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OZ Minerals Ltd – Solid September Quarter 2021 Report

Timothy Anderson

Timothy Anderson is a contributor with the Australian Stock Report and is currently in his final year of studying a Bachelor of Applied Economics and a Bachelor of International Relations and Politics at the University of Canberra. Tim has a genuine passion for economics, specifically in macroeconomic analysis including how certain macroeconomic policies and indicators affect financial markets and the economy, as well as how these factors affect personal investment strategies. Tim currently holds RG146 Tier 1 Generic Knowledge qualifications.

OZ Minerals (ASX: OZL) is a copper and gold producer based in South Australia. OZ Minerals operations include South Australia (Prominent Hill and Carrapateena), Brazil (Antas, CentroGold. Pedra Branca) and Western Australia (West Musgrave). Oz Minerals has a market capitalisation of A$8.7 billion.




What are the key features of the September quarter result for FY21?

OZ Minerals produced 33,794 tonnes of copper in the September quarter of 2021. This is in line with FY21 guidance for copper production of 120,000 to 145,000 tonnes.

OZ Minerals also produced 65,932 ounces of gold in the September quester of 2021. Production was higher than expected due to higher grades from ore sourced from the Carrapateena mine. As a result, OZ Minerals increased their FY21 gold production up by 15,000 ounces, from 205,000-228,000 to 220,000-243,000 ounces. In addition, OZ Minerals lowered its All-in Sustaining Cost guidance for FY21 (from US$1.30-1.45 per pound of copper to US$1.25-1.40 per pound of copper) reflecting higher gold credits.

As of 30 September 2021, OZ Minerals had a $188 million cash balance as well as an undrawn debt facility. This provides OZ Minerals capacity to fund new projects.


What is the outlook for OZ Minerals?

In general, the outlook for copper is very promising. This is partly due to increased demand from electrification (such as motor vehicles) in response to moving towards net-zero emissions in 2050 and partly due to supply constraints with copper grades in aggregate from existing mines worldwide declining over time and the lack of large new projects worldwide.

OZ Minerals continues to further develop its copper producing mines at Prominent Hill and Carrapateena by undertaking exploration and development projects. OZ Minerals is also undertaking a feasibility study to develop the nickel/copper resource at West Musgrave. Importantly, a drilling program has commenced at the Succoth copper deposit. This deposit has an Inferred Mineral Resource totalling 156 million tonnes at 0.60% copper, which was not factored into the West Musgrave Pre-Feasibility Study. This deposit can potentially add upside in mine life or production rate at the proposed West Musgrave mine. Finally, OZ Minerals has the potential to expand copper production in Brazil.


What is the market reaction to the September 2021 result?

OZ Minerals September quarter result was a little ahead of market expectations. OZ Minerals share price is around $26.40 (20 October 2021), up around 1.5 per cent. OZ Minerals trades on a forward P/E ratio in the high teens and dividend yield of around 1% (fully franked).


This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)
(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).
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ASR has no position in any of the stocks mentioned.

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