Managing Director's Report
Dear Shareholders,
The past year has been one of transition and focus for your Company as we successfully commenced our transformation from pure nickel miner to a diversified base metal producer. Our focus on organic growth through exploration and the development of our exciting Pilbara tenure has begun to pay off, with a number of major new discoveries and the successful upgrade of our Radio Hill mill.
The commencement of copper mining during the year at our new West Whundo Copper Zinc Project, located close to Radio Hill in the Pilbara, heralded this transition for Fox. Importantly, the mine was brought on-line under budget and on time concurrently with your Company successfully managing to sustain existing nickel production. Copper production is now well underway and generating excellent cashflow.
Our transition has been successfully achieved due to the significant effort, foresight and commitment of Fox staff and contractors, and we are still only at the beginning of what we expect to be a long and rewarding journey. The loss reported in this financial year reflects our investment for future growth by upgrading our capital asset at Radio Hill mill, embarking on an aggressive exploration program and developing new projects.
Your Company also took the opportunity during this period of transition to re-engineer our balance sheet as a platform from which to drive our new growth phase. All bank debt and hedging has now been retired and a rigorous depreciation and amortisation schedule has been introduced. This combined result significantly allows us to take advantage of all our production being sold into the strong metal spot price market.
While many other base metal companies tend to have projects all around Australia or overseas, we have positioned our Company in the Pilbara region – like the spokes of a wheel with Radio Hill in the centre. We are firmly focussed on getting it right in one area rather than stretching our resources too thin. The Pilbara, I believe, is one of the last frontiers of mineral exploration in Australia and remains largely untapped from a base metals exploration perspective. Our forward planning, from both an operational and financial perspective, means we now have the flexibility and capability to become a significant base metal player in the region.
We have had outstanding exploration success throughout the year. Additional discoveries of copper and zinc deposits and our upgraded mill at Radio Hill will enable us to better exploit these discoveries. I have nicknamed our mill the “cash converter” given that any deposits we discover within the 50 square kilometres covered by our mining leases can easily be processed and monetised. Fox is well positioned to exploit more exploration within our 1000 square kilometres of tenement holdings still yet to be explored. We are currently producing copper at our Radio Hill mill and will shortly be producing zinc in addition to exploiting our nickel resources at both Radio Hill and Sholl, as part of the project pipeline comprising copper, nickel and zinc.
The Pilbara has delivered us a wonderful opportunity as all of these deposits are located in close proximity to the mill. We are really on the cusp of accelerated growth momentum of the Company. With the cashflow from our low-cost, high-grade West Whundo open pit copper mine and as we drill to extend minelife, we will continually evaluate the best revenue options for your Company.
Our Chinese off-take partner, Jinchuan Group (“Jinchuan”), recognises that we have one of the most prospective base metal provinces in Australia. The relationship we have developed with Jinchuan over the last couple of years as a reliable supplier of nickel has further strengthened with their agreement to purchase all our copper production. In addition to this agreement generating significant cashflow for Fox, Jinchuan also provided a $4 million pre-payment for copper concentrate that enabled us to kickstart the West Whundo Copper Zinc Project, as well as supporting the test work undertaken on the Sholl Nickel ores. We are very appreciative for this big vote of confidence from Jinchuan.
I believe that three things make a successful mining company. The first one is the projects; we have copper, nickel, and zinc along with an upgraded mill. The second factor is that the Company has is the right people; we have a very experienced workforce up north at Radio Hill and in Perth. The third critical factor to success is having the necessary backing to support the Company. The strong and progressive partnership with Jinchuan has clearly been a critical part of our success.
Finally on behalf of the Board of Directors, I would like to thank the Radio Hill and head office staff for their outstanding commitment to excellence, which is reflected in the share price increase of over 285% over the last 12 months. It has taken courage to commit such a significant amount of money into exploration and we now are reaping the benefits of new discoveries and growth for the Company. I would also like to thank my fellow directors Bruno Seneque, Terry Streeter and Julian Hanna for their support and encouragement in setting the Company on an exciting pathway to success.
Don Harper
Managing Director
