Mine - When the going gets tough...

Despite the strong financial results, 2008 was definitely a year of two parts with the good times quickly turning bad as the global economic crisis took hold in the last quarter and commodity prices went into freefall. The speed of the drop took many by surprise, and exposed a number of issues. Our survey highlights some of these issues, and also some innovative ways that mining company executives are dealing with the tough times.

Some of the key findings of the analysis include:

• Despite a record year in terms of revenue and EBITDA, market capitalisation declined 62%, primarily due to the fall in commodity prices and the impact of the global economic crisis on shareholder confidence;
  
  
• Operating costs continued to rise at a greater speed than revenue, further eroding margins;
  
  
• In the current climate there is no more valuable an asset than cash, and for cash rich companies opportunities exist as asset values fall. The timing of action could be a lead indicator as to the industry's assessment of value and when asset prices have declined sufficiently to best utilise their cash resources; and
  
  
• The boom encouraged the industry to invest heavily in capital projects and grow the top line. In these more cautious times, the ability to turn the cost tap on and off quickly may be the difference between success and failure.
  

We invite you to read through our analysis, and if you require further information, please do not hesitate to contact us.