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Perpetual Posts Disappointing Profit
October 30th. 2007 - Australasian Investment Review – (AIR)

Investment management company Perpetual (PPT) announced at its AGM today that it expects a 10% increase in operating profit for the first six months of the financial year, below market expectations.

It appears the tentacles of the global credit crisis have reached the conservative money manager, with Perpetual Chairman, Robert Savage saying events in the credit markets had resulted in below benchmark performances in the company’s exact and enhanced cash funds.

This lacklustre performance was attributed to small unrealised losses arising from the revaluation of credit securities.

“Excluding the impact of losses borne by Perpetual in respect of these funds, the forecast result for the first half of the current year would be a 15 per cent increase over the prior half year,” he said.

“The forecast is subject to fluctuations in the markets, particularly in Australia.”
CEO of Perpetual David Deverall said the crisis in the global credit markets had impacted on the company’s income business and corporate trust business, both of which transact in the credit markets.

“The credit crisis is a timely reminder of two core investment principles which are at the heart of Perpetual’s investment philosophy, those being the importance of diversification and a focus on quality,” he said, diverting attention to the future of the company.

“We have a clear vision and strategy to generate long-term shareholder value, our organisation structure has been refined and our teams are engaged in the delivery of our strategy.”

“Perpetual is focussed and poised to deliver another good result for shareholders in 2008.”

Shares in Perpetual fell by 2.8% today to close at $73.76.

Oxiana’s Costs For Mine Rise By 30%(See My Portfolio for more info on OXR.)

Australian copper and gold company Oxiana (OXR) fell by 12 cents at one point today on the news that the rising price of materials and labor will lift costs by 30 percent for the company’s new mine at the Prominent Hill project.

With less than 12 months to commissioning of the South Australian copper-gold project, Oxiana said a comprehensive review of expenditure and schedule has now been undertaken.

The mine will now cost $1.08 billion, up from an earlier estimate of $850 million in August 2006.

Despite the increase in expenditure, Oxiana said the mine will remain on schedule to start production in the third quarter of next year.

Oxiana expects the Prominent Hill project to more than double the company’s copper output and increase its gold output by a third in the first year of production.

“Buoyant market conditions and higher copper, gold and silver prices have significantly improved project economics since Board approval some 12 months ago,” said CEO of Oxiana, Owen Hegarty.

“The expected contribution of Prominent Hill to Oxiana’s earnings and cash flows has increased substantially.
“Exploration success below and lateral to the current open pit has seen Oxiana already initiate studies aimed at expanding production and extending life of mine to at least 2030.”

Over the past ten months a major resource expansion drilling program has been ongoing at Prominent Hill, with 60% of the planned exploration program completed so far.

Oxiana said results from this program have been outstanding and that the ultimate size of the Prominent Hill deposit will be significantly larger than the currently outlined resource.

Prominent Hill is expected to produce 117,000 tons of copper, 86,000 ounces of gold and 390,000 ounces of silver in its first full year of operation.

Furthermore, a large new “discovery-focussed” regional exploration program has recently been commenced nearby the Prominent Hill project.

Oxiana said additional iron oxide systems hosting gold and copper mineralisation have been identified within 30 km of the Prominent Hill deposit and the company believes there is potential for further large discoveries there.

25 separate high priority targets have been identified for testing over the next 14 months, and drilling of the first targets has already commenced.

Shares in Oxiana recovered slightly to close at $4.03. Yesterday’s closing price was $4.11.

Eqitex Soars On Move To Resources Sector

Australian biotechnology company Eqitex (EQX) rose by as much as 67% today after it announced that it has finalised its move into the resources sector via the purchase of interests in three mineral permits in Indonesia.

The permits are for coal mines based in East Kalimantan, located in the Regency of Penajam Paser Utara.

Eqitex has entered into an agreement with PT Mega Coal Indo Mine, the owner of the mines, to acquire the rights to 70% of the net profits generated from coal production from the three permits.

The biotechnology company will be paying a deposit of $US2 million to Mega Coal within the next two weeks, but this is refundable if Eqitex is unable to prove up reserves of at least 20 million tonnes of coal on the three permits during its due diligence.

The decision to move to the resources sector came after Eqitex realised it needed to change its direction to sustain profitability.

Eqitex has focused on the biotechnology sector for the past five years with interests in the areas of chronic diseases and age-related conditions.

The company’s two main programs are the ZingoTX project to develop pharmacologically active compounds for pain management, and the VacTX project to develop a treatment for infectious diseases, cancer, allergies and autoimmune diseases.

“Despite the best efforts of past Board and Management teams, neither project proved to be a company maker,” said Eqitex in a statement.
“In August 2006 there was a major restructure of the Company and a deliberate effort to reduce the company’s burn rate as well as to focus on finding larger partners to develop the two projects to their next commercial level.”

The company said that while the search for partners has “shown some positive signs”, it became clear to the Board that a new direction needed to be taken to build shareholder value in Eqitex.

“After reviewing a number of opportunities, the Board has decided to invest further time and funds in carrying out due diligence on what has the potential to be a significant coal project in Indonesia.”

“The Directors believe that the proposed change of direction to focus of the resources sector, the appointment of senior management with significant experience in this sector and entering into the agreement to earn an interest in these mining permits will provide the Company and its shareholders with
significant potential upside.”

Furthermore, Eqitex said that while it has not yet been able to develop either VacTX or ZingoTX to a commercial level, There still remains the possibility that these projects may ultimately generate some commercial value.

“The existing Board has been in dialogue with a number of national and international companies that have been interested in investing in one or both projects and taking on the day to day management role required to develop the projects further.”

Eqitex said it is currently in discussions with one party regarding a potential investment in VacTX as well as another international organisation with regards a potential investment in ZingoTX.

Over 3 million Eqitex shares changed hands today, more than four times the average daily volume.

The stock rose by 8.5 cents to close up at 28 cents.

Yesterday, China Yunnan Copper Australia (CYU), a Queensland copper, gold and uranium explorer, ended its first day of listing on the ASX at 72 cents, almost tripling its listing price of 25 cents after closing its initial public offering (IPO) heavily oversubscribed and three weeks ahead of schedule.
The junior explorer continued to perform well today, rising by as much as 23% at one point.

China Yunnan raised $4 million on the IPO through the issuing of 16 million shares.

The junior explorer said it has 77.6 million shares and 18.4 million options on issue

The company was formed to explore for and develop minerals in Australia and overseas and is backed by China’s third largest copper producer, Yunnan Copper Industry Group, which holds a 21.2% stake.
“China Yunnan Copper Australia has highly prospective copper, gold and uranium tenements in Queensland with 2,000 km2 chiefly in the Mt Isa Inlier, Ravenswood-Pentland Province and Clermont Inlier,” said the company in a statement.

China Yunnan is targeting high quality copper, gold and uranium projects and has eleven wholly owned Exploration Permit for Minerals in its focus regions in Queensland.

Furthermore, the company said it has a farm-in agreement with the Newmont Exploration and partner Sipa Gold Limited to fund exploration at its Ravenswood Gold Project.

The stock rose by 9 cents to close up at 81 cents.

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