The Perth based miner told investors that a continuing decline in both zinc and copper prices had significantly affected its cash operating margins and cashflow.

Mr Geoff Day MD said the company had to adjust its activities during the period of uncertainty, but the cost reduction measures were only short term. He said that "We are looking at what we can put off until the commodity price improves a little.”

He said that "We are only doing the drilling that is necessary to maintain the growth strategy. It is a measured, appropriate response based on what was a hairy six months on commodity prices."

Kagara's December quarterly activity report, released said that based on current commodity prices, full year earnings forecasts would not be met.

Zinc prices have fallen about 30% over the past six months from USD 2500 a tonne to as low as USD 1750 a tonne.

Copper prices have also dropped by about 28%

Mr Day further said the company's outlook reflected the market's view that the next six months would also be tough on commodity prices. He said that "We are happy with the measures we are putting in place, which will see us through a three- to five-month period of lower prices.”

(Sourced from www.theaustralian.com.au)