THE world's third largest zinc miner Zinifex has $2.2 billion...

THE world's third largest zinc miner Zinifex has $2.2 billion cash to spend on acquisitions or return to shareholders after selling off its smelting assets through the public listing of Nyrstar.

Zinifex chairman Peter Mansell said yesterday the mid-tier miner had a "substantial war chest" and would pursue acquisitions "vigorously".

"Most of the world's zinc and copper production comes from deposits that are too small to attract the attention of the major mining companies and would probably be too large for a junior company," Mr Mansell told shareholders at the company's annual meeting.

"This, therefore, presents Zinifex with an attractive niche from which to grow."

Mr Mansell said Zinifex would primarily target zinc and copper acquisitions, with nickel assets also under consideration.

Potential opportunities exist in northern Canada and Alaska, northern and southern Europe, parts of Africa, China, Mexico and parts of southern America he said.

"Copper would be the first prize for us -- we would like not to be a zinc-only company," Mr Mansell said.

However, Zinifex will return any surplus cash to shareholders if it cannot find any suitable acquisitions within a reasonable time-period, he added.

Zinifex needs new projects to replace the dwindling ore body at its Century Mine in Queensland, which is expected to run out in 2015.

The miner recently merged its smelting assets with those of Belgian-based company Umicore to form a new company called Nyrstar, which was then spun off through a public listing in Europe.

The Nyrstar float has left Zinifex with some $2.2 billion cash in the bank -- leaving it well-placed to conduct acquisitions but also making it an attractive takeover target.

The company has previously been tipped as a potential merger partner for fellow Melbourne-based miner Oxiana, as well as a possible takeover target for Anglo-Swiss mining giant Xstrata.

Zinifex's newly-appointed chief executive Andrew Michelmore shrugged off the takeover rumours.

"I didn't take on the job to be on the defence but I said to the board, 'if someone does have a go at us, it won't bother me at all,' " he said.

Mr Michelmore fended off a failed takeover attempt by Xstrata in 2004 when he was chief executive of WMC Resources.

Acting chief executive Tony Barnes said lower zinc prices, a stronger Australian dollar and higher costs will impact profits in 2007/08.

However, Zinifex should still top its $1.33 billion result of last financial year provided prices and exchange rates remain stable thanks to the Nyrstar float

Zinifex shares closed 25c higher at $14.71.

Herald Sun