The company said the updated reserves and their mining plan for the reserves establish a production life at the Southern Operation of nine years under conservative price assumptions, compared with the previously anticipated two to three years mine life. In addition, material outside of the reported ore reserve has increased with mineral resources identified that are capable of conversion to ore reserves at a later date, providing further opportunity to extend the life of mine at Broken Hill.

The security of the ore reserves has increased as a result of improved operational performance and scheduling of mining activities, according to the company. Perilya’s Executive Chairman, Patrick O’Connor, said the reported reserves and resources is “validation that Broken Hill remains a world-class and significant base metals producer, with one of the highest grade zinc/lead mines in Australia. Our goal now is to build on improved productivity at the Broken Hill Operation, reduce the net cash cost to below US$0.60/lb of zinc payable to move Perilya well down the industry cost curve, and to mine in a sustainable manner replacing ore reserves as we mine.

“To date we have had considerable success in improving productivity with over 80% improvement in development rates performance and over 50% in tons ore mined per man over this calendar year, with further improvements evident under the resized Broken Hill Operation,” O’Connor said. “We are also reducing operational costs, in particular the historically high fixed-costs component.”

According to the company, since it acquired the Broken Hill deposit in 2002 a total of 11.3 million mt of ore has been mined containing 1.2 million mt of contained zinc and lead.

On October 2, 2008, CBH Resources (CBH) announced its intention to make an unsolicited takeover bid to acquire all of the shares in Perilya, offering 4.2 CBH shares for each Perilya share. Perilya’s management issued a letter urging its shareholders to take no action in response to the bid while Perilya evaluated the terms of the offer. The letter stated that:
• A merger with CBH could expose Perilya shareholders to additional risks, including CBH’s historically high cash cost asset at its Endeavor operation and approximately $140 million in debt with the associated debt-servicing costs in the order of $10 million per year.
• CBH announced further reductions in production at its Endeavor mine on November 10, 2008;
• CBH’s interest in Perilya is “a reflection of the inherent strength and value of Perilya’s Broken Hill Operation, which includes a 2.8 million mt/y concentrator plant; and
• CBH has not clearly detailed in its Bidder’s Statement what CBH has previously reported as “compelling financial and operational logic” for the merger.

Perilya management said it expected to issue a formal response to the CBH offer in December.