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OZL

OZ Minerals Ltd - Up 2% On Positive December Quarterly Report

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

OZ Minerals Limited (ASX: OZL) is a copper-focused international company based in South Australia. OZ Minerals operations include Prominent Hill, Antas, Carrapateena, Pedra Branca, West Musgrave and CentroGold. OZ Minerals has a market capitalisation of A$3.17 billion.

 

OZ MINEFRALS

 

What are the key findings for OZ Minerals December quarterly report?

  • Total copper production for the December quarter is 28,659 tonnes, up 16% from the previous quarter.
  • Total gold production for the December quarter is 36,808 ounces, 21% from the previous quarter.
  • All-in Sustaining Costs (ASIC) (US cents/lb) for the December quarter is 94.1, down 26% from the previous quarter.
  • Production at Prominent Hill operation for the December quarter is 26,845 tonnes of copper and 35,102 ounces of gold, up 16% and 21% respectively.
  • Production at Antas operation for the December quarter is 1,814 tonnes of copper and 1,706 ounces of gold, up 16% and 13% respectively.

An important point for OZ Minerals quarterly report is that the Carrapatenna operation has produced first concentrate. This mine is expected to produce its first saleable concentrate prior to the end of the year (2020 calendar year).

Oz Minerals management notes that:

Carrapatenna now enters a faster, circa 12-month, ramp-up towards a 4.25Mtpa throughput rate by the end of 2020, dependent upon the cave performing as expected. We will test and optimise the plant in the first half of 2020, leading to gradual throughput and recovery increases which will drive progressively higher output in the second half before turning cash positive in 2021.

 

What is the outlook for OZ minerals?

The outlook for OZ Minerals is positive with several projects that could allow for strong cash flow in the future. Currently, with the final stages of development at the Carrapatenna operation (saleable production end of 2020), OZ minerals should have 3 operating mines by the end of 2020.

FY19 (2019 calendar year) full year guidance is as follows:

  • Total copper production is 101,000 – 111,500 tonnes
  • Total gold production is 120,400 – 130,800 ounces
  • Total ASIC (US cents/lb) of 120 – 130.

The overall outlook for gold is not looking as favourable as it has been last year. This reflects global economic conditions improving and new developments with certain countries that can improve economic certainly within the global economy.

The overall long-term outlook for copper is positive. Copper is used in a wide range of products. In particular, demand for copper may increase over the long-term due to demand electric vehicles and renewable resources increase to phase out combustion engine cars and fossil fuels to generate electricity.  

 

What is the market reaction?

The market reaction to OZ Minerals quarterly report is positive. OZ Minerals’ share price is up 2% and is currently trading at A$9.98. OZ Minerals have a forward P/E ratio in the high-teens and an annual dividend yield of 2.4%.

 


 

Disclaimer:

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).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law, we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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