North B. H. cautious on ore discovery

Press, Volume CXV, Issue 33967, 7 October 1975, Page 28

North B. H. cautious on ore discovery

(New Zealand Press Association—Copyright) SYDNEY. North Broken Hill, Ltd. is continuing an intensive drilling programme to test the rich silver-lead-zinc mineralisation discovered in deep-level drilling at the company’s North Mine at Broken Hill during August.

The annual report cautiously devotes only One paragraph to the discovery, which showed silver-lead-zinc grades more than twice as rich as the production ore at present being worked by the company. Further drilling results are unlikely to be announced until late November or December. Although North BH is confident of an eventual upturn in sharemarkets, it expects that its investment income will be lower this year, and that recovery in metal demand will be gradual.

No provision has been made for the drop in share prices in North BH’s listed share portfolio even though the market value of $30.7m

to June 30 was $9.6m below the book value of $40.3m. All shares held by the company are held as longterm investments, and the reduction in the market value of quoted shares is not regarded as a permanent diminution in their value, the directors say. However, most industries have suffered a severe loss of confidence and higher costs, resulting in lower profits, they say. “This is true of a number of companies in which north BH holds substantial shareholdings. It is expected that lower dividends will be received from some of these companies in the current year, and that the total investment income received during 1975-76 will be lower

■ that that of the 1974-75 year.” North BH’s investment income in 1974-75 increased i 21.3 per cent to $7.3m to : account for 77 per cent of . its total group net profit of : $9.5m. The high level of inflation iin Australia must result in ; further cost increases for ; North BH. Unlike other in- ■ dustries, it cannot pass on cost increases to consumers since the metals produced • from its concentrates are sold at world market prices. North BH has declined to adopt tax-effect accounting in the belief that income tax

should be provided in accordance with the legislation at the time, and that accounts should reflect each year’s results based on that legislation. Provisions of the Income Tax Act can be altered at any time and, this has been demonstrated in the past 12 months with reductions in rates and the withdrawal of the accelerated depreciation provisions. Peat, Marwick, Mitchell and Company, Ltd, auditor for North 8.H., qualified the report: they say that if taxeffect accounting had been adopted the company’s 197475 profit would have increased by about $900,000 to about $10.7m.