Lost Time InjuryFrequency Rate (LTIFR) decreased from 13 to 10 during the same period.

Serious Injury and Lost TimeFrequency Rate 1997/8Serious InjurSerious Injury and Lost Timey and Lost TimeFrFrequency Rate 1997/8equency Rate 1997/8

0

20

40

60

80

100

120

140

00

2020

4040

6060

8080

100100

120120

140140

1Q 9

6/97

2Q 9

6/97

3Q 9

6/97

4Q 9

6/97

5Q 9

7/98

6Q 9

7/98

7Q 9

7/98

8Q 9

7/98

127

13

111

13

118

118

12 13

108

13

105

13

9013

7710

127

13

111

13

118

118

12 13

108

13

105

13

9013

7710

12 Month Moving Average - SIFR12 Month Moving Average - LTIFR

10 9

1 0

JUN95 JUN96 JUN97 JUN98

> = 40 µg/dL* > = 50 µg/dL*

0

20

40

60

80

100

120

140

160

180

00

2020

4040

6060

8080

110000

112020

114040

116060

118080

164

153

80

49

10 9

1 0

10 9

1 0

18

Safety awardsTeams representing Pasminco’s three major sites in New South Walesachieved outstanding results in the NSW Minerals Council’s fifth annualFirst Aid and Rescue Competition held at Broken Hill on 8 November1997. The Broken Hill team took out the Champion Team Cup along witheach of the six individual first aid awards. Cockle Creek’s team was runner-up for the Cup while Elura won the Underground Mines Rescue Event.Presented with the NSW Mining Industry’s Silver Award, Elura was alsorecognised by the NSW Minerals Council and Department of MineralResources for management’s and employees’ efforts in improvingoccupational health and safety systems and performance.

Employee blood lead levelsWorksafe Australia’s national standard for the control of inorganic lead atwork sets a blood lead level of 50 µg/dL. In 1996, Pasminco establishedthe goal, in advance of this Worksafe standard, to have no employees withblood lead levels greater than or equal to 40 µg/dL. Although the target deadline of end calendar 1997 for realising this goalwas not achieved, the number of employees with blood lead levels greaterthan or equal to 40 µg/dL continued to decline during the report period,falling from 80 at end June 1997 to 49 at end June 1998. Following a progress review, the goal level has been reduced further. Thefocus is now on having no employees with blood lead levels greater thanor equal to 35 µg/dL by end June 2002, which is well in advance of theWorksafe standard of 50 µg/dL.

Safety

Mining

SI SIFR LTI LTIFR

Broken Hill 192(204) 139(140) 36(29) 26(20)

Elura 51(29) 76(48) 10(8) 15(13)

Rosebery 72(153) 87(216) 21(15) 25(21)

EBR 29(17) 161(81) 1(1) 6(5)

Century 6 6 2 6.5

Total Mining 25(403) 88(136) 70(53) 18(18)

Australian Smelting

SI SIFR LTI LTIFR

ARA 28(24) 236(162) 6(6) 50(40)

Cockle Creek 81(67) 81(74) 11(14) 11(15)

Hobart 123(246) 88(193) 4(17) 3(13)

Port Pirie 208(228) 98(155) 16(22) 7(15)

Total Australian Smelting 440(565) 95(149) 37(59) 8(15)

European Smelting

SI SIFR LTI LTIFR

Budel 21(33) 21(20) 1(1) 1(1)

Group (includes GTS, Exploration and Group Office)

SI SIFR LTI LTIFR

817(1,002) 77(118) 110(113) 10(13)

*Note: Figures in brackets for 1996/7.

Safety Indicators 1997/8*

The Pasminco Safety Policy wasreviewed and enhanced, with theobjective of achieving zero incidentsbecoming a fundamental principle.


19

In April 1998, Pasminco brought togethersenior management with safety, health,environment, human resources and publicaffairs practitioners to discuss the nextstep forward in developing a culturededicated to safety and environmentimprovement. Called CleanSafe ’98, the conference was addressed by guestspeakers from academia, government,business and interest groups.

Broken Hill launched several major health andsafety initiatives, includingsponsoring employees to participate in a QuitSmoking program and havetheir blood analysed formultiple health issues as wellas lead levels. (Photo courtesyof Gavin Schmidt, Barrier Daily Truth)

During the year, Port Pirie involved all employees in anintegrated safetytraining program which was developedafter an extensive needs analysis. Here, employees gainpractical experience in the different methodsof fire fighting.

Objective: Ensure a safe

and healthy workplace

Progress: Pasminco’s revised

safety and health policy established the

longer-term goal of achieving an

incident-free organisation. Performance

continued to improve.



20

Australian Minerals Industry Code for Environmental ManagementIn August 1997, Pasminco signed the Australian MineralsIndustry Code for Environmental Management, becoming oneof 40 signatory companies operating in Australia and overseas.

Environmental Management SystemsThe Pasminco Environmental Policy was revised to include the requirements of ISO14001 in keeping with the company’saccreditation goal. The baseline audit of sites’ compliance withISO14001 requirements was completed. All sites should be accredited to the ISO14001standard by June 2001.Groupwide objectives to deliver the intent of the environment policywere established, with sites now setting targets for each objective.

Environment

The focus of BrokenHill’s site environmentalprogram is on circuitwater management and rehabilitation for suppression of dustand erosion. At a decommissionedtailings dam on site,Environmental Scientist Greg Scanlan tends to a newly revegetatedarea adjacent to thedam. The recentlycompleted “rockarmouring” of the dam’sexternal face to controldust and erosion can beseen in the background.

Site Environmental Action PlansThe Executive Safety Health and Environment Committee(ESHE) reviewed the progress of the sites’environmental action plans.The review found that 44% of the more serious issuesidentified by the external audits of 1996 have beenresolved to date. The next round of external audits will commence in late 1999.

Publicly Available ReportIn line with the Minerals Industry Code, Pasminco willproduce a publicly available environmental report.Publication is planned for August 1999 followingconsultation with shareholders, employees andcommunities near Pasminco operations about the scope of the report.

Mining CO2 Emissions Breakdown 1997/8

Reagents 3%

Electricity 86%

Petroleum Products 11%

Objective:Minimise our impact

on the environment

Progress:All sites have quantified objectives

to deliver the intent of Pasminco’s

Environmental Policy. The Hobart smelter

stopped producing jarosite and the Budel

plant is set to follow suit when Century

concentrates come on stream.


Groupwide objectives to deliver the intent of the environment policywere established, with sites nowsetting targets for each objective.


21

Lead in Air at Cockle Creek Site BoundaryLead in Air Lead in Air ((µµg/mg/m33))

00

11

22

33

44

55

JAN92 JAN93 JAN94 JAN95 JAN96 JAN97 JAN98

Pasminco and NHMRC Goal Pasminco and NHMRC Goal ((1.51.5µµg/mg/m33))

Les Barnett, General Manager, planting the115,000th tree in Port Pirie’s revegetationproject. Standing (from left) are Allan Barnett,and John Caputo of the Environment & PlantServices Department and Kerry Backstrom of Zinc Production.

ComplianceSites are required to report to the ESHE any significantenvironmental incidents and compliance breaches along with plansto avoid recurrences. A ranking system is used to ensure effectiveprioritisation in resource allocation.The main environmental issues for 1997/8 were non-compliancewith the conditions of consent for ambient sulphur dioxide at CockleCreek, some exceedence of the limits in the water permit at BudelZink and of the statutory limit for lead in air at the boundary of theARA Melbourne plant. Projects are currently in progress to resolvethese issues in the short term.

Australian Smelting CO2 Emissions Breakdown 1997/8

Petroleum Products 2%

Coke and Coal 54%

Electricity 32%

Natural Gas 8%

Reagents 4%

00

11

22

33

44

JAN92 JAN93 JAN94 JAN95 JAN96 JAN97 JAN98

Lead in Air at Port Pirie Site BoundaryLead in Air Lead in Air ((µµg/mg/m33))

PPasminco and NHMRC Goal asminco and NHMRC Goal ((1.51.5µµg/mg/m33))Objective:Build community confidence

in our operations

Progress:Established operations extended

their community consultation, sponsorship

and outreach activities, while Century

consolidated and built upon its extensive

community networks.



22

Century’s Environmental ProgramGiven the region’s scarcity of water and extreme weather conditions,Century puts a high priority on effective water management. Waterfor the operations will be drawn from a local, unutilised undergroundaquifer. Pumping of the aquifer commenced in 1995. Since this time,groundwater levels in the region have been monitored by 60boreholes to confirm that the drawdown will not impact onvegetation, waterways and the Lawn Hill National Park. A priority isprotecting the nearby Lawn Hill National Park both aesthetically and environmentally. Comprehensive environmental monitoringprograms are in place to ensure that any impacts can be identifiedand managed.

Information from site energymonitoring equipment is used todevelop greenhouse gas reductionstrategies. Electrical ProjectEngineer John Martin (on left) isGreenhouse Coordinator for BrokenHill, seen here discussing data withMaintenance Coordinator ElectricalSteve Corradini and GraduateElectrical Engineer Mark Nash.

Alan Byers,SuperintendentLogistics, in front of the new wharfstorage shed at Hobart,part of the co-treatmentproject which enabledthe end of jarositeproduction anddisposal.

Co-treatmentOn budget and two months ahead of the 31 December 1997deadline agreed with the Australian and TasmanianGovernments, Hobart ended the production and oceandisposal of jarosite. An intermediary product called paragoethiteis now produced in place of jarosite and shipped to Port Pirie toundergo additional treatment and further metal recovery.The co-treatment initiative is a ‘world first’ which establishesnew environmental standards in waste stream management forthe zinc and lead industries.(See also page 14.)

Greenhouse ChallengeIn May 1997, Pasminco joined the Australian Government’sGreenhouse Challenge and committed to a 3% reduction ingreenhouse gas emission rates by the year 2000. The Executive Safety Health and Environment committee(ESHE) oversees and monitors the agreement’s implementationthrough a coordinating team and regularly reports greenhouseemissions and key performance indicators to Government.Progress to date includes the development of a PasmincoGreenhouse Gas Reduction and Energy Efficiency Standard, thetrial of a project audit procedure, the formation of operating siteenergy committees and the commencement of awarenessprograms. Several capital projects which will reducegreenhouse gas emissions have also been initiated, along witha more detailed study of process energy balances.

The Century Environment Committee, consisting of local indigenouscommunities’ representatives, is working with the company to developand monitor environment management programs. Century will makemonitoring data available and provide assistance to the committee toobtain independent advice on matters of concern.

Dr Peter Eaglencalibrates an automaticcreek level monitor whichmeasures water depth aspart of ongoing watermonitoring studies of allsignificant creeks on theCentury lease.

Environment - Continued


0

4

8

12

16

00

44

88

1122

1166

1 9 9 4 5 6 7 8

15.6

14.5

11.6

10.8

7.7

23

■ Pasminco maintained its vigorous international exploration effort. Expenditure for the year, other than at the operating mines, was $16.8 million.

■ A further $5.1 million was spent on exploration at the operating mines.

■ Total drill meterage decreased throughout the Exploration group to 74,389 metres, compared with 87,298 metres in 1996/7.

Pakistan $4.9m

India $0.9m

Mt Isa Block $2.5m

Broken Hill Block $4.8m

Cobar $1.7m

Tasmania $0.8m

Peru $0.6m

Other $0.6m

Exploration* Expenditure 1997/8*other than at operating mines

Geologist OmarFaiyaz Khan logschips from an air

core drill rig at theLorenzo prospect,

Benagerie Ridge.

Exploration

Review

ofOp

erations


24

Technology■ In pursuit of its objective “To give

Pasminco the competitive edge in process technology”, Group Technical Support (GTS), has become an increasingly valued resource for technical input at all Pasminco operations.

■ The major challenge for 1997/8 has been tosupport the commissioning and fine-tuning of the co-treatment process at Hobart and Port Pirie.

Highlights for the year in GTS’s main areas include:

Refining/Casting/Products■ supported the rebuilding of Cockle Creek’s furnace during the

campaign shutdown ■ helped develop Pasminco’s casting strategy ■ developed an on-line Pasminco refractories and wear

materials database ■ developed and tested a method to produce quenched bullion

at Cockle Creek

Process Control■ provided technical support and direction for process control system

development at all smelters ■ initiated a process control workshop for managers from all smelters

Exploration ProjectsActivity focused on fewer areas compared with last year, with alladvanced exploration carried out in the districts around Pasminco mines and zinc deposits in NW Queensland, Cobar, Broken Hill,Tasmania and Pakistan.Project generation continued in India, where applications were made forlicences over some interesting mineralised belts, and in Peru, whereprojects, mostly at an advanced stage of exploration, are being soughtand assessed. All international projects are coordinated by our Europeanoffice.

At the Portia prospect, workcontinued to assess theeconomic potential of oxidisedgold mineralisation. Furtherdrilling is necessary to upgradethis mineralisation to resourcecategory leading to a feasibilitystudy. Overall, these resultsprovide strong encouragementfor the presence on theBenagerie Ridge of a significantgold or copper-gold deposit.Exploration in the area willcontinue at a high level.Further drilling in Balochistan,Pakistan, increased thecompany’s level of confidence in the Duddar zinc resource and located a deep new zone. A resource estimate based onthese results (compiled by SteveSullivan, Resource Geologist,Maptek Pty Ltd) shows thedeposit to contain an indicatedresource of 6.8 million tonnes ata grade of 12.6% zinc and 3.0%lead and an inferred resource of6.4 million tonnes at a grade of6.4% zinc and 3.7% lead, bothusing a 7% zinc and lead cut-off.

Results

Exploration was maintained at a high level on the Benagerie Ridge,

where drilling has identified exciting gold and copper-gold mineralisation

at five prospects: Shylock, South Nerissa, Lorenzo, Jessica, North Portia

and Portia.

Highlights of the results received from reconnaissance air core drilling

include:

Drill hole BEN 617- 14m @ 3.2g/t Au from 74-88m (Shylock prospect)

Drill hole BEN 677- 23m @ 79.3g/t Au from 90-113m (Shylock prospect)

Drill hole BEN 657- 13m @ 0.9g/t Au from 50-63m (South Nerrissa

prospect)

Drill hole BEN 862- 18m @ 3.7g/t Au from 110-128m (Lorenzo prospect)

Drill hole BEN 737 - 2m @ 5.1%Cu, 470g/t Ag from 110-112 (Jessica

prospect)

At the North Portia prospect, shallow copper-gold intersections reported

last year were followed up with diamond drilling to test below the oxidised zone.

The best results from the program included:

Drill hole BEN 592- 76m @ 1.2g/t Au and 1.1%Cu from 297-373m

Drill hole BEN 596- 72m @ 0.6g/t Au and 0.7%Cu from 246-318m

Deep drilling establishedadditional potential at depth withhole D102 intersecting 60.3m @ 11.7% zinc and 3.2% leadfrom a depth of 1328.9 to1,389.2 metres. Dispite theseencouraging results, the size ofthe deposit does not allowPasminco to meet its investmentcriteria. Unfortunately, first-passexploration in the wider regiondid not locate any significantadditional resources andconsequently a purchaser is nowbeing sought for Pasminco’srights to 75% of the project.During the year, Pasmincopurchased the Mt Rosebyproject which includes areassurrounding the Dugald RiverDeposit lease in NWQueensland.The area is prospective forextensions of the Dugald depositalong strike, as well as copper -gold mineralisation

Anna Quillinan, a chemical engineer whojoined Pasminco in the 1998 graduate intake, is working on a project aimed atimproving Hobart’s cell room performance.Here she is testing reagent levels in theelectrowinning cells, as part of a study to determine optimum additive levels forcurrent efficiently as well as environmentalperformance.

Review of Operations - Continued


Mining EBITMining EBITMining EBIT$m

(30)

(15)

0

15

30

$m$m

23.5

19.3

25.7

15.1

( 27.

5)

Includes unrealised profit on consolidated from intra-group sales 1998-$nil, 1997-$6.8m

Includes unrealised profit on consolidated from intra-group sales 1998-$nil, 1997-$6.8m

1 9 9 4 5 6 7 8((3030))

((1515))

00

1515

3030

25

The Potosi open pit at Broken Hillproduced 188,228tonnes of ore in 1997/8.

Mining■ Safety performance improved, with the SIFR reducing to 88 compared

with 136 in 1996/7, while the LTIFR was steady at 18. The number of employees with lead in blood greater than or equal to 40 µg/dL decreased from 4 to 1.

■ Earnings before interest and tax of $15.1 million were impacted by lower production and the cost of mine development at Elura and Rosebery.

■ At 854,800 tonnes, total concentrate production was disappointing due to lower overall throughput and low grades, particularly in the second half. All sites returned to design production rates by year end.

■ To maximise returns over Broken Hill’s remaining operating years, a Life of Mine Optimisation Study has been instigated. Rosebery has initiated a major operational performance review and Elura is now benefiting from 5.3 kilometres of development to access additional ore sources.

Roast/Leach/Purification/Electrolysis ■ established a best practice network

group across all smelters ■ contributed to improving process

stability at Hobart and Port Pirie,particularly in paragoethite production at Hobart

■ constructed a pilot concentrate roaster to monitor Century zinc concentrate quality and performance for Budel

Sintering/Blast Furnaces/Slag Fuming■ supported the commissioning of

paragoethite treatment at Port Pirie

Mineral Processing■ supported concentrate quality

improvement at all mining sites■ conducted metallurgical testwork

of Dugald River ore ■ supported Century’s concentrate

production preparation

Pasminco Information Service ■ established on-line library access

Technological DevelopmentGTS researchers produced over 50kilograms of high grade zinc metal fromElura waste material through a new leachingand electrowinning process. Constructionof a one-tonne-a-day plant is nowproposed with the ultimate aim ofincreasing Elura’s zinc recovery by 15%.

Challenges for 1998/9 ■ supporting the commissioning

of the Century mine and the Budel smelter’s change-over to Century concentrates

■ development of the Dugald River deposit process flowsheet

■ Y2K testing for process control equipment

■ supporting the commissioning of the Port Pirie refinery replacement

■ input to Hobart process stability study


26

Broken HillBroken Hill achieved goodproduction during the first half of 1997/8. However, stopefailures in the lead lode areas of the mine adversely impactedboth volume and grade duringthe second half. Total containedmetal production of 295,692tonnes was down 9.4% on the previous year despite a record high throughput of2,715,402 tonnes.Site blood lead levels decreasedto an average of 10.33 µg/dL(down from 10.92 µg/dL in1996/7). There are noemployees with lead in bloodcontent greater than or equal to 40 µg/dL (down from one the previous year). Following more than two years of negotiation, a new enterpriseagreement moved theunderground mining workforce to extended shifts.

EluraMost of Elura’s production was sourced from the previouslyunmined northern ore bodyduring 1997/8, as groundproblems associated with thesubsidence in 1996 interruptedproduction from the main orebody. Following accelerateddevelopment by a miningcontractor, Elura returned to its design rate of 1.2 milliontonnes p.a. by the end of thereport period, with grades equal to or slightly better than in the past. In total, 1,021,965 tonnes weremilled for the year, comparedwith 1,044,253 tonnes for theprevious year. At 53,365 tonnes,contained zinc was 15% lowerthan last year’s 62,498 tonnes.Contained lead was also down,at 37,587 tonnes compared with 43,166 tonnes in theprevious year.In September 1997, a trial massblast of 5/9 crown pillar andassociated blocks demonstratedthat the mine can produce ore efficiently from the areasadjacent to the subsidencezone. Future mass blasts in themain ore body are planned. The main decline was extendedto 90 metres below 8 level. As well as restoring access tothe main ore body, the declinehas established sites for an

extensive underground diamonddrilling program currently underway to test the Elura ore bodiesat depth and upgrade the resource to measured status.New fine grinding equipmentinstalled on the lead flotationcircuit was commissioned in May 1998. When the circuit isoptimised, grade and recoverywill improve, providing a moremarketable product.During the next few years, it is planned to install a pebblecrusher to increase the grindingrate, which combined withadditional flotation capacity will enable throughput to beincreased to 1.5 million tonnesp.a. Depending upon the resultsof the upgraded explorationprogram, further expansion to 2.4 million tonnes p.a. will be investigated.

RoseberyA ground failure at Rosebery in the second half restrictedaccess to high-grade areas for four months.At 649,657 tonnes, total oremilled for the year was 1.4%above last year’s 640,593tonnes. Contained zinc of56,134 tonnes was 1.7% lowerthan last year’s 57,089 tonnesdue to lower zinc ore grade.Contained lead of 12,243 tonneswas also marginally lower than in the previous year (12,608 tonnes). A review of the site’s safety and production performance wasinitiated, focusing on systemsand processes. Two key capitalprojects to improve safety and operational performance(Northern Upcast and newunderground primary crusher)commenced during the year,with completion due in 1998/9.Other programs have beenintroduced to improve recoveriesand concentrate quality.With 21,800 metres drilledduring the year, Rosebery’s deepexploration program continued to identify new resources. As themine deepens, grades havetended to improve. Lookingahead, therefore, there is anopportunity to offset the moredifficult ground conditions withhigher grades.

Operator Jeff Crasegreasing the Tamrock

CHA 1100 blastholedrill rig at Potosi.

Chief surveyor Gary Watts establishes laser control for the development work at Rosebery which put production back on track after a ground fall.

In April 1998, Pasminco officially handed back to Tasmania 139 hectares of land from itsRosebery mining lease containing the historic10,500-year-old Huon Pine on Mt Read. Thought to be one of the world’s oldest living organisms,the tree is now within a nature reserveadministered by the State’s Parks and Wildlifedepartment. Pictured at the handover ceremonyare (from left) Rosebery General Manager David Rose, Pasminco Managing Director andChief Executive David Stewart, The Hon TonyRundle MHA, Premier of Tasmania, and The Hon John Beswick MHA, Minister for Mines.



27

Cockle Creek completedsuccessful trials fortuyere injection ofpump sump dross withhand-over in late July1998. Graduaterecruits Paul Trotta(front) and Peter Frostassisted with theproject.

Australian Smelting

■ On an aggregate basis, Australian Smelting’s safety performance improved markedly, with the SIFR declining to 95 from the previous year’s 149, and the LTIFR declining from 15 to 8. The number of employees with lead in blood greater than or equal to 40 µg/dL decreased from 77 to 48.

■ Earnings before interest and tax of $78.7 million were up slightly on the previous year’s $74.5 million.

■ At 533,600 tonnes, total zinc, lead and copper metal production was down 6% compared with the previous year due to disruptions associatedwith the commissioning of co-treatment, the Port Pirie refinery upgrade and the campaign shutdown at Cockle Creek.

■ Zinc production improved in the final quarter.


28

Cockle CreekZinc production for the year was71,291 tonnes, compared with79,393 tonnes in 1996/7. Lead bullion production was25,149 tonnes, compared with theprevious year’s 28,795 tonnes. Two major factors contributed to the lower production. After the planned campaign shutdown in August 1998, the blast furnaceexperienced weir block failuresduring start-up. The sinter plant also experiencedmechanical failures followingmodifications to achieve newemission conditions effective fromJanuary 1998.Although the goal conversion rate is being achieved and emissionshave been reduced by 40%,modifications to the sinter plant fellshort of delivering the required SO2

levels in the community. An internaltaskforce is investigating options toimprove performance further.Following renewed emphasis on hygiene, there was a markeddecline in the number ofemployees with lead in bloodgreater than or equal to 40 µg/dL. With the closure of the WoodlawnMine, Pasminco Elura Mine is nowCockle Creek’s major source ofconcentrates, supplemented bybulk concentrates from McArthur River.A new General Manager, Lucien van den Boogaard(transferred from Pasminco’s Budelsmelter), was appointed during theyear.

HobartAt 197,043 tonnes zinc, 1997/8production was 5.1% lower than last year’s 207,703 tonnes,mainly due to downtime associatedwith commissioning the newparagoethite (PG) process toeliminate jarosite (see Co-treatmenton page 14). In addition to optimising the PGcircuit, a critical focus next year willbe building calcine stocks in thelead up to the No 6 Roastershutdown in March/April 1999. Safety performance was excellent,with a new LTI-free record of morethan six consecutive months beingachieved. By end June 1998, onlyone employee and no contractorshad lead in blood greater than orequal to 40 µg/dL, down from five at end June 1997.

Hobart achieved a majorenvironmental milestone when it ceased the ocean disposal of jarosite residue on 25 October1997. The first stage of therehabilitation of the old jarositestockpile site was recognised with a State Environmental ExcellenceAward to the principal contractor forthe earth-moving industry. Otherenvironmental improvements includethe construction of a secondcontaminated water pond, furtherdemolition of disused buildings andthe introduction of an environmentalawareness program for employees.There was one major environmentalincident during the year, asignificant release of sulphurtrioxide in July 1997, which led toan action program of remedialmaintenance, improved processcontrol and enhanced operatingprocedures for the site’s acidfacilities.

Port PirieAt 185,176 tonnes, leadproduction was 8% lower than theprevious year’s 202,000 tonnes,due to disruptions associated withthe commissioning of co-treatmentand the construction works for therefinery modernisation (see page13). The latter will be fullycommissioned by October 1998.Zinc production of 35,243 tonneswas 8% higher than the previousyear’s 32,651 tonnes. At 112 tonnes, silver productionwas severely limited while the silverrefinery processes were replacedwith new technology.Copper production of 3,787 tonneswas 4% below the previous year’s3,934 tonnes. The plant operatedvery well but was limited by thelack of feed from the lead plant.Environmental and hygieneimprovements, together withimproved operating practicesresulted in a further reduction from 41 to 33 in the number ofemployees with a blood lead levelgreater than or equal to 40 µg/dL.A detailed environmental plan to upgrade effluent treatment andcontrol was established to ensure the site meets SouthAustralian effluent emissionguidelines by 2000/1. An extensiveair monitoring program aimed atidentifying key lead emissionsources was also completed duringthe year. Looking ahead, total lead and silverproduction in 1998/9 is expectedto be above the current year’s.Following some productionrestrictions during the phasedchangeover to the new technologyfrom June to October 1998, thesmelter will achieve its expandedannual production rate of 250,000tonnes p.a. towards the end ofcalendar 1998.

Budel Zink’s production of 215,400tonnes in 1997/8 was up morethan 5% on the previous year’s204,200 tonnes. Engineering design for Budel’sconversion to Century concentratesprogressed and the smelter wasgranted a renewed operatinglicence accommodating thechangeover. Progress continued on Budel’s environmental program. By year end, some 65% of thejarosite and gypsum ponds werecovered and 70% of the areacontaining historic residues (zincashes) had been cleaned.Construction also commenced onthe new effluent purification facility,which will enable Budel to eliminatethe production of gypsum.

Australian Refined Alloys (ARA)ARA achieved steady and fullproduction, a better safety resultand a significant improvement inemployee blood lead levels duringthe year. Metal production was 27,777tonnes, compared with last year’s27,941 tonnes. The loss of a separate leadbyproduct market resulted in fewerrecycled batteries (down 14%), butthe conversion of this material tolead metal, thereby expandingsmelting capacity and restoring thebattery treatment rate, is beingstudied. All employees were below thebenchmark 40 µg/dL lead bloodlevel from February 1998. The expansion of the productrange to include refined leadproved valuable in a changingmarket but incurred some costand servicing pressures.During 1998/9, the construction ofa new baghouse at the Melbourneplant will further improve workingconditions and environmentalperformance.


(above) Port Pirie’srefinery upgrade willenable it to treat leadconcentrates from theCannington and Centurymines and increasesilver production.Pictured is one of thenew vacuum inductionretorts in the completelyrebuilt precious metalsarea, which wascompleted in May 1998.

European Smelting ■ There were 21 serious injuries,

of which 1 resulted in lost time. The SIFR increased from 20 to 21 and the LTIFR was steady at 1.

■ Earnings before interest and tax increased substantially to $77.3 million on strong production and sales results, and the strong US dollar relative to the Dutch guilder. Further efficiencies contributed to the good result.

■ Production reached the highest level since 1992.


0

10

20

30

40

50

60

70

80

00

1010

2020

3030

4040

5050

6060

7070

8080

1 9 9 4 5 6 7 8

12.7

19.2

25.1

42.9

77.3

Note: Includes 50% share of Budelco EBIT prior to 1996, 100% from 1996

Note: Includes 50% share of Budelco EBIT prior to 1996, 100% from 1996

29

Port Pirie successfullycommissioned a new, high-productivity lead moulding machineusing robotics to remove dross.

Budel’s new effluentpurification facilitywill be completed in second quarter of calendar 1999,enabling an end to gypsum wasteproduction.


30

David M Stewart Managing Director and Chief Executive(Refer to Board profiles on page 31.)

R Bryan DavisExecutive Director - Mining(Refer to Board profiles onpage 31.)

Management Team

Back (from left): Ian Williams, Bronwyn Constance, David Stewart,Tom Eadie, Ron Berenholtz Front (from left): Wim de Graaff,John Winckel, Christine Burnup,Bryan Davis

Christine M BurnupExecutive General Manager - Corporate Affairs (age 49) was appointed to hercurrent role in August 1995, after joining Pasminco as General Manager -Environment and Public Affairs in 1993. She was previously an Assistant Directorat the Business Council of Australia for four years, with responsibility fordevelopment of Council policies on environment, manufacturing andimmigration. Prior experience includes senior positions in the public sector ineducation, training and labour portfolios.

Ron N BerenholtzExecutive General Manager - Human Resources (age 45) joined Pasmincoin May 1998. His most recent role was Group General Manager HumanResources with Smorgon Consolidated Industries where he wasresponsible for all human resource activities across a diverse range ofmanufacturing and processing industries. Prior to this, he was GroupGeneral Manager Human Resources for Elders IXL and held seniormanagement positions in both the operating groups and the corporate office.

Bronwyn M Constance(FCPA, FCIS) Executive General Manager - Finance and Services (age 49) joinedPasminco in February 1997. She spent the previous eight years with Kraft Foodswhere she was Vice President - Finance & Administration, Central Asia, based inHong Kong, and Finance and Administration Director - Australia and New Zealand.Prior to joining Kraft, Bronwyn held senior financial positions, both at a head officeand operating division level, with the ACI Group of companies. She was a foundingboard member of Citipower Ltd when that company was established in 1994.

Wim P F H de GraaffExecutive General Manager - European Smelting (age 60). Prior to joiningBudel Zink, Wim managed exploration activities and directed miningcompanies in Europe, Asia, Africa and North and Central America, workingprimarily for Canadian mining companies. In 1972, he joined Shell/Billitonand in 1986 became General Manager of the Billiton/Pasminco jointventure Budelco (now Pasminco Budel Zink) in the Netherlands.

E Tom EadieExecutive General Manager - Exploration & Technology(age 44) was appointed to his current role following theformation of the Exploration division in early 1990. Hespent eight years in the minerals exploration industry inNorth America, including three years with Cominco. In1983, he was transferred to Aberfoyle Limited (then 48%owned by Cominco) in Melbourne as ChiefGeophysicist. For the three years prior to joiningPasminco, Tom was manager of Aberfoyle’s basemetals and minerals sands exploration programs. InAugust 1995, he assumed responsibilities for GroupTechnical Support, Pasminco’s technology group basedin Newcastle.

Ian J WilliamsExecutive General Manager - Pasminco Century (age 60) joined Pasmincoin September 1997 following the acquisition of the Century project fromRio Tinto Ltd. He was appointed Managing Director of Century Zinc Ltd in1994 following a 25-year career with Rio Tinto in a variety of engineering,operational and project development roles in Australia, as well as SouthAfrica and North America. In his earlier career, Ian worked for BHP Ltd, andSiemens Industries in Germany. Prior to his appointment to the Centuryproject, he had been active in education and training in Western Australiaand for a time was Chairman of the State Training Board.

John W WinckelExecutive General Manager - Australian Smelting (age 53) joined Pasminco in hiscurrent position in October 1995. He spent the previous 34 years with BTRNylex in a number of operational roles both in Australia and overseas. His mostrecent position was General Manager, Glass Packaging with accountability forthe operational performance of six Australian sites, including responsibility forsales and marketing, human resources and environmental performance. He alsochaired a research consortium of international companies.


31

From left: Geoff Allen, Andrew Guy, Bryan Davis, Anthony Daniels,David Stewart, Mark Rayner, David Brydon,David Macfarlane

Mark R RaynerChairman of the BoardChairman of the Remuneration CommitteeMark Rayner (age 60), BSc (Hons) Chem Eng., FTSE, FAusIMM,FIEA, FAICD, has been a Director since 1989 and was appointedChairman of Pasminco in October 1992. Mr Rayner is alsoChairman of National Australia Bank Limited and Mayne NicklessLimited and a Director of Boral Limited. He is a member of theExecutive Committee of the Australia Japan Business Co-operation Committee and Chairman of the Australia JapanBusiness Forum. He was previously Chief Executive of ComalcoLimited and a Director and Group Executive of CRA Limited. Mr Rayner resides in Melbourne.

David M StewartManaging Director and Chief Executive, Member of the Board Safety,Health and Environment CommitteeDavid Stewart (age 52) joined Pasminco in early 1992 as ExecutiveGeneral Manager - Metals. He was appointed a Director in August1994 and Managing Director and Chief Executive of Pasminco on 1 July 1995. He returned to Australia from North America, where asan Executive Director for Libbey Owens Ford he was responsible forthe operation of their Automotive Replacement Business in theUnited States, Mexico and Canada. Prior to joining Libbey OwensFord, Mr Stewart was Chief Executive of Pak Pacific, an Australianbased printing and packaging business with operations in Australia,New Zealand and Singapore. His previous experience includedoperational roles in the building products and packaging industries,both in Australia and South-East Asia. Mr Stewart graduated as achemical engineer from Monash University. He subsequentlyreceived postgraduate degrees from the Universities of Manchesterand Cambridge in the United Kingdom. Mr Stewart is Vice Presidentof the Minerals Council of Australia and member of the BusinessCouncil of Australia. Mr Stewart resides in Melbourne.

Geoffrey D AllenMember of Safety, Health and Environment CommitteeGeoff Allen (age 56), BA (Hons), MBA, joined the Board in August1994. He was formerly a Commonwealth public servant, politicaladviser and business school academic. He was the foundationExecutive Director of the Business Council of Australia and iscurrently Chairman of the Allen Consulting Group and theAustralasian Centre of Corporate Public Affairs. He was Chairmanof the Australian Government’s Trade Negotiations Advisory Groupduring the Uruguay Round and is a member of the AustralianGovernment’s Trade Policy Advisory Council and Foreign AffairsCouncil. He was formerly Council Member of the Australian Film,Television and Radio School and is currently a Director of WorldCompetitive Practices Pty Ltd, Lancemore Pty Ltd and MelbourneBusiness School Ltd. He is Principal Fellow at the MelbourneBusiness School, and President of the Melbourne Business SchoolAlumni. Mr Allen resides in Melbourne.

David J BrydonChairman of the Audit CommitteeMember of the Remuneration CommitteeDavid Brydon (age 68), has been a Director since 1988. Mr Brydonis Chairman of UAP Australia Limited, a Director of WMC Limited,Spicers Paper Limited, PMP Communications Limited, NorwichUnion Financial Holdings and Djerriwarrh Investments Limited. Hewas previously Managing Director of ACI International Limited. MrBrydon resides in Melbourne.

Anthony B. Daniels OAMMember of the Audit CommitteeTony Daniels (age 63) was appointed a Director in January 1996. MrDaniels is Chairman of Australian National Industries Ltd and aDirector of Capral Aluminium Limited, Orica Limited and PacificDunlop Ltd. He is also a Director of IBJ Australia Bank Limited andO’Connell Street Associates Pty Ltd, and Chairman of the NSWState Superannuation Trustee Corporation. He was previouslyManaging Director of Tubemakers of Australia Limited. Mr Danielsresides in Sydney.

R Bryan DavisBryan Davis, Executive Director - Mining (age 55) BSc (Tech) - MiningEngineering was appointed a Director in May 1995. Prior to joiningPasminco in November 1991 as Executive General Manager - Mininghe spent 23 years with CRA Group, commencing his career at BrokenHill where he became Manager - Mining at the ZC/NBHC operationsbefore moving to Cobar as General Manager of the CSA Mine. In 1988he joined the Australian Consolidated Minerals Group to oversee thedevelopment of the Golden Grove base metals in Western Australiaand was General Manager - Mining and an Executive Director of ACMGold, incorporating operational responsibilities for the group’s goldmines. He was also Director of North Flinders Gold Mines. Currently heis a Director of Newcrest Mining Limited, a Director of NSW MineralsCouncil and a Director of the Centre for Mining Technology &Equipment. Mr Davis resides in Melbourne.

Andrew F GuyMember of the Audit CommitteeAndrew Guy (age 50), LLB, MBA, was appointed to the Board inAugust 1994. Mr Guy is a partner of the legal firm Arthur Robinson &Hedderwicks. Currently, he is a Director of McPherson’s Limited,Djerriwarrh Investments Limited and Anglicare Victoria, andChairman of Commercial Union Holdings Australia Limited. Mr Guyresides in Melbourne.

David K MacfarlaneChairman of the Safety, Health and Environment CommitteeMember of the Remuneration CommitteeDavid Macfarlane (age 68), has been a Director since 1988. Mr Macfarlane is Chairman of Spicers Paper Limited, Vice Chairmanof National Australia Bank Limited and a Director of SchrodersAustralia Holdings Limited, DEM Limited and the AustralianFoundation Investment Company Limited. He was previouslyManaging Director of James Hardie Industries Limited. Mr Macfarlaneresides in Sydney.

Board


32

Broken Hill - Southern operationsThe reserve for the Southern operations at Broken Hill is based on assaysfrom diamond drill holes and mapping data interpreted on cross-sectionsspaced 19.8 metres apart. The resource is based on a three-dimensionalmodel of the geology and mapping of the mine openings. The reserve hasbeen calculated by intersecting actual three-dimensional stope designshapes with the resource model, and is derived from a measured (31.7 million tonnes), indicated (6.4 million tonnes) and inferred (2.6 million tonnes) resource at 30 June 1998 of 40.7 million tonnes at9.3% zinc, 5.5% lead and 59 grams per tonne silver, at a cut-off grade of7% lead plus zinc. During 1997/8, diamond drilling added 1.9 million tonnes to the reserve.Mining depleted it by 2.5 million tonnes and a further 2.6 million tonneswere deleted as having no reasonable expectation of being mined. Thereserve at 30 June 1998 is estimated to be 23.7 million tonnes at 8.1%zinc, 5.2% lead and 51 grams per tonne silver.(Compiled by C Lutherborrow, Chief Geologist, Pasminco Broken Hill Mine)

Broken Hill - PotosiThe reserve for the Potosi open-cut mine is based on assays from drillingand mapping data interpreted on cross sections 10 metres apart. Thisinformation is used to create a three-dimensional block model of theresource. The depth of the production surface in the Potosi open-cutoperation during 1997/8 approached the limit of the ore defined by closelyspaced grade control drilling. This required additional drilling of the lowersection of the resource followed by a re-optimisation of the final pit design.The exercise decreased reserves by 0.3 million tonnes, while the gradeincreased from 11.6 % to 12.5% lead and zinc. Mining at Potosi during 1997/98 depleted the reserve by 0.2 milliontonnes. At 30 June 1998, the reserve is estimated to stand at 0.3 milliontonnes at 9.7% zinc, 2.8% lead and 30 grams per tonne silver.(Compiled by C Lutherborrow, Chief Geologist, Pasminco Broken Hill Mine)

CenturyMore than 500 diamond, reverse circulation and percussion holes havebeen drilled at an average drilling density of 70 metres to delineate theresource and to explore for additional resources.The reported reserves were developed from mine planning studiescompleted in April 1997. In the course of these studies, the economicfactors impacting upon the exploitation of the identified mineral resourcewere evaluated. The physical disposition of the mineralisation has been

The Ore Reserves are compiled bycompetent persons for each location and reported according to the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves.*

assessed and mining loss and dilution parameters applied.A variable cut-off grade has been applied in compiling the ore reserves.The cut-off grade is based upon the zinc equivalence (ZnEq) relationship,which includes value for lead and silver, and varies from 8.0% ZnEqreducing to 4.0% ZnEq over the planned life of the open-pit miningoperations. The equivalence relationship is based upon analysis of themetallurgical performance of the ore and assumptions of metal pricesexpected to be achieved for the project. The variable cut-off grade hasbeen developed with the objective of maximising the net present value ofthe mine operation.The reserve as at 30 June 1998 was 98.5 million tonnes at 11.6% zinc,1.7% lead and 43 grams per tonne silver, calculated from a measured(69.3 million tonnes) and inferred (2.9 million tonnes) resource of 105.1million tonnes at 12.1 zinc, 1.7 % lead and 46 grams per tonne silver.(Compiled by R A Adam, Mining & Resource Technology Pty Ltd)

Pasminco Exploration geologistsCaroline Hilton andFergus O’Brien logcore samples atBroken Hill.

*Report of the Joint Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC)

Ore Reserves


33

Ore Reserves as at30 June 1998 1997 Zinc Lead Copper Silver GoldLocation Tonnes (millions) % % % % %

Broken HillSouthern Proved 21.0 20.3 8.2 5.4 53Operations Probable 2.7 6.6 7.5 3.9 43

Total 23.7 26.9 8.1 5.2 51Potosi Proved 0.3 0.9 9.7 2.8 30

Probable -Total 0.3 0.9 9.7 2.8 30

Rosebery Proved 2.0 2.2 8.3 2.7 0.40 83 1.6Probable 1.4 1.5 11.4 4.2 0.43 155 2.6Total 3.4 3.7 9.5 3.3 0.41 112 2.0

Elura Proved 2.9 6.1 8.2 5.5 77Probable 14.2 14.7 8.3 4.9 53Total 17.1 20.8 8.3 5.1 59

Century Proved 67.5 11.6 1.7 42Probable 31.0 11.6 1.6 47Total 98.5 11.6 1.7 43

Beltana Proved 0.1 0.2 40.0 2.2Proved 93.8 29.7Probable 49.3 22.8Total 143.1 52.5

Crystalline calcite andgalena (lead sulphide)mineralisation fromBroken Hill.

Dugald RiverThe Dugald River resource was estimated using a block modellingtechnique with a cut-off of 10% zinc plus lead, a minimum block thicknessof 5 metres and a vertical extent from surface of 1,000 metres. At 30 June1998,the indicated (48 million tonnes) and inferred (2 million tonnes)resource is estimated to be 50 million tonnes at 12.1% zinc, 1.9% lead and41 grams per tonne silver.(Compiled by J H Duke, Principal Geologist, Metals)

EluraThe reserves at the Elura mine are based on assays from diamond drillholes and samples from underground mapping and have been interpretedon vertical cross-sections at 10 and 20 metre spacings. The reserve isderived from a measured (22.5 million tonnes) and indicated (0.7 milliontonnes) resource of 23.2 million tonnes at 8.1% zinc, 5.0% lead and 59grams per tonne silver.A total of 4.9 million tonnes written out of the Elura reserve during 1998/9was partly offset by 1.1 million tonnes moving from resource to reserve inthe lower levels. Mine production in 1997/8 reduced ore reserves by 1.1 million tonnes. During 1997/8, major problems occurred in the recovery of zinc to zincconcentrates from ore mined from the centre pillar between the two lensesthat make up the main ore body. As a result, mining of the 4/5 block wascurtailed before planned tonnes had been extracted, as production fromstopes with satisfactory metallurgical performance was favoured. A total of1.4 million tonnes was written out of reserves as a result of metallurgicalinformation now known about the area.(Compiled by P Levers, Geology Superintendent, Pasminco Elura Mine)

RoseberyReserves at the Rosebery mine are based on diamond drilling conductedon sections spaced from 10-40 metres along strike, together withinformation gained from underground ore exposures in some lenses. Theyare derived from a measured (2.3 million tonnes), indicated (1.5 milliontonnes) and inferred (7.9 million tonnes) resource at 30 June 1998 of 11.7million tonnes at 12.3% zinc, 4.3% lead, 0.35% copper, 139 grams pertonne silver and 2.2 grams per tonne gold.During 1997/8, successful surface and underground exploration programsincreased the measured, indicated and inferred resource by 14%compared with end June 1997. Additions were delineated in the south (T lens), central (V lens) and northern mine areas (B, P, K and W lenses).The reserve base decreased 7% compared with last year. Moderateincreases were defined in B and C lenses with incremental rises in P, K andT lenses, but were offset by mining depletion and conversion of reservesinto the inaccessible category, principally in B and J lenses. The reserve at30 June 1998 is estimated to be 3.4 million tonnes at 9.5% zinc, 3.3%lead, 0.41% copper, 112 grams per tonne silver and 2.0 grams per tonnegold.During 1998/9, the focus of drilling will be to continue exploring for newresources in the mine area, together with upgrading the large amount ofinferred resource tied up in K and P lenses.(Compiled by M Berry, Chief Geologist, Pasminco Rosebery Mine)

Typical high grade galena(lead sulphide), sphalerite(zinc sulphide), calcite andrhodonite ore from BrokenHill, one of the world’srichest lead-zinc deposits.


34

Mines 1998 1997 1996 1995 1994

Broken Hill

Broken Hill operations (includes ore sourced from Pototsi open-cut operations). Ore Treated Tonnes 2,715,402 2,700,642 2,547,179 2,525,153 2,431,711Assaying Zinc % 7.5 8.2 7.7 8.0 8.7

Lead % 4.7 5.2 5.5 5.9 6.9Silver g/t 43.4 53 54 56 61

Zinc Concentrate Tonnes 360,885 393,791 349,323 362,222 374,447

Containing Zinc tonnes 181,097 196,371 174,926 181,148 190,931

Lead Concentrate Tonnes 165,749 191,269 185,118 196,504 219,311Containing Lead tonnes 114,595 130,185 129,490 138,689 158,067

Silver kg 96,788 118,922 119,594 121,801 134,107

Elura

Ore Treated Tonnes 1,021,965 1,044,253 1,023,641 1,059,602 813,928Assaying Zinc % 7.8 8.5 8.5 9.2 8.9

Lead % 5.1 5.7 5.8 5.9 5.9

Silver g/t 79.2 94 74 101 103Zinc Concentrate Tonnes 105,772 124,217 130,865 146,069 108,364Containing Zinc tonnes 53,305 62,498 66,219 73,149 54,659Lead Concentrate Tonnes 72,444 83,020 85,329 88,110 59,580Containing Lead tonnes 37,587 43,166 43,716 44,169 31,577

Silver kg 31,125 36,046 31,732 44,150 30,267

Rosebery

Ore Treated Tonnes 649,657 640,593 600,053 500,181 539,066ex Rosebery Mine 569,940 622,643 600,053 500,181 532,126

Purchased Ore 79,717 17,950 - - 6,940Assaying Zinc % 9.8 10.0 11.1 11.0 9.7

Lead % 2.8 2.9 3.0 3.7 3.1Copper % 0.4 0.4 0.4 0.4 0.4

Silver g/t 84.5 104 103 114 97Gold g/t 1.4 1.5 1.7 1.6 1.9

Zinc Concentrate Tonnes 106,719 108,390 113,750 94,392 83,567Containing Zinc tonnes 56,134 57,089 59,321 48,942 45,970Lead Concentrate Tonnes 19,646 19,877 20,046 9,047 7,709Containing Lead tonnes 12,243 12,608 12,228 5,919 5,066

Silver kg 25,412 28,304 27,820 10,388 8,909Gold kg 88 78 130 38 50

Copper Concentrate Tonnes 5,553 5,855 4,649 3,680 4,409Containing Copper tonnes 1307 1,394 990 865 1,078

Silver kg 12,103 18,765 14,062 12,876 12,250Gold kg 363 400 326 233 284

Gold Dore’ kg 113 226 247 174 294Containing Gold kg 79 147 168 120 194

Silver kg 34 68 79 52 81Bulk Concentrate Tonnes - - - 14,964 14,235Containing Zinc tonnes - - - 1,844 1,715

Lead tonnes - - - 7,599 7,610Copper tonnes - - - 341 258

Silver kg - - - 18,267 17,500Gold kg - - - 185 140

Beltana Aroona Open Cut

Ore Mined Tonnes 57,269 9,600 - - -Assaying Zinc % 38 40.0 - - -Containing Zinc tonnes 21,762 3,840 - - -

Production 5-Year Summary


35

Smelters 1998 1997 1996 1995 1994

HobartTonnes

Zinc and Alloys 197,042 207,703 207,840 189,067 193,763Cadmium 368 244 319 316 354Lead Residue 26,797 28,779 26,913 23,676 23,386Sulphuric Acid 390,989 395,827 392,304 347,150 361,959Fertilisers - - - 3,525 75,933Copper Sulphate 3,088 3,446 3,985 3,062 2,542

Port Pirie

Lead and Alloys 185,061 201,755 223,654 204,665 217,386Cathode Copper 3,787 3,943 4,065 3,834 3,055Zinc and Alloys 35,243 32,651 38,013 36,051 37,375Silver (kg) 112,030 231,756 206,016 206,201 208,698Gold (kg) 311 700 661 550 500Sulphuric Acid 68,058 82,985 87,264 81,540 83,264

Cockle Creek

Zinc and Alloys 71,291 79,393 84,437 86,804 75,201Lead Bullion 25,149 28,795 31,447 33,556 27,833Cadmium 350 201 514 538 408Copper Sulphate 1,681 2,731 3,514 2,969 2,766Lead Dross 1,176 1,627 2,045 2,834 2,140Sulphuric Acid 150,799 170,646 177,286 177,955 168,276

ARA *

Lead Alloys 13,147 12,486 11,782 10,545 12,615Lead Bullion 742 1,485 1,141 1,640 560* These figures represent Pasminco’s50% share of ARA production.

Europe Avonmouth

Zinc and Alloys - - - - 33,431Lead Bullion - - - - 14,210Cadmium - - - - 117Copper Lead Dross - - - - 2,428Sulphuric Acid - - - - 66,386

Budel Zink *

Zinc and Alloys 215,385 204,626 205,674 107,631 105,652Cadmium 730 605 700 297 324Copper in Residue 1,279 1,189 1,166 850 494Cobalt in Residue 35 38 40 33 21Sulphuric Acid 341,372 311,468 305,934 273,696 172,990Zinc Dross 178 141 264 212 173* These figures represent Pasminco’s 50% share of Budel Zink production up until 1995. 1997 & 1998 show Pasminco’s 100% share.

Bloxwich

Zinc Alloys - - - - 8,178Zinc/Aluminium Anodes - - - - 1,759Zinc Dust/Oxide/Phosphate - - - - 3,512Zinc Secondaries - - - - 1,754


36

Led byAnthropologistPeter Bindon (firstfrom left), Century’sCultural ClearanceTeam searches forartefacts.

Profit & Loss 1997 1996 1995

Gross sales $m 1,352.8 1,318.2 1,224.1Cost of sales (including exploration & research) $m 1,104.2 1,108.7 1,049.6Depreciation $m 121.5 121.5 120.1Earnings before interest and tax $m 127.1 88.0 54.4Net interest and finance charges $m 17.1 17.0 21.5Income tax charge/(credit) $m 40.0 30.2 16.2Operating profit/(loss) after tax and before abnormal and extraordinary items $m 70.0 40.8 16.7Abnormal items (net of tax) $m (5.3) 0.0 (4.5)Extraordinary items (net of tax) $m 0.0 0.0 0.0Operating profit/(loss) after tax and abnormal and extraordinary items $m 64.7 40.8 12.2Earnings per share ◗ cents 8.1 5.1 1.5Return on shareholders’ equity ◗ % 8.3 5.4 1.6Dividends $m 31.8 23.8 15.9Dividends per share cents 4.0 3.0 2.0Dividend cover ◗ times 2.0 1.7 0.8Net cash provided by operating activities $m 151.0 80.2 180.6Interest cover ◗ times 8.8 4.7 8.1Balance Sheet

Shareholders’ equity $m 778.5 750.6 740.0Property, plant and equipment $m 948.4 887.4 891.7Economic entity (Group) net debt $m 239.1 153.1 76.5Operating working capital $m 306.3 268.6 209.8Net Debt to Net Debt plus Equity ◗ % 23.5 16.9 9.4Capital expenditure $m 196.5 140.7 97.3

Production

Mines

Ore treated tonnes 1,352.8 4,395,000 4,170,900 4,084,900

Contained zinc ▲ tonnes 1,436.8 319,800 300,500 305,100

Contained lead ▲ tonnes 1,799.9 186,000 185,400 196,400

Contained silver kg 1,913.5 202,100 193,300 207,500

Contained gold kg 1,667.2 625 620 580

Smelters

Zinc ✚ tonnes 1,436.8 524,400 536,000 419,600

Lead (metal and bullion) ◆ tonnes 1,913.5 244,500 268,000 250,400

Silver kg 1,224.1 231,000 206,000 206,200

Commodity Prices

Zinc (year average) US$/tonne 1,667.2 1,124* 1,022 1,045

Lead (year average) US$/tonne 1,799.9 724 721 613

Exchange Rates

AUD/USD (year average) 0.77* 0.76 0.74

AUD/Nlg (year average) 1.40 1.24 1.25

1998

1,370.11,152.5

131.785.913.532.8

39.623.7

0.0

63.36.24.3

45.04.01.6

258.619.2

1,490.71,652.6

166.5267.610.0

445.3

4,387,000

312,400

164,400

165,500

530

519,000

224,100

112,000

1,192*

562*

0.70*

1.38*

▲ includes purchased ore ✚ includes 50% share of Budel Zink production prior to 1996, 100% from 1996 ◆ includes 50% share of ARA production

Performance 10-Year Summary


37

Rosebery extended its communityrelations activities during the year.A Community Liaison Committee wasestablished and a site Open Day washeld in May 1998. Here at the Open Day,visitors view the Atlas Copco Jumbo drillrig on display underground in the 17 Level workshop.

Before casting, zinc is treated with sodiumto remove arsenic. Cockle Creek is currentlytrialling a new automated liquid sodiumprocess to reduce manual labour andimprove environmental performance.Project Engineer Peter Brain (on left) and Metallurgist John Laws are picturedchecking equipment for the project.

Budelrenovated itsfire watermains systemduring theyear.

1994 1993 1992 1991 1990 1989

1,193.7 1,487.1 1,431.2 1,692.2 1,913.5 1799.91,066.1 1,384.9 1,326.5 1,562.0 1,503.6 1,409.6

112.2 130.3 131.8 132.0 115.2 100.415.4 (28.1) (27.1) (1.8) 294.7 289.921.2 28.5 33.5 43.0 44.5 42.1(4.1) (15.7) (17.4) (10.9) 96.5 84.5

(1.7) (40.9) (43.2) (33.9) 153.7 163.3(12.7) (46.0) (15.4) (13.7) 0.0 0.0

0.0 0.0 (81.5) 0.0 0.0 (6.8)

(14.4) (86.9) (140.1) (47.6) 153.7 156.5(1.9) (12.1) (8.1) (6.6) 21.3 22.7(2.0) (12.2) (7.1) (5.2) 17.2 19.70.0 0.0 0.0 0.0 86.4 97.00.0 0.0 0.0 0.0 12.0 13.50.0 0.0 0.0 0.0 1.8 1.6

128.2 168.5 80.1 309.1 337.8 355.85.9 5.8 2.3 7.2 7.6 8.4

739.6 665.7 759.4 885.4 935.4 857.4900.1 966.6 1,083.8 1,223.4 1,103.2 1005.9272.8 521.1 560.7 469.2 291.5 207.4221.2 306.1 402.2 388.7 598.2 468.326.9 43.9 42.5 34.6 23.7 19.550.0 94.2 114.3 258.1 214.0 217.0

3,784,700 3,662,800 3,814,300 4,157,900 4,451,500 4,490,700

293,300 285,400 299,000 366,400 365,100 365,900

202,300 200,300 199,300 211,000 210,600 225,000

203,100 225,400 234,300 261,100 310,300 377,800

670 690 680 1,090 1,080 1,310

445,400 544,600 533,600 519,400 482,200 480,300

272,600 308,500 303,000 295,600 280,200 249,700

208,700 214,400 204,100 221,300 228,300 245,400

938 1,116 1,162 1,309 1,609 1,609

438 487 528 682 772 639

0.69 0.70 0.77 0.79 0.77 0.82

1.31 1.24 1.45 1.41 1.54 1.70

◗ refer page 48 of financial statements for definition realised prices and exchange rates *


38

Glossary

A$ Australian dollars

AUD/USD exchange rate Australian US dollar exchange rate

Ag Chemical symbol for silver

ARA The Australian Refined Alloys joint venture with Simsmetal Limited, in which a Pasminco subsidiary has a 50% interest

Au Chemical symbol for gold

break-even The lowest zinc price for a particular performance period zinc price at which Pasminco would break even i.e. make zero profit

contained Amount of zinc/lead metal contained zinc/lead in a mineral deposit or concentrate, calculated

by multiplying average grade by total tonnes

co-treatment Co-treatment of paragoethite (or ‘co-treatment’) is an integrated process developed by Pasminco and involving two of its smelting sites. Commissioned in 1997/8, the new technology has eliminated jarosite production at the Hobart smelter, which now produces an intermediary product calledparagoethite. This is shipped to the Port Pirie lead smelter toundergo additional treatment and further metal recovery

Cu Chemical symbol for copper

EBIT Earnings before interest and tax

ESHE Executive Safety Health and Environment Committee (Pasminco Group subsidiaries) consists of Pasminco’s management team (see page 30), is attended by the Group Managers Environment and Safety & Health and chaired by the Managing Director and Chief Executive. The ESHE establishes policy and strategic directions for the management of safety, health and environment across the Pasminco Group

g/t grams per tonne

Gulf Communities Agreement between Century, native title claimants Agreement and the Queensland Government, dated 7 May 1997

ISO14001 An international standard for environmental management systems published by the International Standards Organisation in 1996. Key elements include Policy, Planning, Implementation and Operation, Checking and Corrective Action, and Management Review.

ISO 9002 International standard for quality assurance in production, installation and servicing

ISO 9003 International standard for quality assurance in final inspectionand test

jarosite A residue of the roasting and hydrometallurgical treatment ofzinc concentrates. A compound of ammonia, iron and sulphate, it takes its name from a similar naturally occurring material. Jarosite cannot be reprocessed except at very low rates. Historically, it has been disposed of at sea, in permanent ponds or landfill sites

LME London Metal Exchange

LTI Lost Time Injury, an injury to a person which results in that person losing one normal working day or shift any time after the date of the injury

LTIFR Lost Time Injury Frequency Rate, the number of lost time injuries per million hours worked

Nlg Netherlands guilder

ore reserves As defined in the 1996 Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves

paragoethite A hydrated iron oxide produced at the Hobart smelter as part of the co-treatment process

Pb Chemical symbol for lead

PBS Pasminco Business Systems, an initiative to introduce an integrated business system utilising SAP software and encompassing sales and marketing, asset management, maintenance, finance, purchasing and humanresources processes across Pasminco

premium Dollar amount payable over and above the LME price as negotiated between buyer and seller (includes freight and other realisation costs)

resource As defined in the 1996 Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves

SI Serious Injury, any injury that results in lost time, medical treatment or selected/restricted duties

SIFR Serious Injury Frequency Rate, the number of serious injuries per million hours worked

SO2 sulphur dioxide

µg/dL micrograms per decilitre

Western world A term used by industry analysts such as Brook Hunt and CRU to include all countries apart from China, Vietnam, North Korea, Cuba, the former Soviet Union and eastern Europe (Romania, Bulgaria, Czech Republic, Slovak Republic, Hungary, Poland)

Y2K Year 2000

Zn Chemical symbol for zinc

ZnEq Zinc equivalence is a concept which allows the mine planner to take into account not only the zinc grade of an ore block but also the value of lead and silver. The total value of zinc, lead and silver in a block is divided by the zincprice to give the zinc equivalent grade of that block


Key Financial Dates (subject to change)

Books close for 1998 final dividend 21 October 1998Annual General Meeting 28 October 1998September quarter production report released 28 October 1998Final dividend payment 2 November 1998Half-year end 31 December 1998December quarter production report released 27 January 1999Half-year results 24 February 1999March quarter production report released 21 April 19991998/9 year end 30 June 1999June quarter production report released 28 July 1999Full-year results and final dividend announcement 25 August 1999Annual Report mailed to shareholders 20 September 1999Annual General Meeting 27 October 1999September quarter production report released 27 October 1999

Contents

40 Directors’ Report43 Corporate Governance

Statement44 Profit and Loss45 Balance Sheet46 Statement of Cash Flows47 Notes to the Financial

Statements47 Summary of Significant

Accounting Policies 69 Directors’ Statement70 Auditors’ Report71 Shareholder Information

Directors’ Report and Financial Statements 1998

39


Your Directors present their report for the year ended 30 June 1998.

DirectorsThe Directors of Pasminco Limited at the date of this report are:M R Rayner (Chairman)D M Stewart (Managing Director & Chief Executive)G D AllenD J BrydonA B DanielsR B DavisA F GuyD K Macfarlane

Principal ActivitiesThe principal activities of the corporations in the economic entity duringthe year were exploration and integrated mining, smelting and marketingto produce zinc and lead concentrates, and zinc, lead and silver metalstogether with various alloys and by-products.

Consolidated Results1998 $m 1997 $m

Consolidated economic entityprofit attributable to the members of Pasminco Limited 63.3 64.7

Review of operationsA review of the operations of the economic entity during the year andthe results of those operations are set out in the 1998 Annual Report.

Significant Changes in the State of Affairs and EventsSubsequent to Year EndOther than items noted in this report, and in the 1998 Annual Report towhich it refers, there were no significant changes in the state of affairsof the economic entity during the financial year. There are no othermatters or circumstances that have arisen since the end of the financialyear which significantly affected or may significantly affect:a) the operations of the economic entity;b) the results of those operations; orc) the state of the affairs of the economic entity.

Likely Developments and Expected Future ResultsDirectors believe it would be likely to prejudice the interests of theCompany to provide additional information relating to likelydevelopments in the operations of the economic entity and theexpected results of those operations in the financial years subsequentto the financial year ended 30 June 1998.

DividendThe Directors have declared a dividend of 4 cents per share unfrankedfrom profits payable on 2 November 1998, books closing/record date10.00 pm AEST on 21 October 1998. Dividends paid during the yeartotalled $31.8 million. This amount represents the final 1996/7 dividenddeclared of 4 cents per share which was 96% franked.

Information on DirectorsParticulars of the qualifications, experience and special responsibilitiesof each Director at the date of this report are set out on page 33 in the1998 Annual Report.

Attendance at MeetingsThe number of meetings of the Board of Directors and its principalBoard Committees held during the year were:Board of Directors: 11Audit Committee: 4Environment Committee: 5Remuneration Committee: 4

The following table sets out the number of meetings Directors wereeligible to attend, and the meetings attended by each Director.

Present Board of Audit Safety, Health Remuneration

Directors Directors Committee & Environment Committee

Meetings Meetings Committee Meetings

Meetings

held attended held attended held attended held attended

M R Rayner 11 11 - - - - 4 4

D M Stewart 11 11 4 4 5 4 - -

G D Allen 11 10 - - 5 4 - -

D J Brydon 11 10 4 4 - - 4 4

A B Daniels 11 11 4 4 - - - -

R B Davis 11 11 - - - - - -

A F Guy 11 11 4 3 - - - -

D K Macfarlane11 10 - - 5 4 4 3

Directors’ BenefitsThe interests of each Director in the share capital of the Company atthe date of this report were:

Pasminco LimitedOrdinary Shares of $1.00 each

Directors Beneficial Non-Beneficial

Interest Interest

M R Rayner 13,629 Nil

D M Stewart 25,000 1,029

G D Allen 10,000 Nil

D J Brydon 2,572 Nil

A B Daniels 10,572 Nil

R B Davis Nil 5,000

A F Guy 10,000 Nil

D K Macfarlane 2,572 Nil

40

Directors’ Report


Your Directors present their report for the year ended 30 June 1998.

DirectorsThe Directors of Pasminco Limited at the date of this report are:M R Rayner (Chairman)D M Stewart (Managing Director & Chief Executive)G D AllenD J BrydonA B DanielsR B DavisA F GuyD K Macfarlane

Principal ActivitiesThe principal activities of the corporations in the economic entity duringthe year were exploration and integrated mining, smelting and marketingto produce zinc and lead concentrates, and zinc, lead and silver metalstogether with various alloys and by-products.

Consolidated Results1998 $m 1997 $m

Consolidated economic entityprofit attributable to the members of Pasminco Limited 63.3 64.7

Review of operationsA review of the operations of the economic entity during the year andthe results of those operations are set out in the 1998 Annual Report.

Significant Changes in the State of Affairs and EventsSubsequent to Year EndOther than items noted in this report, and in the 1998 Annual Report towhich it refers, there were no significant changes in the state of affairsof the economic entity during the financial year. There are no othermatters or circumstances that have arisen since the end of the financialyear which significantly affected or may significantly affect:a) the operations of the economic entity;b) the results of those operations; orc) the state of the affairs of the economic entity.

Likely Developments and Expected Future ResultsDirectors believe it would be likely to prejudice the interests of theCompany to provide additional information relating to likelydevelopments in the operations of the economic entity and theexpected results of those operations in the financial years subsequentto the financial year ended 30 June 1998.

DividendThe Directors have declared a dividend of 4 cents per share unfrankedfrom profits payable on 2 November 1998, books closing/record date10.00 pm AEST on 21 October 1998. Dividends paid during the yeartotalled $31.8 million. This amount represents the final 1996/7 dividenddeclared of 4 cents per share which was 96% franked.

Information on DirectorsParticulars of the qualifications, experience and special responsibilitiesof each Director at the date of this report are set out on page 33 in the1998 Annual Report.

Attendance at MeetingsThe number of meetings of the Board of Directors and its principalBoard Committees held during the year were:Board of Directors: 11Audit Committee: 4Environment Committee: 5Remuneration Committee: 4

The following table sets out the number of meetings Directors wereeligible to attend, and the meetings attended by each Director.

Present Board of Audit Safety, Health Remuneration

Directors Directors Committee & Environment Committee

Meetings Meetings Committee Meetings

Meetings

held attended held attended held attended held attended

M R Rayner 11 11 - - - - 4 4

D M Stewart 11 11 4 4 5 4 - -

G D Allen 11 10 - - 5 4 - -

D J Brydon 11 10 4 4 - - 4 4

A B Daniels 11 11 4 4 - - - -

R B Davis 11 11 - - - - - -

A F Guy 11 11 4 3 - - - -

DK Macfarlane 11 10 - - 5 4 4 3

Directors’ BenefitsThe interests of each Director in the share capital of the Company atthe date of this report were:

Pasminco LimitedOrdinary Shares of $1.00 each

Directors Beneficial Non-Beneficial

Interest Interest

M R Rayner 13,629 Nil

D M Stewart 25,000 1,029

G D Allen 10,000 Nil

D J Brydon 2,572 Nil

A B Daniels 10,572 Nil

R B Davis Nil 5,000

A F Guy 10,000 Nil

D K Macfarlane 2,572 Nil

40

Directors’ Report

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 2

Pasminco LimitedOptions on Ordinary Shares of $1.00 each

Executive Allocation Year Exercise Expiry

Directors of Issue Price Date

D M Stewart 150,000 1995 $1.67 10 November 2000

200,000 1996 $2.07 8 November 2001

300,000 1997 $1.84 14 November 2002

R B Davis 75,000 1995 $1.67 10 November 2000

75,000 1996 $2.07 8 November 2001

100,000 1997 $1.84 14 November 2002

No interests were held in the share capital of related companies.

Mr D K Macfarlane is a Director of Schroders Australia HoldingsLimited which provides advisory services on a commercial basis tothe economic entity.

Mr A F Guy is a partner of Arthur Robinson & Hedderwicks, Solicitors,who provide legal advice on a commercial basis to the economicentity.Other than as stated above, the Directors do not have an interest in acontract or proposed contract with the Company being an interest thenature of which the Directors are required to declare in accordancewith Section 307 of the Corporations Law.During the financial year, Mr D M Stewart and Mr R B Davis have beenengaged in the full-time employment of the economic entity, andreceived or became entitled to receive in connection with thatemployment, medical and other benefits relating to such employment.Other than as stated in this report, during or since the financial year noDirector of Pasminco Limited has received or become entitled toreceive a benefit, other than a benefit included in the aggregateamount of emoluments received or due and receivable by theDirectors shown in the consolidated accounts by reason of a contractentered into by the Company or an entity that the Company controlledor a body corporate that was related to the Company when thecontract was made or when the Director received, or became entitledto receive the benefit, with:■ a Director; or■ a firm of which the Director is a member; or■ an entity in which a Director has a substantial financial interest.The Group has in place an insurance policy to indemnify Directors andOfficers against liability incurred which arises out of the conduct ofbusiness or in the discharge of their duties as a Director or Officer. The insurance premium is currently $163,000 per annum.

Board and Committee FeesDirectors’ fees are determined by the Board on the basis ofrecommendations received from the Remuneration Committee fromtime to time. Company policy is to set fees around the median of themarketplace for listed companies of similar size to Pasminco. There isno direct relationship between the quantum of the directors’ fees andthe Company’s performance in any given year.The nature and amount of each element of the directors’ emoluments are:

Safety, Health Company

Directors’ Audit & Environment Contribution to

Base Fee Committee Committee Fee Superannuation Total

M R Rayner 100,000 6,000 106,000

G D Allen 42,000 7,000 2,940 51,940

D J Brydon 42,000 10,000 3,120 55,120

A B Daniels 42,000 7,000 2,940 51,940

A F Guy 42,000 7,000 2,940 51,940

D K Macfarlane 42,000 10,000 3,120 55,120

NotesThe emoluments of Executive Directors D M Stewart and R B Davis arereported in the following section relating to the five highest paid officers.

Emoluments of Five Highest Paid OfficersThe emoluments of Pasminco employees is determined by theindividual’s performance, the Company’s performance and themarketplace generally. Pasminco assesses its position annually toensure that its remuneration policy is aligned with the median level in themarketplace. For executive level positions, the marketplace is defined asexecutive positions in Australian-based operations. Data is obtainedfrom remuneration and management consultants and other policysurvey forums. Individual remuneration is reviewed in the context of thispolicy, taking into account the executive’s current remuneration andperformance. A significant element of the potential remuneration formanagers, including executives, is linked to organisational performance.At the executive level, a maximum incentive payment of up to 30% ofsalary is achievable.

41

The nature and amount of each element of the emoluments for the five highest paid named officers are:

Salary - inclusive of Company Contribution Company Provided Incentive Plan Other Salary Sacrifice items to Superannuation Motor Vehicle Payments for 97/8 Sundry Items Total

D M StewartManaging Director andChief Executive Officer 550,202 60,522 47,062 100,000 11,860 769,646

R B DavisDirector - Mining 300,202 39,627 35,985 24,124 14,726 414,664

J W WinckelExecutive General Manager- Australian Smelting 257,702 28,347 24,770 20,018 7,815 338,652

I J WilliamsExecutive General Manager- Century Project 290,784 4,254 14,336 - 5,402 314,776

B M ConstanceExecutive General Manager- Finance and Services 225,202 24,772 36,000 18,097 7,815 311,886

NotesI J Williams has been employed by Pasminco since 25 September 1997.Sundry items includes telephone reimbursement, parking, medical plan assistance, and spouse travel plus Fringe Benefits Tax where applicable.Employees who worked mainly outside of Australia for the financial year have been excluded.Emoluments are costed on the same basis used for reporting Executive Remuneration set out in note 27 to the Financial Statements.

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 3

D M StewartManaging Director and Chief Executive

Rounding of AmountsThe Directors have chosen to express amounts in millions of dollars toone decimal place, in accordance with ASC Class Order 97/1005,except where rounding to the nearest one thousand dollars is required,as permitted by Section 311 and Regulation 3.6.05 of the CorporationsLaw and Regulations.

Deed of Cross GuaranteePursuant to Class Order 95/1530, relief has been granted to thoseidentified controlled entities of Pasminco Limited shown in Note 10 tothe financial statements from the Corporations Law requirements forpreparation, audit and publication of accounts.As a condition of the Class Order, Pasminco Limited and the identifiedcontrolled entities entered into a deed of cross guarantee on 23 April1997. Under the deed of cross guarantee, each named Companyguarantees the debts of the other named companies. This guarantee isconditional upon the winding up of any companies which are a party tothe deed.

Pasminco Limited Employee Option PlanAt the date of this report, options over shares pursuant to the PasmincoLimited Employee Option Plan are as follows:

Pasminco Limited Employee Option Plan

No. of No. Year of Exercise Expiry

Participants of Options Issue Price Date

1,922 4,128,000 1995 $1.67 10 November 2000

2,062 5,587,000 1996 $2.07 8 November 2001

2,898 11,924,000 1997 $1.84 14 November 2002

The total number of options outstanding at the end of the period was 21,639,000, equivalent to 1.9% of the total issued ordinary shares in the Company.

During the financial year, options over the shares of the Company havebeen exercised as follows:

Year No. of Participants No. of Options Exercised

of Issue Exercised

1995 13 93,000

1996 11 41,500

The names of all holders of options are entered in the Company’sregister, inspection of which may be made free of charge.In disclosing these details, the Directors have availed themselves of ASCclass order 97/1011.No person entitled to exercise these options had or has any right, byvirtue of such options, to participate in any share issue of any other bodycorporate.Non-executive Directors do not participate in the employee option plan.The 1997 options shown above were granted on the basis that eachoption can, under most circumstances, be converted to one ordinary$1.00 share in the Company, after a two year period from the date ofissue, by the holder subscribing $1.84 per share, being 10% above theweighted average sale price of Pasminco Limited shares on theAustralian Stock Exchange over the five business days immediatelybefore 14 November 1997. For employees other than those at BudelZink, options can be exercised after 14 November 1999 and on orbefore 14 November 2002. Employees of Budel Zink can exerciseoptions at any time on or before 14 November 2002. Under certaincircumstances, such as redundancy, retirement or death, options maybe exercised by Australian employees prior to 14 November 1999.Under the terms of the Plan, participants may, upon exercise of theiroptions, participate in any issue of additional shares or bonus shares toshareholders.Other than as stated above, no shares of the Company (or subsidiaries)have been issued during the financial year or since the end of thefinancial year by virtue of the exercise of any options granted by theCompany (or subsidiaries).

Signed, 26 August 1998 in accordance with a resolution of theDirectors.

M R RaynerChairman

42

Directors’ Report

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 4

Corporate GovernanceIn the exercise of their duties as your Directors, the Pasminco Board iscommitted to observing the highest standards of corporate governance.Following is a statement of the main features of the corporate governanceprocedures and guidelines adopted by the Board.

Board CompositionThe Pasminco Board is comprised of a majority of non-executivedirectors. The Chairman is a non-executive member of the Board. Inappointing additional Directors, the Board specifies the mix ofqualifications, skills and experience it believes is desirable and selectsindividuals who will bring characteristics which are necessary to achievethis mix. To identify appropriate candidates, the assistance of externalconsultants is utilised. The Remuneration Committee undertakes thenomination function, and brings recommendations to the full Board. Apartfrom the statutory retirement age, no maximum age is prescribed forDirectors.

Responsibilities and OperationThe Board regularly reviews the operational and financial performance ofeach of the Group’s activities, considers strategic plans and initiatives,reviews plans and budgets, reviews and approves significant capitalinvestment proposals and establishes and monitors delegated authoritylevels for capital and financial commitments. It monitors and receivesadvice on areas of operational and financial risk and considers strategiesfor appropriate risk containment.The Pasminco Board meets monthly, but from time to time the Boardconvenes outside the scheduled monthly meetings to consider issues of special importance. Members of management, auditors, andrepresentatives from the Company’s advisers attend Board andCommittee meetings as appropriate. Three Committees of the Board -the Audit Committee, the Safety, Health and Environment Committee andthe Remuneration Committee - have been established to consider thesespecific areas in detail and to report to the full Board.

Independent AdviceProcedures are in place for Directors to obtain independent professionaladvice, at the entity’s expense, if appropriate after consultation with thechairman.

Audit CommitteeThe charter of the Audit Committee is to review significant financialinformation to ensure that it is complete, accurate, adequate and timelyand to advise the Board accordingly. It is comprised only of non-executive Directors.To achieve this, the Audit Committee:■ reviews annual and half-yearly financial reports;■ reviews the terms of engagement and scope of activity of the

external auditors;■ provides a direct line of communication between Directors and

both the internal and external auditors;■ reviews internal audit activities and reports in conjunction with

senior management;■ monitors the effectiveness of internal control systems;■ reviews the Group’s commercial practices and policies; and■ reviews the performance of the external and internal auditors and

their audit fees.

In addition to the non-executive Director members, Audit Committeemeetings are attended by members of management and the external andinternal auditors as appropriate. Current members of the Committee areDavid Brydon (Chairman), Andrew Guy and Tony Daniels.

Board Safety, Health and Environment CommitteeThe terms of reference of the Board Safety, Health and EnvironmentCommittee are to oversee the implementation of the Pasminco Safety,Health and Environment policies which are aimed at achieving highstandards of care in all activities in which the Group is engaged, from exploration through mining and smelting to the marketing of itsproducts.In particular, the Committee reviews with Management:■ the Safety, health and environmental risks associated with

Pasminco’s operations;■ the response to be adopted with respect to such risks;■ the implementation and audit of such responses; and■ the appropriate management structure in the light of the

responses adopted.The Board Safety, Health and Environment Committee members areDavid Macfarlane (Chairman), David Stewart and Geoff Allen. Members ofmanagement attend meetings as appropriate.

Remuneration CommitteeThe charter of the Remuneration Committee is to review with the ChiefExecutive the overall remuneration structure and policies for staffemployed by Pasminco, and to review and approve the remuneration ofthe senior executive staff and appointments at senior level.The Committee seeks to ensure that the remuneration policy structure isequitable, market competitive and consistent to assure the recruitmentand retention of staff with the capabilities, competence and experiencenecessary for the achievement of Pasminco’s business objectives.With advice from appropriate external consultants, the Committee reviewsand establishes the remuneration and other employment conditions of theChief Executive. In consultation with the Chief Executive, the Committeealso obtains the advice of qualified external consultants on appropriatelevels of remuneration for the non-executive Directors. The Committeeacts as the nomination committee in developing recommendations fornew Board appointments.The Committee consists solely of non-executive Directors and currentmembers are Mark Rayner (Chairman), David Brydon and DavidMacfarlane. The Chief Executive attends meetings when appropriate.

Risk Assessment and ManagementThe Board as a whole monitors and receives advice on areas ofoperational and financial risk and considers strategies to managebusiness risks. In turn the Audit Committee, the Safety, Health andEnvironment Committee and working committees of the Boardestablished for specific projects, regularly report back on the particularrisks associated with their respective areas of responsibility.

Ethical StandardsThe economic entity has adopted a vision and values statementdeveloped with the involvement of many employees throughout thegroup. The values which support the group’s vision include, through anadopted code of conduct, a commitment to respect the law and actaccordingly and to fair, honest and consistent dealings and behaviour.The code of conduct also deals with conflicts of interest, use of Companyassets and information, honesty and accountability.

43

Corporate Governance Statement

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 5

Pasminco Limited and its controlled entities for the year

ended 30 June 1998

Operating profit before abnormal items and income tax 2, 3 72.4 110.0 15.0 5.1

Abnormal items before income tax 4 30.3 (8.2) - -

Operating profit before income tax 102.7 101.8 15.0 5.1

Income tax charge attributable to operating profit 5 39.4 37.1 4.4 1.3

Operating profit after income tax attributable

to the members of Pasminco Limited 63.3 64.7 10.6 3.8

Retained profits/(Accumulated losses) at the

beginning of the financial year (105.5) (138.4) 177.7 205.7

Total available for appropriation (42.2) (73.7) 188.3 209.5

Dividends provided for or paid 15, 31 45.0 31.8 45.0 31.8

Retained profits/(Accumulated losses) at the

end of the financial year (87.2) (105.5) 143.3 177.7

The above Profit and Loss Account should be read

in conjunction with the accompanying notes.

44

Profit & LossNotes 1998 $m 1997 $m 1998 $m 1997 $m

(Consolidated) (Pasminco Limited)

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 44

Pasminco Limited and its controlled entities as at

30 June 1998

Current Assets

Cash at bank 58.9 20.0 - -

Receivables 6 194.3 200.4 527.4 397.9

Inventories 7 311.9 249.8 - -

Other 8 37.8 16.9 - -

Total current assets 602.9 487.1 527.4 397.9

Non-current Assets

Receivables 9 - 0.1 476.9 142.7

Investments 10 - 10.0 1,065.7 903.9

Property, plant and equipment 11(a) 766.7 711.7 - -

Capitalised exploration 11(b) 29.7 23.8 - -

Mine properties & development 11(c) 856.2 212.9 - -

Future income tax benefit 5(b) 102.9 102.7 - -

Other 12 53.0 21.0 - -

Total non-current assets 1,808.5 1,082.2 1,542.6 1,046.6

Total assets 2,411.4 1,569.3 2,070.0 1,444.5

Current Liabilities

Accounts payable 13 227.5 133.3 - 0.1

Borrowings 14 13.4 85.7 18.7 0.2

Provisions 15 166.1 103.1 45.0 31.8

Total current liabilities 407.0 322.1 63.7 32.1

Non-current Liabilities

Accounts payable 16 0.1 0.7 - -

Borrowings 17 215.4 175.8 315.2 357.5

Provisions 18 298.2 292.2 4.7 2.8

Total non-current liabilities 513.7 468.7 319.9 360.3

Total liabilities 920.7 790.8 383.6 392.4

Net assets 1,490.7 778.5 1,686.4 1,052.1

Shareholders’ Equity

Share capital 19 1,124.6 795.1 1,124.6 795.1

Reserves 20 453.3 88.9 418.5 79.3

Retained profits/(Accumulated losses) (87.2) (105.5) 143.3 177.7

Total shareholders’ equity 1,490.7 778.5 1,686.4 1,052.1

45

The above Balance Sheet should be read


Balance SheetNotes 1998 $m 1997 $m 1998 $m 1997 $m


117318.175P.M7.TEXT 21/9/98 4:21 PM Page 45

Pasminco Limited and its controlled entities for the year

ended 30 June 1998

Cash Flows from Operating Activities

Receipts from customers 1,377.2 1,305.7

Payments to suppliers and employees (1,092.3) (1,155.6)

Net income taxes (paid)/received (26.3) 0.9

Net cash provided by operating activities 34(b) 258.6 151.0

Cash Flows from Investing Activities

Investment in property, plant and equipment (430.6) (193.6)

Investment in Pasminco Century Mine Limited and Dugald River 10(b),34(c) (344.7) (10.0)

Payments for major maintenance and repairs 1(o) (14.7) (2.9)

Proceeds from sale of property, plant and equipment 8.6 7.5

Net cash used in investing activities (781.4) (199.0)

Cash Flows from Financing Activities

Net proceeds from share issues 668.7 0.9

Proceeds from borrowings 504.4 450.1

Repayments of borrowings (571.1) (381.9)

Net finance charges 3 (13.5) (17.1)

Dividends paid (31.8) (23.8)

Net cash derived from financing activities 556.7 28.2

Net increase/(decrease) in cash held 33.9 (19.8)

Cash at start of reporting period 21.1 39.3

Effects of exchange rate on foreign currency denominated cash balances 2.2 1.6

Cash at end of reporting period 1(r),34(a) 57.2 21.1

The above Statement of Cash Flows should be read


46

Statement of Cash FlowsNotes 1998 $m 1997 $m

(Consolidated)

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 46

47

1 Summary of Significant Accounting PoliciesThis general purpose financial report has been prepared inaccordance with Accounting Standards, other mandatoryprofessional reporting requirements (Urgent Issues Group Consensus Views) and the Corporations Law.

It is prepared in accordance with the historical cost convention,except for certain assets which, as noted, are at valuation. Theaccounting policies adopted are consistent with those of theprevious year except where noted. Comparative information isreclassified where appropriate to enhance comparability.

(a) Principles of ConsolidationThe consolidated accounts incorporate the assets and liabilities of all entities controlled by Pasminco Limited (the chief entity) as at 30June 1998, and the results of all controlled entities during the yearended 30 June 1998. All intercompany balances and transactionshave been eliminated.A complete list of Pasminco Limited’s controlled entities is set out innote 10(b). The economic entity’s interest in joint ventures has beenincluded in the economic entity’s accounts by taking up theeconomic entity’s share in each of the individual assets and liabilitiesof the joint ventures.

(b) Financial Instruments(i) Foreign Exchange

Refer note (c) Foreign Exchange(ii) Other

Gains and losses on derivatives used as hedges are accounted for on the same basis as the underlying physical exposures they are hedging. Accordingly, hedge gains and losses are included in the profit and loss account when the gains and losses arising on the related physical exposures are recognised in the profit and loss account. Gains and losses related to qualifying hedges of firm commitments or anticipated transactions are deferred andrecognised in income as adjustments to the underlying hedged transactions when they occur.

(c) Foreign ExchangeAmounts payable and receivable in foreign currencies have beentranslated into Australian currency at the rates of exchange ruling at balance date. Gains and losses on unhedged balances arerecognised in the result of the period. Costs arising from forwardexchange contracts are deferred and amortised over the term of the contracts. Costs and gains or losses arising on the hedgingcontracts relating to sales commitments are deferred and included in the measurement of the sales. All other transactions in foreigncurrencies during the year have been brought to account at theexchange rate ruling at the time of the transactions. Exchange gainsand losses on designated borrowings, effectively hedging net assetsof foreign operations, are taken to the foreign currency translationreserve on consolidation. The accounts of self sustaining overseascontrolled entities are reported in Australian currency by translatingassets and liabilities at the rates of exchange ruling at balance dateand the revenue and expense items at the average of rates rulingduring the year. Translation differences arising are included in theforeign currency translation reserve.

(d) TaxationTax effect accounting procedures are followed whereby income tax is regarded as an expense and is matched with the accounting profitafter allowing for permanent differences. Provisions for current andfuture income tax are calculated on earnings using the “liability”method. Certain items of expenditure, mainly depreciation and otherprovisions, may be deductible for income tax purposes in yearsdifferent from those in which they are charged against earnings. Theamount of the taxation difference due to such timing differences isclassified as a deferred tax liability or future tax benefit. It is economicentity policy not to carry forward any part of future tax assets, arisingfrom tax losses, including those arising as capital losses, unless theirrecovery is virtually certain through the economic entity’s ability toderive future assessable income or capital gains sufficient to enable

the benefits to be realised, and for the economic entity to continueto comply with deductibility conditions imposed by law. Dividendwithholding tax is provided on the economic entity’s portion ofearnings of certain foreign subsidiaries where it is intended torepatriate those earnings to Australia as dividends.

(e) InventoriesStocks of ores, metals, concentrates and work in progress arevalued at the lower of cost and net realisable value. Cost includesexpenditure incurred in acquiring and bringing the stock to itsexisting condition and location and includes an appropriate portionof fixed and variable overhead expenses, including depreciation.Stores are valued at cost with due allowance for obsolescence. In each case, cost is determined on an average cost basis.

(f) InvestmentsShares in companies held as long-term investments, includingcontrolled entities, have been stated at Directors’ valuation or cost.Controlled entities are accounted for in the consolidated accountsas set out in note 1(a). Dividend income is brought to account as it becomes receivable. Interest income is brought to account as itaccrues on a daily basis.

(g) LeasesLeases of plant and equipment under which the economic entityassumes substantially all the risks and benefits of ownership areclassified as finance leases, whilst other leases are classified asoperating leases. Finance leases are capitalised with a lease assetand liability equal to the present value of the minimum leasepayments being recorded at the inception of the lease. Capitalisedlease assets are amortised on a straight-line basis to their residualvalue over the term of the lease, or where it is likely that theeconomic entity will obtain ownership of the asset, the life of theasset. Lease payments made under operating leases are chargedagainst profits in equal instalments over the accounting periodscovered by the lease term.

(h) Property, Plant and EquipmentProperty, plant and equipment are carried at cost or at Directors’valuation. Any surplus on revaluation is credited directly to theasset revaluation reserve and excluded from the profit and lossaccount. All items of property, plant and equipment, with theexception of freehold land, and certain mine freeholds andleaseholds, are depreciated over their estimated remaining useful lives. Depreciation rates are reviewed regularly and reassessed inlight of commercial and technological developments. The expecteduseful lives are as follows:Buildings 40 yearsPlant and Equipment 5-15 years

Capital spares purchased for particular plant are capitalised anddepreciated on the same basis as the plant to which they relate.

(i) Exploration ExpenditureExpenditure on exploration and evaluation of individual projects iswritten off against earnings as incurred except that, when a projectreaches the stage where such expenditure is considered to becapable of being recouped through development or sale, allsubsequent expenditures are capitalised and amortised againstproduction from the area once mining commences.

(j) Research & Development ExpenditureExpenditure on research and development is written off againstearnings as incurred, except that, when a project reaches the stagewhere such expenditure is considered capable of being recoupedthrough development or sale, all subsequent expenditures arecapitalised. Unamortised costs are reviewed at each balance dateto determine the amount (if any) that is no longer recoverable andany amount so identified is written off.

Notes to the Financial Statements

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 47

48

1. Summary of Significant Accounting Policies (continued)

(k) Mine DevelopmentMine development expenditure for the initial establishment of accessto mineral reserves, together with capitalised exploration, evaluationand commissioning expenditure, and financing costs on borrowingsfor a project prior to the commencement date of commercialproduction, are capitalised to the extent that the expenditure resultsin significant future benefits. These amounts are amortised over thecurrent estimated economic reserve of the mine on a unit productionoutput basis. This calculation includes consideration of appropriateestimates of the future costs to be incurred in developing theestimated economic reserve, which includes the proven andprobable reserve, plus an estimate of the economic resource withinthe inferred category.

(l) Recoverable Amount of Non-Current AssetsThe values of assets are reviewed on an ongoing basis, and wherenecessary the carrying amount of non-current assets are revalued to their recoverable amount. Where net cash flows are derived from a group of assets working together, recoverable amount isdetermined on the basis of the relevant group of assets. Theexpected net cash flows included in determining recoverableamounts of non-current assets are discounted to their present values using a market-determined, risk adjusted discount rate.

(m) Employee BenefitsProvision is made for expected benefits accruing to past and presentemployees in relation to such items as annual leave, long serviceleave, sick leave, medical benefits and workers’ compensation.These provisions are accrued on at least the basis of statutory orcontractual obligations. A number of employee superannuation fundsexist which provide benefits for employees and their dependents onretirement, disability, resignation, retrenchment or death(refer note 29). The value of the employee share scheme describedin note 35 is not being charged as an employee entitlement.

(n) Restoration Expenditure(i) Mining Operations

Provision is made for the anticipated costs of future restoration and rehabilitation of areas from which natural resources have been extracted. The provision is recognised on a gradual basis over the life of the mine as production occurs. The provision includes costs associated with reclamation, plant closure, waste site closure, monitoring, demolition and decontamination. These costs have been determined on an undiscounted current cost basis with reference to current legal requirements and current technology. The restoration provision is separated into current (estimated costs arising within 12 months) and non-current components. Any change in the provision estimate is dealt with on a prospective basis. The extent of the restoration provision is,in part, dependent upon the remaining life of each mine as calculated by reference to the economic reserve.

(ii) Smelting Operations Provision is made for the anticipated costs of future restoration and rehabilitation of smelting sites to the extent that a legal obligation exists and that the anticipated expenditure is not capital in nature. The provision includes costs associated with reclamation, monitoring, water purification and coverage and permanent storage of historical residues. The provision is based upon current costs and has been determined on an undiscounted basis with reference to current legal framework and current technology. Any change in the provision estimate is dealt with on a prospective basis. The restoration provision is separated into current (estimated costs arising within 12 months)and non-current components.

(o) Major Maintenance and Repairs ExpenditureThe costs of major overhauls of operating plant are considered toconstitute increases in assets. Accordingly, the accounting treatmentadopted is to recognise overhaul expenditure as an asset to beamortised over the period in which benefits are expected to arise(typically 3-4 years).

(p) Sales RevenueSales revenue is stated on a gross basis, with freight and realisationexpenses included in the cost of sales. Sales revenue is stated netof the impact of gains and losses arising on foreign exchangehedging contracts relating to sales commitments. Sales of metals,concentrates, ores and by-products are recognised when theproduct passes out of the physical control of the selling company to external customers pursuant to enforceable sales contracts. As the final value of concentrate sales can only be determined fromweights, assays, prices and exchange rates applying after ashipment has arrived at its destination, sales of concentrates arerecorded at estimated values pursuant to contract terms, withadjustments being subsequently recognised in the period when finalvalues are determined.

(q) Borrowing CostsBorrowing costs are recognised as expenses in the period in whichthey are incurred, except where they are included in the costs ofqualifying assets. To the extent that additional funds have beenborrowed for the purpose of, and are associated with the qualifyingasset, the interest rate used is that applicable to those funds. Theinterest rate for any funds utilised in excess of specified borrowingsis the weighted average for all other borrowings.Borrowing costs include:

- interest on short-term and long-term borrowings- amortisation of discounts or premiums relating to borrowings- amortisation of ancillary costs incurred in connection with the - arrangement of borrowings; and - exchange differences arising from foreign currency borrowings.

(r) CashFor the purposes of the statement of cash flows, cash includescash on hand and deposits at call which are readily convertible tocash and are subject to an insignificant risk of changes in value, netof outstanding bank overdrafts.

(s) Trade and Other CreditorsThese amounts represent liabilities for goods and services providedto the economic entity prior to the end of the financial year andwhich are unpaid. The amounts are unsecured and are usually paidwithin 30 days of recognition.

(t) Trade ReceivablesTrade receivables are carried at nominal amounts due less anyprovision for doubtful debts. A provision for doubtful debts isrecognised when collection of the full nominal amount is no longer probable.

(u) Basis of Calculation of Ratios andStatistical Information

(i) Earnings per shareThe calculation of earnings per share is based on the operating profit after income tax and abnormal items but before extraordinary items and the weighted average number of ordinary shares on issue during the financial year.

(ii) Return on Shareholders’ EquityThis measures the relationship of profit after tax toshareholders’ equity, expressed as a percentage.

(iii) Interest CoverThis measures the relationship of net cash provided by operating activities to net finance charges.

(iv) Dividend CoverThis measures the relationship of operating profit after tax and before extraordinary items, to dividends paid or payable in respect of the same period.

(v) Net Debt to Net Debt & Equity RatioThis ratio is expressed as the proportion of total net debt to total shareholders’ equity and net debt. Total net debt comprises all borrowings and overdrafts less cash andshort-term deposits.


117318.175P.M7.TEXT 21/9/98 4:21 PM Page 48

2 Operating Revenue

(a) Sales revenue (note 1(p)) 1,370.1 1,352.8 - -

(b) Other revenue

(i) Dividends received (note 3) - - - 0.5

(ii) Interest received (note 3) 7.5 3.3 17.8 23.9

(iii) Proceeds on sales of non-current assets 8.6 7.5 - -

(iv) Other 8.5 9.4 3.9 -

1,394.7 1,373.0 21.7 24.4

3 Operating Profit

The operating profit before abnormal items and income tax is

arrived at after charging and crediting the following specific items:

Charges

Amortisation -

(a) Deferred expenditure 6.1 3.1 - -

(b) Mine development 31.1 30.2 - -

37.2 33.3 - -

Depreciation of property, plant and equipment 97.0 88.2 - -

Less: Depreciation capitalised 2.5 - - -

Depreciation expensed 94.5 88.2 - -

Borrowing costs -

(a) Interest paid/payable -

(i) Controlled entities - - 9.0 20.0

(ii) Other persons and/or corporations 20.8 14.7 - -

(b) Other finance charges 3.2 5.7 - -

Total borrowing costs 24.0 20.4 9.0 20.0

Less: borrowing costs capitalised 3.0 - 3.0 -

Borrowing costs expensed 21.0 20.4 6.0 20.0

Rent expense relating to operating leases 14.9 12.7 - -

Exploration costs 21.2 22.7 - -

Research and development costs 7.7 10.8 - -

Government royalties 2.0 1.6 - -

Superannuation 16.2 15.7 - -

Net foreign exchange loss 11.5 0.4 - 0.4

Net loss on disposal of property, plant and equipment 0.8 - - -

Provisions -

(a) Employee entitlements 26.2 22.7 - -

(b) Workers’ compensation 19.4 19.4 - -

(c) Restoration 1.1 0.9 - -

(d) Sundry 0.7 0.1 - -

47.4 43.1 - -

Credits

Dividends received/receivable -

Controlled entities - - - 0.5

Interest received/receivable -

(a) Controlled entities - - 17.3 23.9

(b) Other persons and/or corporations 7.5 3.3 0.5 -

Net foreign exchange gain - - 0.3 -

Net bad and doubtful trade debts (note 6(a)) 0.5 0.4 - -

Net profit on disposal of property, plant and equipment - 2.2 - -

Profit on share buy back - Controlled entity - - 2.8 -

49

Notes to the Financial Statements1998 $m 1997 $m 1998 $m 1997 $m


117318.175P.M7.TEXT 21/9/98 4:21 PM Page 49

4 Abnormal Items

The following abnormal item was credited / (charged)

in arriving at the operating profit after tax:

Credit

Release of environmental provision (a) 30.3 - - -

Charge

Provision for retired staff medical benefits (b) - (8.2) - -

Abnormal items before income tax 30.3 (8.2) - -

Applicable income tax (charge) /credit (6.6) 2.9 - -

Abnormal items after income tax 23.7 (5.3) - -

(a) In the light of progress to date with Budel Zink’s environmental program, Pasminco has reduced the provision in agreement with the Dutch

Authorities. The remaining environmental provision is sufficient to complete the program previously agreed with the Dutch Authorities.

(b) On formation, Pasminco took over the obligations for a Retired Staff Medical Benefits Scheme relating to the sites previously part of the

Rio Tinto Limited Group (then CRA Limited). Eligibility of this scheme was restricted to employees retiring before 1987 ie before Pasminco’s

formation. In prior years Pasminco expensed any payments as incurred. An actuarial review was used to establish the necessary

provision for future expenditure.

5 Income Tax 1998 $m 1997 $m 1998 $m 1997 $m


(a) The prima facie tax payable on the operating profit differs

from the income tax provided in the accounts and is reconciled

as follows:

Operating profit 102.7 101.8 15.0 5.1

Prima facie tax payable at 36% 37.0 36.7 5.4 1.8

Taxation charge on profit for the year 39.4 37.1 4.4 1.3

Variation from prima facie tax 2.4 0.4 (1.0) (0.5)

The following major items caused the charge for income tax to vary

from the prima facie tax payable on reported profit:

Permanent differences –

Exempt income - (2.3) - (1.5)

Development allowance (0.5) (6.4) - -

Research and development allowance (2.5) (2.9) - -

Non-allowable depreciation and amortisation 19.2 14.5 - -

Non-assessable capital profit - (0.8) (2.8) -

Non-allowable demolition expenditure 1.4 1.2 - -

Non-assessable component of environmental provision write-back (11.4) - - -

Sundry (0.6) 0.5 - -

Total permanent differences 5.6 3.8 (2.8) (1.5)

Tax effect of these differences at 36% 2.0 1.4 (1.0) (0.5)

Tax on overseas income at lower rates (1.0) (0.6) - -

Overseas tax losses not brought to account 2.4 2.3 - -

Under/(over) provision for previous years (1.0) (2.7) - -

Consequent increase/(decrease) in tax charge 2.4 0.4 (1.0) (0.5)

50



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5 Income tax (continued)

(b) Analysis of future income tax benefits:

Future income tax benefits arising from tax losses of

controlled entities which have been brought to

account amount to: 102.9 102.5 - -

Future income tax benefits arising from timing

differences amount to: - 0.2 - -

102.9 102.7 - -

Future income tax benefits arising from tax losses of controlled

entities which have been offset against the

provision for deferred income tax amount to: 34.2 30.0 - -

(c) Deferred income tax liability arising from timing differences

net of the offset of future income tax benefit, amounts to: 96.3 66.6 4.7 2.8

(d) The Directors’ estimate that the potential future income tax

benefit at 30 June 1998, in respect of tax losses not

brought to account is: 13.7 8.6 - -

The benefit of these tax losses will only be obtained if:

(i) the economic entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions

for the losses to be realised;

(ii) the economic entity continues to comply with the conditions for deductibility imposed by tax legislation; and

(iii) no changes in tax legislation adversely affect the economic entity in realising the benefit from the deductions for the losses.

51



117318.175P.M7.TEXT 21/9/98 4:21 PM Page 51

6 Current Assets - Receivables

Trade debtors 181.9 189.2 - -

Less provision for doubtful debts (a) 0.6 1.2 - -

181.3 188.0 - -

Other debtors 13.0 12.4 - -

Trade debts receivable from controlled entities - - 527.4 397.9

194.3 200.4 527.4 397.9

(a) Reconciliation of provision for doubtful debts

Opening balance 1.2 1.6 - -

Doubtful debts previously provided for written back during the year (0.8) (0.7) - -

Bad and doubtful debts provided for during the year 0.3 0.3 - -

Bad debts written off against the provision (0.1) - - -

Closing balance 0.6 1.2 - -

7 Current Assets - Inventories

Raw materials and stores (at cost) 84.8 78.7 - -

Less provision for diminution in value 1.0 1.1 - -

83.8 77.6 - -

Work in progress

At cost 129.5 78.3 - -

At net realisable value 10.3 18.5 - -

139.8 96.8 - -

Finished goods

At cost 88.2 73.9 - -

At net realisable value 0.1 1.5 - -

88.3 75.4 - -

311.9 249.8 - -

8 Current Assets - Other

Short-term deposits 3.4 2.4 - -

Prepayments 12.9 14.5 - -

Deferred net option premiums 12.2 - - -

Land held for resale at written down value (a) 7.3 - - -

Property, plant and equipment held for resale at written down value (b) 2.0 - - -

37.8 16.9 - -

(a) Land held for resale

Cost of acquisition of the land 2.5 2.5 - -

Costs incurred in developing the land which have been recognised

as part of its carrying value 6.4 6.4 - -

Other costs incurred which have been recognised as part of its

carrying value

Pasminco Group formation adjustment 1989 5.1 5.1 - -

Provision for loss on sale (10.6) (8.5) - -

Exchange rate adjustment 3.9 0.5 - -

Carrying value at 30 June 7.3 6.0 - -

In the previous year, land held for resale was included as a

non-current asset under freehold and leasehold land and buildings.

(b) Property, plant and equipment held for resale

At cost 3.5 - - -

Accumulated depreciation (1.5) - - -

Carrying value at 30 June 2.0 - - -

52



117318.175P.M7.TEXT 21/9/98 4:21 PM Page 52

9 Non-current Assets - Receivables

Loans receivable from controlled entities - - 476.9 142.7

Other receivables - 0.1 - -

- 0.1 476.9 142.7

10 Non-current Assets - Investments

(a) The investments include:

Unlisted investments

Shares in controlled entities (note 10(c)) - - 1,065.7 893.9

Investment in Century Zinc Limited (note 10(b)) - 10.0 - 10.0

- 10.0 1,065.7 903.9

(b) On 9 January 1997, the Group agreed to purchase from the Rio Tinto Group (formally the CRA Group) both Century Zinc Limited and the

Rio Tinto Group’s interest in the Dugald River joint venture. A deposit of $10 million was paid with the balance of $335 million due on

settllement. Settlement was subject to the issue of valid mining leases, pipeline leases and port leases.

On 24 September 1997, Pasminco settled with Rio Tinto the 100% purchase of Century Zinc Limited for $322.5 million and Dugald River joint

venture for $22.5 million. Century Zinc Limited has been renamed Pasminco Century Mine Limited. Details of the acquisition of Pasminco

Century Limited are as follows:

Fair Value of Identifiable Net Assets of Controlled Entity Acquired $m

Sundry debtors 0.3

Prepayments 0.2

Land and buildings 5.1

Plant, machinery & equipment 17.3

Mine properties & development 345.9

Provisions (2.4)

Net deferred tax balances (43.8)

Creditors & accruals (0.1)

322.5

Net cash effect

Cash consideration paid for purchase of shares 163.8

Cash consideration paid for settlement of loan 158.7

322.5

53



117318.175P.M7.TEXT 21/9/98 4:21 PM Page 53

10 Non-current Assets - Investments (continued)

(c) Unquoted investments of the chief entity in controlled entities which are all wholly owned comprise the following:

Country of Investment of Investment ofNotes Incorporation Pasminco Limited Immediate entity

1998 1997 1998 1997 $thousands $thousands

American Zinc Company B USA 22,165 22,165

Budel Management BV A Netherlands 32 27

Budel Zink BV A Netherlands 161 137

Budelco BV A Netherlands 8 7

Buzifac BV A Netherlands 32 27

Buzipon BV A Netherlands 32 27

Buzisur BV A Netherlands 32 27

North-West Acid Pty Limited D Australia - -

Pasminco Australia Limited F Australia 354,444 354,444

Pasminco Broken Hill Mine Pty Limited F Australia 105,027 105,027 ($110 only) ($110 only)

Pasminco Century Mine Limited C,F Australia 172,985 n/a

Pasminco Cockle Creek Smelter Pty Limited F Australia 151,497 151,497

Pasminco Europe Limited A UK 62,400 62,400

Pasminco Europe (ISC Alloys) Limited A UK 699 559

Pasminco Europe (Mazak) Limited A UK 3,058 2,447

Pasminco Europe (Smelting) Limited A UK 23,719 18,975

Pasminco Exploration (Canada) Limited B,E Canada ($1 only) ($1 only)

Pasminco Exploration & Mining BV A,G Netherlands 32 n/a

Pasminco Exploration Private Limited A,G India 16 n/a

Pasminco Europe (UK) BV A UK 28,377 28,377

Pasminco Finance Limited F Australia 20,000 20,000

Pasminco Incorporated B USA 41,467 33,727

Pasminco Insurance Private Limited A Singapore 1,935 1,935

Pasminco International Pty Limited C Australia 42,077 43,200

Pasminco International (Holdings) Pty Limited Australia 40 40

Pasminco Metals Pty Limited F Australia 2 2

Pasminco Netherlands (Holdings) BV A Netherlands 48 43

Pasminco Pacific Pty Limited Australia 23,101 23,101

Pasminco Pakistan (Private) Limited A Pakistan ($362 only) ($308 only)

Pasminco Port Pirie Smelter Pty Limited F Australia 129,265 129,265

Pasminco Superannuation Pty Limited Australia ($2 only) ($2 only)

Pasminco UK (Holdings) Limited A UK 13 13

Pasminco UK Limited A UK 17 13

Pasminco Zinc Limited B,C Cayman Islands 249,203 48,251

The Emu Bay Railway Company Limited F Australia 2,959 2,959

Warmframe Limited A,C UK 249,203 48,251

1,065,732 893,870

(A) These controlled entities had other member firms of Ernst & Young International acting as their auditors.

(B) The accounts of these controlled entities have been reviewed by the auditors for inclusion in the consolidated accounts as a statutory audit

is not required in the country of incorporation.

54


117318.175P.M7.TEXT 21/9/98 4:21 PM Page 54

(C) Acquisition of Controlled Entities and increases in Investments in Controlled Entities(a) On 24 September 1997, Pasminco Limited acquired 100% of the issued capital of Century Zinc Limited, subsequently renamed

Pasminco Century Mine Limited, for $322.5 million (refer 10 (b)). The results of this entity have been included in the Group since this date.

(b) On 23 October 1997, Pasminco International Pty Limited bought back 260,000 $1 ordinary shares held by Pasminco Limited at $15.12 per share.

(c) On 3 September 1997, Pasminco Europe (UK) BV, a wholly owned controlled entity of the Pasminco Group, subscribed for 68 million 6% cumulative preference shares of 1 GBP each in Warmframe Limited.

(d) On 3 September 1997, Warmframe Limited, a wholly owned controlled entity of the Pasminco Group, subscribed for 68 million ordinary shares of 1 GBP each in Pasminco Zinc Limited.

(D) This controlled entity was deregistered during the year.(E) This controlled entity is currently in the process of being liquidated(F) Pursuant to Class Order 95/1530, relief has been granted to these identified controlled entities of the parent entity from the Corporations

Law requirements for preparation, audit and publication of accounts.As a condition of the Class Order, the parent entity and the identified controlled entities entered into a deed of cross guarantee on23 April 1997. Under the deed of cross guarantee, all of the named companies guarantee the debts of the other named companies. This guarantee is conditional upon the winding up of any companies which are a party to the deed.The aggregate assets and liabilities of the companies subject to the deed as at 30 June 1998, and the aggregate result of these companies for the year then ended (after eliminating inter-company investments and other inter-company transactions) are as follows:

1998 $m 1997 $mAssets 2,209.7 1,386.4Liabilities 667.5 582.2Profit after income tax (13.0) 38.5

(G) This controlled entity was incorporated during the year.

Movements in the value of the investment of the immediate entity represent exchange rate fluctuations except where detailed in (C) and (G) above.Rounding to the nearest thousand dollars has been adopted except where shown.

11 Non-current Assets - Property, Plant and Equipment 1998 $m 1997 $m 1998 $m 1997 $m


Property, plant and equipment are included in the accounts on the

following bases:

(a) Freehold and leasehold land and buildings

At cost 51.1 50.5 - -

Less: accumulated depreciation 14.3 10.3 - -

36.8 40.2 - -

At Directors’ valuation 1979 4.4 4.5 - -


2.3 2.5 - -

Total freehold and leasehold land and buildings 39.1 42.7 - -

Construction in progress (at cost) 113.9 89.9 - -

Plant and equipment

At cost 1,292.3 1,179.0 - -


596.7 556.3 - -



7.0 10.0 - -



10.0 12.8 - -

Total plant and equipment 766.7 711.7 - -

(b) Capitalised exploration and evaluation expenditure (d) 29.7 23.8 - -

(c) Mine properties and development

At cost 1,084.8 410.4 - -


841.6 197.1 - -



14.6 15.8 - -

Total mine properties and development 856.2 212.9 - -

Total property, plant and equipment 1,652.6 948.4 - -

55


117318.175P.M7.TEXT 21/9/98 4:21 PM Page 55

11 Non-current assets

- Property, Plant and Equipment (continued)

(d) Capitalised Expenditure in the Exploration

and Evaluation Phase

Cost brought forward 23.8 15.1 - -

Expenditure incurred during current year 27.1 31.4 - -

Less expenditure written off during current year 21.2 22.7 - -

Cost carried forward 29.7 23.8 - -

An independent valuation of the Australian freehold land and buildings of the Pasminco Group was undertaken by AT Cocks and Partners

Pty. Ltd. during the previous year. The freehold land and buildings held overseas were subject to a Directors’ valuation. All valuations are

estimates of the amounts for which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing

seller in an arm’s length transaction at the valuation date.

The valuation of freehold land and buildings for the Pasminco Group is $53.9M (1997 - $46.7M). This compares with the net written down

value of $48.2M shown in the balance sheet (1997 - $42.7M). It is the policy of the economic entity to ensure an independent valuation

and/or a Directors’ valuation of freehold land and buildings is undertaken at least once every three financial years.

The market value of the economic entity’s operations is subject to cyclical variation because of changes in internationally determined

metal prices and exchange rates. It is the economic entity’s policy to assess the recoverable amount of non-current assets using long-term

metal price and exchange rate parameters. No assets are carried in excess of their recoverable amount.

This basis of valuation is consistent with the existing use of the assets to the business as a going concern and does not purport to show

the current market value of assets. Where this assessment indicates a permanent loss in value of the assets of an operation, an appropriate

writedown is made.

12 Non-Current Assets - Other

Net deferred expenditure (note 1(o)) 20.0 10.1 - -

Deferred foreign exchange hedge loss (note 1(c)) 33.0 10.9 - -

53.0 21.0 - -

13 Current Liabilities - Accounts Payable

Trade creditors 225.6 131.5 - 0.1

Other creditors 1.9 1.8 - -

227.5 133.3 - 0.1

56



117318.175P.M7.TEXT 21/9/98 4:21 PM Page 56

14 Current Liabilities - Borrowings

Bank overdrafts 5.1 1.3 - -

Revolving bank credits 8.3 17.7 - -

Transferable loan certificates - 66.7 - -

Short-term borrowings - controlled entities - - 18.7 0.2

13.4 85.7 18.7 0.2

15 Current Liabilities - Provisions

Taxation 31.3 - - -

Employee benefits 41.1 39.1 - -

Restoration - mining operations 0.4 0.3 - -

Restoration - smelting operations 27.5 14.4 - -

Workers’ compensation 17.8 16.4 - -

Dividends 45.0 31.8 45.0 31.8

Sundry 3.0 1.1 - -

166.1 103.1 45.0 31.8

16 Non-current Liabilities - Accounts Payable

Sundry creditors 0.1 0.7 - -

17 Non-current Liabilities - Borrowings

Transferable loan certificates 133.5 108.7 - -

Long-term borrowings - controlled entities - - 315.2 357.5

Synthetic loans - 0.4 - -


215.4 175.8 315.2 357.5

Summary of economic entity net debt position

(All amounts are unsecured)

The economic entity’s net debt position

may be summarised as follows:

Bank overdrafts 5.1 1.3 - -


Synthetic loans - 0.4 - -

Transferable loan certificates 133.5 175.4 - -

Gross debt 228.8 261.5 - -

Less: Cash & short term deposits 62.3 22.4 - -

Economic entity net debt at 30 June 166.5 239.1 - -

Being: Current 13.4 85.7 - -

Non-current 215.4 175.8 - -

Less: Cash & short term deposits 62.3 22.4 - -

Economic entity net debt at 30 June 166.5 239.1 - -

57



117318.175P.M7.TEXT 21/9/98 4:21 PM Page 57

18 Non-current Liabilities - Provision

Employee benefits 24.8 24.7 - -

Deferred income tax 96.3 66.6 4.7 2.8

Restoration - mining operations 14.2 10.4 - -

Restoration - smelting operations 137.7 168.9 - -

Workers’ compensation 25.2 21.6 - -

298.2 292.2 4.7 2.8

19 Share Capital - Pasminco Limited

(a) Authorised 2,000,000,000 ordinary shares of $1 each 2,000.0 2,000.0 2,000.0 2,000.0

(b) Issued and paid up 1,124,630,499 (1997-795,086,120)

ordinary shares of $1 each fully paid 1,124.6 795.1 1,124.6 795.1

(c) Employee share scheme

On 14 November 1997, 11,924,000 options at an exercise price of $1.84 were issued over ordinary $1.00 shares (refer note 35).

(d) Shares issued during the year

To assist in the financing of the Pasminco Century Mine Limited and Dugald River acquisition and the development of the Century mine

the following share issues took place:

On 25 September 1997, a global offering to institutions of 79,500,000 fully paid ordinary shares was made at $2.30 per share.

On 24 September 1997, the company announced a renounceable rights issue of new shares on a 2 for 7 basis at a price of $2.00 per

share. On 14 November 1997, the company announced that 249,909,879 ordinary shares were issued as a result of the rights issue.

During the year, 134,500 share options were exercised by Budel Zink BV employees and employees leaving the Group and in accordance

with the special provisions of the scheme.

20 Reserves

Share premium account 418.5 79.3 418.5 79.3

Capital reserve 4.6 4.6 - -

Foreign currency translation 30.2 5.0 - -

453.3 88.9 418.5 79.3

Movements in reserves:

Share premium account

Balance at the beginning of the financial year 79.3 78.9 79.3 78.9

Premiums on shares issued during the year:

Share placement 103.4 - 103.4 -

Rights issue 249.9 - 249.9 -

Pasminco employee option plan 0.1 0.4 0.1 0.4

Share issue expenses (14.2) - (14.2) -

Balance at the end of the financial year 418.5 79.3 418.5 79.3

Foreign currency translation

Balance at the beginning of the financial year 5.0 10.9 - -

Gain/(loss) on translation of overseas controlled entities 25.2 (5.9) - -

Balance at the end of the financial year 30.2 5.0 - -

58



117318.175P.M7.TEXT 21/9/98 4:21 PM Page 58

21 Receivables and Payables not Effectively Hedged

(a) Current foreign exchange exposures – economic entity,

at 30 June. Of the $602.9 million current assets

(1997 – $487.1 million) and $407.0 million current liabilities

(1997 – $322.1 million) disclosed in the balance sheet,

receivables and payables denominated in foreign currencies

not effectively hedged are:

(A$ equivalents)

(i) Current assets

UK pounds 1.8 3.1 - -

US dollars 5.2 13.1 - -

Other 29.6 24.4 - -

36.6 40.6 - -

(ii) Current liabilities

UK pounds - 0.3 - -

US dollars 3.6 14.8 - -

Other 4.2 2.7 - -

7.8 17.8 - -

(iii) Net current assets/

(current liabilities)

UK pounds 1.8 2.8 - -

US dollars 1.6 (1.7) - -

Other 25.4 21.7 - -

28.8 22.8 - -

(b) Non-current foreign exchange exposure – economic entity, at 30 June.

There are no material non-current foreign exchange exposures in the economic entity as at 30 June 1998. Hedging

of the loans denominated in US dollars is undertaken by:

(i) Utilising the natural hedge afforded by the economic entity’s US dollar denominated net monetary receivables.

(ii) Utilising the large US dollar revenue stream arising from metal and concentrate sales.

(iii) Hedging of loan repayments utilising currency options (refer note 22).

22 Financial Instruments

Derivatives, including Off-balance Sheet Risk

Hedging is undertaken in order to avoid or minimise possible adverse financial or cash flow effects of movements in exchange rates

and commodity prices. The economic entity manages these exposures using a comprehensive set of policies and procedures approved

by the Board of Directors. Financial risk is managed centrally, and no speculative trading has taken place throughout the current year.

Instruments used by the economic entity to hedge natural exposures to exchange rates and commodity prices include forward foreign

exchange contracts, currency options and metals futures. Accounting for these instruments is outlined in notes 1(b) and 1(c).

(a) Interest Rate Risk Management

The economic entity does not have any exposure to fixed interest rates with all interest rates on borrowings and cash investments being

transacted at the market rate. The current hedging policy in relation to interest rate risk is for the economic entity to be exposed to the

market rate.

The weighted average interest rate received on financial assets and paid on financial liabilities was as follows:-

Financial Assets Average Interest Rate %

Cash and cash equivalents 4.9

Financial Liabilities

Borrowings 6.4

59



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22 Financial Instruments (continued)

(b) Foreign Exchange Risk Management

The economic entity enters into foreign exchange contracts and currency options to hedge capital obligations and expenses and

revenues denominated in foreign currencies. The following table sets out at balance date the outstanding foreign currency contracts

and foreign currency options, the weighted average contracted exchange rates and settlement dates of outstanding contracts:-

Forward Foreign Exchange Contracts Maturity date of transactions 6 month ending

Average 31/12/98 30/06/99 31/12/99 TotalContract price A$m A$m A$m A$m

USD/NLG forward 2.03 27.9 - - 27.9

USD/AUD forward 0.7333 279.6 259.1 145.9 684.6

AUD/GBP forward 0.3636 2.8 - - 2.8

USD/European currencies various 30.2 13.2 9.4 52.8

Currency Options Maturity date of transactions 12 months ending

30/06/99 30/06/00 30/06/01 30/06/02 Total

A$m A$m A$m A$m A$m

AUD/USD purchased 265.0 410.6 546.4 185.3 1,407.3

Average rate 0.6793 0.6820 0.6589 0.6475

AUD/USD sold 300.8 464.8 614.0 208.6 1,588.2

Average rate 0.5984 0.6024 0.5863 0.5753

This listing excludes the internal forward exchange contracts held between controlled entities.

(c) Commodity Price Risk Management

The economic entity is exposed to commodity price volatility on commodity sales made by mines and smelters and raw materials

purchased by the smelters. The economic entity enters into futures contracts to hedge commodity exposures with the objective of

obtaining the LME commodity price existing at the date of the transaction.

The following outlines metals futures contracts entered into as at 30 June 1998:-

Metals Futures Contracts Maturity date of transactions 6 months ending

Average 31/12/98 30/06/99 31/12/99 30/06/2000 TotalContract price A$m A$m A$m A$m A$m

US $ per tonne

(i) Zinc

Contracts purchased 1,170 105.8 33.2 15.8 3.1 157.9

Contracts sold 1,099 (1.9) (19.8) - - (21.7)

Net position 103.9 13.4 15.8 3.1 136.2

(ii) Lead

Contracts sold 533 (3.5) - - - (3.5)

(iii) Silver US $ per ounce

Contracts purchased 5.38 0.7 - - - 0.7

(d) Credit Risk

Credit risk represents the loss that would be recognised if the counterparties to financial instruments fail to perform as contracted.

On Balance Sheet

The credit risk on financial assets of the economic entity which have been recognised on the balance sheet is generally the carrying

amount, net of any provisions for doubtful debts. The economic entity minimises concentration of credit risk by undertaking transactions

with a large numbers of customers in various countries. The economic entity is not materially exposed to any individual customer.

Credit risk in trade receivables is also managed in the following ways:

- payment terms are generally 30 days;

- a regular risk assessment process is undertaken with credit limits imposed on customers;

- export sales are predominantly covered by a letter of credit with approved financial institutions; and

- credit insurance is obtained for export sales debtors on open terms.

Off Balance Sheet

Credit risk arising from dealings in financial instruments is controlled by a strict policy of credit approvals, limits and monitoring procedures.

The economic entity has no significant concentration of credit risk with any single counterparty. Credit exposure of foreign currency and

commodity derivatives is represented by the net fair value of the contracts, as disclosed.

60


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61

22 Financial Instruments (continued)

(e) Net Fair Value

The following methods and assumptions were used to estimate the net fair values.

Cash & Cash Equivalents, Debtors, Creditors, Dividends Payable and Short-term Borrowings

The carrying amounts of these financial instruments approximate net fair value because of their short maturity.

Long-term Borrowings

The carrying amounts of these financial instruments approximate net fair value because interest is charged at the current prevailing market rate.

Foreign Currency Forwards and Commodity Hedging Contracts

Carrying amounts for commodity and foreign currency futures and forwards are based on the revaluation of open contracts at 30 June

1998 against spot rates at that date. The fair value disclosed represents the same contracts on a mark-to-market basis using forward

rates and prices.

Options

For purchased call options, the fair value disclosed represents the difference between the forward rate and the strike price where

the option is in the money. Where the option is not in the money, the fair value is nil.

For sold put options, the fair value disclosed represents the difference between the forward rate and the strike price where

the option is out of the money. Where the option is not out of the money, the fair value is nil.

The net fair value of unrecognised financial instruments at balance date are as follows:

Off Balance Sheet $m

Foreign currency forward contracts (129.0)

Currency options (2.8)

Metals futures contracts (17.8)

Foreign currency forward contracts relate to the conversion of USD borrowings to AUDs’ to fund the AUD portion of expenditure required

to construct the Century Mine. The contracts ensure the USD borrowings will be sufficient to meet the budgeted AUD expenditure on

the project. The foreign currency forward contracts were established at rates less favourable than the rate at balance date.

The contracts mature progressively throughout the construction period and the gain or loss on each contract will be determined by the

exchange rate at the time of drawdown. The gains or losses on the foreign currency forward contracts will be amortised over the period

of the project.

Metals futures contracts match existing fixed price sale commitments to external customers.

Liquidity Risk

Liquidity risk arises from the possibility that a market for derivatives may not exist in some circumstances. To counter this risk,

the economic entity only uses derivatives in highly liquid markets.

23 Contingent Liabilities

During the course of the 1994 financial year certain warranties were issued by the entity in relation to the sale of UK based assets of the

Group. At the date of this report, the directors are not aware of any claims or intentions to claim under these warranties and indemnities.

Pasminco Australia Limited has guaranteed a residual value of $6.9 million (1997: $5.9 million) for a shiploader it is currently operating

under lease.

Pasminco Limited has, with certain exceptions, guaranteed all the obligations of Pasminco Finance Limited.

Pasminco Limited has guaranteed a US$5 million (1997: US $5 million) revolving bank credit loan taken out by Pasminco Incorporated.

Pasminco Limited has guaranteed the obligations of certain controlled entities in relation to Banker’s Undertakings provided by the

Company’s bankers to the controlled entities’ respective Workers’ Compensation authorities.

In relation to the Pasminco Century Project, the following bank guarantees have been entered into:

- a $8.3 million guarantee to the Queensland Department of Mines and Energy in relation to rehabilitation works of which $4.4 million

has been provided for in the financial statements;

- a $0.7 million guarantee to the Queensland Department of Transport in relation to the security deposit under the Pipeline Corridor Licence;

- a $0.25 million guarantee to the Gulf Aboriginal Development Corporation in relation to environmental management; and

Cross guarantees by Pasminco Limited and other Group companies are as described in note 10(c)(F).


117318.175P.M7.TEXT 21/9/98 4:21 PM Page 61

24 Commitments for Expenditure

(a) Capital expenditure contracted for at balance date

but not provided for is as follows:

Payable not later than one year 307.8 38.3 - -

Payable later than one year but not later than two years 20.7 5.1 - -

328.5 43.4 - -

The capital expenditure obligations predominantly relate

to contracts entered into for the construction and operation

of the Pasminco Century Project.

(b) Lease expenditure commitments

Operating leases:

Not later than one year 13.8 13.1 - -

Later than one year and not later than two years 12.8 12.1 - -

Later than two years and not later than five years 18.9 28.1 - -

Aggregate lease expenditure contracted for at balance

date but not provided for: 45.5 53.3 - -

The operating lease obligations predominantly relate

to a long-term ship time charter.

25 Auditors’ Remuneration

Amounts received, or due and receivable by the auditors of

Pasminco Limited for:

-an audit or review of the financial statements of the

entity and any other entity in the economic entity 401 384 90 90

-other services in relation to the entity and any

other entity in the economic entity 160 158 92 103

561 542 182 193

Amounts received or due and receivable by auditors other

than the auditors of Pasminco Limited for:

-an audit or review of the financial statements of

the entity and any other entity in the economic entity 88 79 - -

649 621 182 193

26 Remuneration of Directors

(a) The cost of amounts paid or payable, or otherwise

made available, in relation to all Directors of each entity in

the economic entity, directly or indirectly, by the entities of

which they are Directors or any related party 1,557 1,343 - -

(b) The cost of amounts paid or payable, or otherwise made

available, to Directors of Pasminco Limited, directly or

indirectly, from the entity or any related party - - 1,557 1,343

(c) Number of Directors of Pasminco Limited whose

total remuneration falls within the following bands:

50,000 - 59,999 5 5

100,000 - 109,999 1 -

110,000 - 119,999 - 1

360,000 - 369,999 - 1

410,000 - 419,999 1 -

600,000 - 609,999 - 1

760,000 - 769,999 1 -

(d) Details of options in Pasminco Limited shares granted to Directors during the year ended 30 June 1998 are set out in the

Directors’ Report. Details of the employee share scheme are set out in note 35.

62

Notes to the Financial Statements($thousands) ($thousands) ($thousands) ($thousands)

1998 1997 1998 1997


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27 Remuneration of Executives

(a) The cost of amounts paid or payable to Executive Officers

of the economic entity and the Company whose remuneration

is $100,000 or more from entities in the economic entities

and related entities in connection with the management of the

affairs of these entities. 7,036 6,150 2,786 2,919

(b) The number of Executive Officers of the economic

entity and the Company whose remuneration was at

least $100,000 is shown in the following bands:

100,000 - 109,999 1 - - -

120,000 - 129,999 1 1 1 1

130,000 - 139,999 2 - - -

140,000 - 149,999 1 1 - -

150,000 - 159,999 2 2 - -

160,000 - 169,999 4 3 - -

170,000 - 179,999 2 2 - -

180,000 - 189,999 1 2 - -

190,000 - 199,999 2 1 - -

200,000 - 209,999 2 1 - -

210,000 - 219,999 - 3 - 1

220,000 - 229,999 3 1 - -

230,000 - 239,999 1 - - -

240,000 - 249,999 1 2 - 1

250,000 - 259,999 1 - 1 -

260,000 - 269,999 2 1 1 -

270,000 - 279,999 - 1 - 1

290,000 - 299,999 - - - -

310,000 - 319,999 2 - 2 -

320,000 - 329,999 - 1 - 1

330,000 - 339,999 1 - 1 -

360,000 - 369,999 - 1 - 1

410,000 - 419,999 1 - 1 -

600,000 - 609,999 - 1 - 1

760,000 - 769,999 (e) 1 1 1 1

(c) The remuneration reflected above excludes remuneration paid to those executives that worked mainly outside Australia for the whole

of the financial year.

(d) Executive Officers of the economic entity and the Company whose remuneration is $100,000 or more were granted 1,630,000 options

(1997 - 860,000) over $1.00 ordinary Pasminco Limited shares during the year ended 30 June 1998. Options exercised during the year

totalled 50,000 (1997 - 50,000).

Details of the employee share scheme are set out in note 35.

(e) Includes entitlements paid on resignation in 1997.

28 Earnings per Share (Refer Note 1(u)) 1998 1997

Basic earnings per share - cents 6.2 8.1

Basic earnings per share before abnormal items - cents 3.9 8.8

Weighted average number of ordinary shares outstanding

during the financial year - million 1,016.1 794.8

Diluted earnings per share is not materially different from basic earnings per share.

63

Notes to the Financial Statements($thousands) ($thousands) ($thousands) ($thousands)

1998 1997 1998 1997(Consolidated) (Pasminco Limited)

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 63

29 Superannuation CommitmentsThe commitments not provided for in the accounts of the economic entity as at 30 June 1998 are:

Economic entity companies participate in a number of superannuation and retirement benefit plans, the majority of which have beenestablished by or sponsored by those companies or related companies. The plans provide benefits on retirement, disablement, death,retrenchment or withdrawal from service, the principal types of benefits being lump sum defined benefits and lump sum accumulationbenefits. Contributions are made by employees and the employing corporations as percentages of salary or wages or specified dollaramounts as required by the relevant trust deeds.The latest actuarial assessments for those plans subject to actuarial supervision were as follows:

Broken Hill Mine Employees’ Pension Fund, reviewed as at 30 June 1996 by R R Codron FIAA of William M Mercer Pty Ltd, BHASEmployees Superannuation Fund, reviewed as at 30 June 1995 by R R Codron FIAA of William M Mercer Pty Ltd, PasmincoSuperannuation Fund, reviewed as at 30 June 1995 by R R Codron FIAA of William M Mercer Pty Ltd, Sulphide Pensions Fund,reviewed as at 31 December 1995 by R R Codron FIAA of William M Mercer Pty Ltd.

The last actuarial review of the Broken Hill Mine Employees’ Pension Fund indicated that there were sufficient assets to cover the vestedbenefits payable on voluntary termination of each and every employee member. In the unlikely event of the compulsory termination ofeach and every employee member at 30 June 1996 there would have existed a potential deficiency of Fund assets of $4.9 million. Otherthan in the event of the closure of mining operations and the resultant compulsory termination of each and every employee member, nocontingent liability would have arisen had the Fund been terminated as at 30 June 1996. The Company has raised its contributions tocompensate for the known increased level of compulsory terminations over recent years and to finance future prospective liabilities.

The last actuarial assessment for the BHAS Employees Superannuation Fund indicated that the Fund’s assets were sufficient to cover the Company’s obligations under the Superannuation Guarantee legislation. A shortfall of $271,000 existed in the event of the voluntarytermination of the employment of each employee provided all employees elected the “cash/partly preserved” benefit option. However,if a member on voluntary termination elects to receive a “fully preserved benefit”, the benefit is calculated in the same way as the benefitpayable on the compulsory termination of the employment of the employee by the employer (ie, on retrenchment). In the unlikely eventthat each and every member was compulsorily terminated (or voluntarily terminated and chose the “fully preserved” option), there wouldhave been a potential deficiency of Fund assets of $3.94 million at 30 June 1995. The Company has maintained its practice of fundingadditional amounts in respect of every terminating member with the aim of maintaining the Fund’s solvency.

The last actuarial review of the Pasminco Superannuation Fund’s financial position carried out as at 30 June 1995 indicated that therewere sufficient assets to cover the vested benefits payable on the voluntary termination of each employee or the termination of the Fund.In the unlikely event of the compulsory termination of each and every employee member, there was a potential shortfall of Fund assets of $12.4 million at 30 June 1995.

The last actuarial review of the Sulphide Pensions Fund as at 31 December 1995 indicated that the funds assets were sufficient to satisfyall benefits that would have been vested under the Fund in the event of: termination of the fund; voluntary termination of the employmentof each employee on the initiative of that employee; and compulsory termination of the employment of each employee by the employer.With the exception of the contribution obligations in respect of those members of the Pasminco Superannuation Fund who weremembers of the CRA Staff Provident Fund immediately prior to joining the Fund, the contribution obligations to the respective plans arelegally enforceable only up to the date upon which any such obligation is terminated by appropriate action pursuant to the relevant trustdeed, subject to the terms of any relevant award agreement.

In respect of the ex-members of the CRA Staff Provident Fund, the obligation to contribute is enforceable to the extent necessary tofinance the defined benefits provided under the Rules of the Pasminco Superannuation Fund in relevant circumstances.

The accrued benefits and Fund assets at net market value at the previous actuarial review dates, together with the Fund assets netmarket value and the vested benefits disclosed in the Fund’s most recently available statements, are as follows:

Broken Hill BHAS Pasminco SulphideMine Employees’ Superannuation Pensions

Employees’ Superannuation Fund FundPension Fund Fund

$’000 $’000 $’000 $’000

Fund assets at net market value at actuarial review date 42,377 17,921 106,908 14,626

Accrued benefits at actuarial review date 40,738 17,657 106,643 13,219

Excess of Fund assets over accrued benefits 1,639 264 265 1,407

Date of most recent actuarial review 30/06/96 30/06/95 30/06/95 31/12/95

Fund assets at net market value at most recently available

year end 42,722 25,288 121,459 14,867

Vested benefits at most recently available year end 35,070 27,201 115,583 12,535

Date of most recent year end 30/06/97 30/06/97 30/06/97 31/12/97

Notes:1. Accrued benefits have been determined based on the amounts calculated by the Fund’s actuary at the most recent actuarial review. These amounts represent the present

value of the benefits which the Fund is presently obliged to pay at some future date as a result of membership of the Fund as at the date of the actuarial review.2. Vested benefits are benefits which are not conditional upon the continued membership of the Fund or any factor other than resignation from the Fund.3. The value of the accrued benefits at the last actuarial reviews did not make any specific allowance for retrenchment benefits.4. The vested benefits at 30 June 1997 shown in the BHAS Employees Superannuation Fund financial statements assumed that all members would have elected

the “fully preserved” option.5. The BHAS Employees’ Superannuation Fund and Pasminco Superannuation Fund are currently in the process of an actuarial review.

64


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30 Segment Information

Industry segments:

The principal activity of the economic entity comprises the conduct of an integrated lead and zinc business, including exploration for and

mining of ores, concentrating to saleable concentrates, smelting of metals and marketing in a primary form.

Geographical Segments Australia Overseas Total

1998 $m 1997 $m 1998 $m 1997 $m 1998 $m 1997 $m

External sales 987.5 1,046.6 382.6 306.2 1,370.1 1,352.8

Operating profit before abnormal

items and income tax 6.6 76.3 65.8 33.7 72.4 110.0

Total assets 2,212.7 1,386.4 198.7 182.9 2,411.4 1,569.3

Compilation of segment information:

The division of the economic entity’s results and assets into geographical segments has been ascertained by reference to direct

identification of assets and revenue/cost centres and where inter-related segment costs exist, an allocation has been calculated on a

pro-rata basis of the identifiable assets and/or costs. Inter-segment pricing is on an arm’s-length market basis. Inter-segment transactions

are not material.

Segment results reflect the allocation of the economic entity’s net external finance charges apportioned on the basis of total assets

employed (intra group interest has been eliminated).

31 Franked Dividends 1998 $m 1997 $m 1998 $m 1997 $m


(a) The franked portion of dividends paid during the year

franked @ 36 cents (1997 - 36 cents) 30.6 23.8 30.6 23.8

(b) Amount of dividends provided for in the current year.

The final dividend of 4 cents has not been franked,

(1997 - 4 cents, 96% franked @ 36 cents). 45.0 31.8 45.0 31.8

(c) Franking account balance at 30 June franked @ 36 cents 0.2 0.3 - -

The above amounts represent the balances of the franking accounts as at the end of the financial year, adjusted for:

(a) franking credits that will arise from the payment of income tax payable as at the end of the year,

(b) franking debits that will arise from the payment of dividends proposed as at the end of the year, and

(c) franking credits that may be prevented from being distributed in the subsequent year.

32 Related Parties

Related parties of Pasminco Limited (ultimate parent entity) fall into the following categories:

Controlled Entities

Transactions with entities in the wholly owned Group during the year included sales on a commercial basis, interest charged/earned

on a commercial basis, dividends paid and received, hedging transactions, asset sales, borrowings on a commercial basis and

tax loss transfers.

Directors

The names of persons who were Directors of the chief entity as at the date of this report are set out in the Directors’ Report.

There have been no changes in Directors since 30 June 1997.

Transactions of Directors and Director Related Entities Concerning Shares or Options

The aggregate number of shares acquired by Directors of the Company and their Director related entities in the Company was 47,974 fully

paid ordinary shares and 400,000 (1997 - 275,000) options under the Pasminco Limited Employee Option Plan. There were nil shares and

options disposed of by Directors and their Director related entities in the Company. The aggregate number of shares and share options held

directly, indirectly or beneficially by Directors and their Director related entities in the Company at balance date was 80,374 (1997 - 32,400)

fully paid ordinary shares, and 900,000 (1997 - 500,000) options under the Pasminco Limited Employee Option Plan.

Information on the remuneration of Directors is set out in note 26.

Superannuation Fund

Information in respect of the entity’s superannuation funds is set out in note 29.

65


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33 Joint Ventures

A controlled entity, Pasminco Port Pirie Smelter Pty. Limited, participates in the Australian Refined Alloys (ARA) joint venture to produce

and market lead alloys ex-secondary materials. Pasminco Port Pirie Smelter Pty. Limited has a 50% interest in the assets, liabilities and

output of this joint venture. Another controlled entity, Pasminco Pakistan (Private) Limited, participates in a joint venture for the exploration

and development of ore deposits in Pakistan. Activities thus far have been restricted to exploration drilling and feasibility studies.

Pasminco Pakistan (Private) Limited has met all costs to date and owns all the assets associated with the joint venture.

As a consequence, details of the Pakistan joint venture are not included with the production joint venture information shown below.

The share of assets employed in the ARA joint venture is included in the economic entity balance sheet under the following classifications.

1998 $m 1997 $m

(Consolidated) (Consolidated)

Non-current assets – property, plant and equipment 2.7 2.5

Current assets – receivables 1.3 1.2

Current assets – inventories 1.5 2.3

Share of assets employed in the ARA joint ventures 5.5 6.0

Output 11.2 11.8

Profit contribution to the economic entity result (before tax) 2.7 3.0

Output represents the economic entity’s share of the joint venture’s value of production.

66


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34 Statement of Cash Flows

(a) Components of cash (Refer note 1(r))

Cash, as shown in the statement of cash flows, is reconciled to the

statements of financial position as follows:

Cash at bank 58.9 20.0

Short-term deposits 3.4 2.4

Bank overdrafts (5.1) (1.3)

57.2 21.1

(b) Reconciliation of operating profit after tax to net cash provided

by operating activities

Operating profit after tax and abnormal items 63.3 64.7

Depreciation and amortisation 131.7 121.5

Net finance charges 13.5 17.1

Net (profit) loss on disposal of non-current assets 0.8 (2.2)

Net exchange differences 11.5 2.8

Change in assets and liabilities

Receivables – current (2.3) (27.4)

Receivables – non-current 0.1 (9.6)

Payables – current 97.2 (20.3)

Payables – non-current (0.6) 0.3

Inventories (62.1) (8.9)

Provisions (13.5) (24.6)

Prepayments 1.9 0.1

Income tax payable 31.3 (2.0)

Deferred income tax (14.0) 12.7

Future income tax benefit (0.2) 27.8

Other - (1.0)

Net cash provided by operating activities 258.6 151.0

(c) A statement of cash flows for the chief entity, Pasminco Limited, has not been included as there were no material cash flows other

than the payment of $31.8 million in dividends and $344.7 million investment in Pasminco Century Mine Limited and Dugald River funded

by intra-Group borrowings. Net proceeds from share issues of $668.6 million were transacted via intra-Group accounts. The cash

balance for Pasminco Limited at the beginning and end of the 30 June 1998 financial year is nil.

1998 $m 1997 $m 1998 $m 1997 $m 1998 $m 1997 $m

(d) Current loan facilities Total Facilities Drawn at 30 June Undrawn at 30 June

Long term 1,514 404 224 176 1,290 228

Short term 76 229 - 80 76 149

1,590 633 224 256 1,366 377

These facilities comprise:

(i) US dollar facilities 984 - - - 984 -

Syndicated loan 134 176 134 176 - -

Transferable loan certificate facility 352 287 82 67 270 220

Revolving credit facilities 1,470 463 216 243 1,254 220

The transferable loan certificates were fully drawn down with a maturity date of February 2000.

The revolving credit facilities have varying maturity dates through to June 2002.

(ii) Australian dollar facilities

Multi option facility 75 75 8 7 67 68

Revolving credit facility - 50 - - - 50

Bank bill and cash facility 45 45 - 6 45 39

120 170 8 13 112 157

(iii) A lease facility with A$ and US$ components totalling A$6 million (1997-A$6 million) all undrawn at balance date.

67

Notes to the Financial Statements1998 $m 1997 $m

(Consolidated)

117318.175P.M7.TEXT 21/9/98 4:21 PM Page 67

35 Employee Share Scheme

After shareholder approval was obtained at the 1995 Annual General Meeting, the Pasminco Limited Employee Option Scheme was

established where all full-time or permanent part-time employees of the Pasminco Group (including Executive Directors but excluding

Non-Executive Directors) were offered options over ordinary $1.00 shares of Pasminco Limited. The options, issued for nil consideration,

are issued in accordance with the guidelines established by the Directors of Pasminco Limited pursuant to the approved Scheme. The

options cannot be transferred and will not be quoted on the Australian Stock Exchange. At 30 June 1998, options over shares pursuant

to the Pasminco Limited Employee Option Plan are as follows:

No. of Options Year of Issue Exercise Price Expiry Date

4,128,000 1995 $1.67 10 November 2000

5,587,000 1996 $2.07 8 November 2001

11,924,000 1997 $1.84 14 November 2002

The total number of options outstanding as at 30 June 1998 was 21,639,000 which is equivalent to 1.9% of the total issued ordinary

shares in the Company.

The Pasminco Limited Employee Option Scheme rules provides for the exercise price of options to be adjusted for the dilutive impact

of a rights issue. Effective 1 October 1997, the 1995 and the 1996 option exercise price was reduced by six cents to $1.67 and $2.07

respectively arising from 249,909,879 ordinary shares being issued as a result of the rights issue to fund the Century mine project.

During the financial year, options over the shares of the Company have been exercised as follows:

Year of Issue No. of Options Exercised

1995 93,000

1996 41,500

1997 -

During the financial year, 11,924,000 options were granted on the basis that each option can, under most circumstances, be converted

to one ordinary $1.00 share in the Company, after a two year period from the date of issue, by the holder subscribing $1.84 per share,

being 10% above the weighted average sale price of Pasminco Limited shares on the Australian Stock Exchange over the five business

days immediately before 14 November 1997. For employees other than those at Budel Zink BV, options can be exercised after

14 November 1999 and on or before 14 November 2002. Employees of Budel Zink BV can exercise options at any time on or before

14 November 2002. Under certain circumstances, such as redundancy, retirement or death, options may be exercised by Australian

employees prior to 14 November 1999. Under the terms of the Plan, participants may, upon exercise of their options, participate in any

issue of additional shares or bonus shares to shareholders.

The market value of ordinary $1.00 Pasminco Limited shares closed at $1.23 on Tuesday 30 June 1998 (the last trading day of the

financial year). No other equities in any of the entities within the economic entity were acquired by or issued to employees during the

year in relation to any other ownership-based remuneration scheme.

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69

In accordance with a resolution of directors of Pasminco Limited, we state that –

(1) In the opinion of the Directors:

(a) the profit and loss account is drawn up so as to give a true and fair view of the profit of the Company for the financial year

ended 30 June 1998;

(b) the balance sheet is drawn up so as to give a true and fair view of the state of affairs of the Company as at 30 June 1998; and

(c) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and

when they fall due.

(2) In the opinion of the Directors the consolidated accounts:

(a) give a true and fair view of:

(i) the profit of the economic entity, constituted by the Company and the entities it controlled from time to time during the

financial year, for the financial year ended 30 June 1998; and

(ii) the state of affairs of the economic entity, constituted by the Company and the entities that it controls at the year’s end,

as at 30 June 1998; and

(b) have been made out in accordance with Divisions 4A and 4B of Part 3.6 of the Corporations Law.

(3) In the opinion of the Directors at the date of this statement:

(a) there are reasonable grounds to believe that the closed group comprising the company and the controlled entities identified

in note 10 will be able to meet any obligation or liabilities to which it is, or may become, subject by virtue of the deed of

cross-guarantee disclosed in note 10; and

(b) the company and the wholly owned controlled entities obtaining relief under the Class Order remain within the class of companies

affected by the Class Order.

(4) In accordance with section 285(3) of the Corporations Law, the directors have elected to apply the requirements of AASB 1036:

“Borrowing Costs” earlier than its mandatory application date.

On behalf of the Board.

M. R. Rayner

Chairman

D. M. Stewart

Managing Director and Chief Executive

Melbourne, 26 August 1998

Directors’ Statement

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To the members of Pasminco Limited

Scope

We have audited the financial statements of Pasminco Limited for the financial year ended 30 June 1998, as set out on pages 44

to 69, including the Statement by Directors. The financial statements include the accounts of Pasminco Limited, and the

consolidated accounts of the economic entity comprising Pasminco Limited and the entities it controlled at year’s end or from time

to time during the financial year. The Company’s directors are responsible for the financial statements. We have conducted an

independent audit of these financial statements in order to express an opinion on them to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the

financial statements are free of material misstatement. Our procedures included examination on a test basis, of evidence

supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant

accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial

statements are presented fairly in accordance with Accounting Standards, other mandatory professional reporting requirements,

and statutory requirements so as to present a view which is consistent with our understanding of the Company’s and the economic

entity’s financial position, the results of their operations and their cash flows.

The names of the entities controlled during all or part of or at the end of, the financial year, but of which we have not acted as

auditor are disclosed in Note 10. We have, however, received sufficient information and explanations concerning these controlled

entities to enable us to form an opinion on the consolidated accounts.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial statements of Pasminco Limited are properly drawn up:

(a) so as to give a true and fair view of:

(i) the state of affairs as at 30 June 1998, and of the profit and cash flows for the financial year ended on that date

of the Company and of the economic entity; and

(ii) the other matters required by Divisions 4, 4A, and 4B of Part 3.6 of the Corporations Law to be dealt with in the

financial statements;

(b) in accordance with the provisions of the Corporations Law; and

(c) in accordance with applicable Accounting Standards and other mandatory professional reporting requirements.

Ernst & Young

Alan I Beckett

Partner

Melbourne

Date: 26 August 1998

Auditors’ Report

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Investor InformationPasminco makes a significant commitment to investor relations.

Institutional investors and stockbroking analysts are invited to visit theCompany’s operations in May and November each year. After therelease of the half-year and ful l-year f inancial results, senior management provide briefings to the investment community, both inAustralia and overseas. Through the site visit program and investorbriefings Pasminco strives to achieve a greater level of understandingand transparency of the Group’s operations.

Substantial ShareholdersThe Register of Substantial Shareholders as at 18 August 1998showed that:

PDFM Limited and its associates have a relevant interest in134,536,129 fully paid ordinary shares (Notice dated 15 July 1998)

Bankers Trust Australia Limited and its associates have arelevant interest in 56,738,872 fully paid ordinary shares (Notice dated 3 July 1998)

Distribution of Shareholders and ShareholdingsThe number of issued shares at the date of this report was1,124,630,499 held by 31,578 shareholders whose voting rights areone vote for each share held.

Top 20 Shareholders

Size of Shareholding Number of Number of

Shareholders Shares

1-1,000 16,429 8,048,747

1,001 - 5,000 10,208 28,014,819

5,001 - 10,000 2,832 22,306,537

10,001 - 100,000 1,847 48,837,715

100,001 and over 262 1,017,422,681

Total 31,578 1,124,630,499Shareholders of less than a marketable parcel (having a market value of $500 or less) 9,810 3,192,643

Shareholding DistributionTop 20 Shareholders Number of %

Shareholders

Westpac Custodian Nominees 157,521,843 14.01

National Nominees 140,297,660 12.48

ANZ Nominees 98,802,002 8.79

Chase Manhattan Nominees 76,611,993 6.81

AMP Life 40,986,347 3.64

BT Custodial Services 28,638,673 2.55

Queensland Investment 25,900,000 2.30

Permanent Trustee Company 20,953,987 1.86

SAS Trustee Corporation 19,677,074 1.75

BT Custodial Services 18,652,912 1.66

Reinsurers Investments 15,903,949 1.41

Citicorp Nominees 15,363,865 1.37

Mercantile Mutual Life 13,905,390 1.24

HKBA Nominees 12,283,569 1.09

Perpetual Trustees Nominees 12,283,297 1.09

MLC Limited 12,276,534 1.09

Prudential Corporation Australia 10,393,007 0.92

Australian Foundation Investment 9,041,745 0.80

Queensland Investment 8,797,410 0.78

Invia Custodian 8,552,600 0.76

Stock Exchange ListingPasminco’s shares are listed on the Australian Stock Exchange andtrade under the ASX code PAS.

Direct Deposit of DividendsDividend payments may be paid directly to a nominated Australian financial institution. Payments are electronically credited on the dividendpayment date and confirmed by payment advices mailed directly to theshareholder’s registered address. A form for this purpose is availablefrom Corporate Registry Services Pty Ltd.

Shareholding Alternatives under ChessShareholders may choose to trade their shares using the ClearingHouse Electronic Sub-register System, otherwise known as the“CHESS” system offered by the Australian Stock Exchange. Until themove to Issuer Sponsorship which will be completed before the end of December 1998, Pasminco shareholders can continue to hold theirshares by way of their current share certificates, continue to request acertificate when purchasing new shares and use certificates for deliveryto their stockbroker upon sale.

Shareholder Information

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Tax File Number (TFN) InformationWhile it is not compulsory for a shareholder to provide a TFN, Pasmincois obliged to deduct tax from any unfranked portion of dividend paymentto shareholders resident in Australia who have not supplied suchinformation. If you have not already supplied your TFN, you may do so bywriting to Corporate Registry Services Pty Ltd.

Changing Name or AddressChanges to your name or address must be advised in writing to Corporate Registry Services Pty Ltd. You will need to provide the following information:For changes to your address:

your full nameyour shareholder numberyour old addressyour new addressyou must also sign the request

For changes to your name:your old nameyour addressyour shareholder numberyour new nameoriginal documentary evidence (or copy certified by a Justice ofthe Peace) of your change of name, such as:marriage certificatedeed poll, orcertificate of registration on change of name (for corporations)

If you are sponsored by a broker, in both cases, your notice in writingmust be sent to your sponsoring broker.

Lost Certificates/StatementsShareholders should inform Corporate Registry Services Pty Ltd immediately, in writing, so that a replacement certificate/statement can be arranged.Removal from the Annual Report Mailing List Shareholders can nominate not to receive an Annual Report by writing toCorporate Registry Services Pty Ltd. Shareholders will continue toreceive all other shareholder information including Notice of AnnualGeneral Meeting and Proxy.Company InformationThe Annual Report is the major source of information for investors in Pasminco. Other publications for shareholders are:

Report of the Annual General Meeting which includes the Chairman’sAddress and Managing Director’s Review of OperationsHalf-yearly results summary which reviews the December half year.

Further information and publications about the Company’s operations are

available on request from the Company Secretary:

Tel: (03) 9288 0426Fax: (03) 9288 0406 or by writing to the Melbourne address.

Web-SitePasminco has a web site accessible through the Internet. All publications sent to shareholders, and other public releases, includingthe 1998 Annual Report can be accessed in this way. Our address is www.pasminco.com.au.

Shareholder Information

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Pasminco Limited PASMINCO LIMITED · Zinc 291,187 324,205 Lead 168,341 177,925 Silver (kg) 180,730...

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Transcript of Pasminco Limited PASMINCO LIMITED · Zinc 291,187 324,205 Lead 168,341 177,925 Silver (kg) 180,730...