Zinc metal is the fourth most commonly used metal in the world, after iron, aluminum and copper. Most finished zinc metal is produced by refining mined zinc concentrates and combining that with secondary zinc feedstocks. Zinc producers tend to be less vertically integrated than other metal producers, with many focusing on either mining ore/producing zinc concentrate or smelting/refining.

Global demand for zinc is comprised of two primary types of products: zinc metal and value-added zinc products. Zinc metal is a commodity product, with well-established product grade specifications adhered to on a worldwide basis and deliverable on the LME commodity zinc market.

Value-added zinc products, such as oxide, dust, powders and metal alloys, are engineered with a wide range of product grades and specifications for use in various applications including rubber tires, paints, oil additives, alkaline batteries and specialty coatings.

Nearly half of the zinc consumed in the world is used to galvanize steel products, with the rest used in a wide range of other industrial applications. Demand for zinc tends to track general global industrial activity levels.

The Company’s recycling and production operations form a complete zinc recycling loop, from recycled zinc to finished zinc products.

The Company operates four hazardous waste recycling facilities for the recovery of zinc from EAF dust. The Company’s recycling facilities are strategically located near sources of EAF dust production. These facilities recover zinc from EAF dust generated primarily by steel mini-mill manufacturers during the melting of steel scrap, as well as from other waste material.

The Company offers a wide variety of zinc products and services. In 2006, the Company sold approximately 158,000 tons of zinc products.

The Company’s primary zinc metal product is PW zinc metal, which the Company sells to the hot-dip galvanizing and brass industries. The Company also produces SSHG zinc metal, which is used as feed for the manufacture of high-purity zinc powder and zinc alloys. The Company also sells PW zinc metal for use in the production of brass, a zinc/copper alloy.

The Company sells over 50 different grades of zinc oxide with differing particle sizes, shapes, coatings and purity levels. Zinc oxide is an important ingredient in the production of tire and rubber products, chemicals, ceramics, plastics, paints, lubricating oils and pharmaceuticals.

The Company’s zinc powder is sold for use in a variety of chemical, metallurgical and battery applications as well as for use in corrosion-resistant coating applications. Zinc powder is manufactured by the atomization of molten zinc, and is coarser than zinc dust.

Cost of sales increased $113.0 million, or 48%, to $346.4 million for fiscal 2006, compared to $233.4 million for fiscal 2005.

Depreciation expense for fiscal 2006 was $8.5 million, an increase of $1.3 million from fiscal 2005.

Interest expense increased $0.6 million, or 7%, to $9.6 million during fiscal 2006, compared to $9.0 million during fiscal 2005.

Net income increased $51.4 million, or 1,658%, to $54.5 million for fiscal 2006, compared to $3.1 million for fiscal 2005.