It's a bit worse than I expected. I had forecast +4 Million in EBIDTA for Q1&Q2 2011, but this was based on prior production guidance, which was on target in the last report.
Their zinc production is down -20%. Copper production down about -20%.
Had I factored in this lower production I would have also been somewhere near EBIDTA of -15 or so.
Cutting back significantly on dev and ex was expected but not that 130 people would get the boot, however I hate to say it but that's usually a positive. The biggest savings are in clearing the decks.
On a more positive note, Kagara expects to return to modest profitability during 2HFY12 and extended their bank finance facility to April 30.
I know it makes a tough read but I was expecting this report to be quite negative but now that it's out and we know KZL is not going out of business tomorrow, I believe the market will take heart in the tough implementation of fiscal discipline and appreciate the benefits of selling Lounge Lizard.
KZL Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
