Shares in diversified miner OZ Minerals surged on Tuesday after an impressive second-quarter result, which showed a boost in copper production and improved gold guidance.
The results highlighted a strong cash position on operational performance and a robust market. Oz saw a 22% uplift in quarter-on-quarter copper production contribute to a strong first half operating performance, with first-half net revenue of $986 million enabling a closing cash balance of $134 million (unaudited) along with zero debt. The group’s copper production guidance was on track, gold production increased and cash costs were lowered. Growth projects are also advancing with the company reporting key milestones and decision points are in line with expectations for the second half of 2021.
A strong second quarter from major South Australian operations and favourable copper prices saw OZL finish the half in a robust financial position boosting cash reserves and fully repaying the company’s corporate debt facility from operating cashflow.
Full-year group copper production guidance remains on track notwithstanding a lowering of annual guidance in the Carajás, Brazil, which has been impacted by direct and flow-on effects of COVID-19. Group cash costs guidance has been lowered for the year, primarily due to higher by-product credits associated with expected higher gold production at Prominent Hill.
Second-quarter copper production was higher than the prior quarter, as OZL noted its grade increased at Carrapateena in line with its mine plan. Prominent Hill continued to reliably increase the level of underground ore mined with the second quarter delivering the highest recorded underground ore mined to date.
OZL reiterated that it strong financial position continues to support the company’s pipeline of major brownfield projects at Carrapateena and Prominent Hill and the potential West Musgrave Project currently advancing through the study phase. Prominent Hill has continued to sustain annualised rates above 4Mtpa with work continuing at the bottom of the current Life-of-Mine level to establish level infrastructure for the commencement of the bottom-up mining sequence. Simultaneous bottom-up and top-down mining will enable an increase in mining rates from 2022, to between 4Mtpa and 5Mtpa. While copper grade at Carrapateena increased to 1.39% for the quarter. Annual production remains in line with guidance for the full year.
Andrew Cole, Managing Director and CEO commenting on the results noted, “We continued to advance our growth pipeline projects with drilling programs continuing to provide confidence at Prominent Hill, West Musgrave and Santa Lucia. With cost inflation pressure gaining attention across the industry our project teams are working through possible impacts to capital cost assumptions as we approach important key milestones and decision points later this year. With first-half revenue of $986 million underpinned by a strong operating performance we have established solid foundations for 2021.”