REPORTING SEASON: Oz Minerals Limited (OZL)

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Figure 1: Oz Minerals Limited 12 month chart

 

OZ Minerals Limited (OZL) returns to profitability despite softer copper prices

– OZ Minerals (OZL) posted a $51.8m profit for the 6 months ended June 2015. Despite the return to profitability its earnings, sales and dividend fell short of the market’s expectations.

– The South Australia based copper and gold miner’s result was driven by a 59% lift in copper production, together with improved operational efficiency and productivity at its Prominent Hill mine. Earnings were held back by recent copper price weakness (copper price slumped by ~20% over the half). More than three quarters of its revenue was generated from the sale of copper. Gold production fell to 57,664/oz over the half; contributing around $11m less to revenue than 12 months earlier.

– Lower waste movement has helped reduce mining expenditure over the half, while favourable currency fluctuations added $14m to underlying profit. $8m in restructuring costs (incl. employee redundancy expenses) held back the result slightly.

– An unfranked interim dividend of 6c/share was declared, payable 24 September and has a 2.8% yield. OZL shares are down on the result and are trading near five-month lows. The miner’s shares are still slightly outperforming the broader Australian market.

– Looking ahead, the company expects production to finish at the upper end of guidance with 110,000 to 120,000 tonnes of copper likely for 2015. It expects a ~4.5% fall in production over 2016 and 2017 and a more substantial fall in 2018.

 

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Steven Daghlian, Market Analyst,