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Let the Good Times Roll: OZ Minerals Posts Massive Profit
Aug. 16, 2018 04:45PM PST
The Australian company has rolled with its takeover of Brazil-focused Avanco Copper over the first half of the year.
Australian miner OZ Minerals (ASX:OZL) has released its half-year report, revealing a 59-percent increase in net profit after tax to AU$127.8 million.
The first half of this year has been a busy one for the company, which at the very end of June commenced the compulsory acquisition of fellow Australian miner Avanco Copper, with over 90 percent of shareholders accepting the AU$418-million takeover.
The process began much earlier in the year, with the Adelaide-based company setting its sights on Brazil’s lucrative Carajas copper province, where Avanco’s high-grade Antas copper-gold mine is based.
Avanco’s operations in Brazil represented new ground for OZ, which up until the takeover only had assets throughout Australia. The company said it is working on a “value enhancing Brazil asset development strategy” for Antas and all its other new projects in South America.
Avanco made the news in its own right earlier this year, reporting in May that a Brazil truck strike caused it to scale back all activities at its mine.
It’s all humming along fine now though, and Antas’ 14,000 tonnes of copper per year will soon be adding to total output from OZ, whose operating Prominent Hill copper-gold mine is in its home state of South Australia. The target for Antas is 50,000 tonnes of the red metal per year.
In the report, OZ says Prominent Hill produced 54,597 tonnes of copper and 58,994 ounces of gold in H1 — well within guidance.
“OZ Minerals expects 2018 to be another strong year at Prominent Hill with mine life currently extended to 2029 and has accordingly retained guidance for contained copper production at 100,000 to 110,000 tonnes,” notes the report.
OZ also said that for its business model, copper is proving a higher priority.
“All financial metrics and copper and gold production are expected to remain within annual guidance as OZ Minerals continues to prioritise higher margin copper production over gold,” it states.
Another project OZ already has in the world is the Carrapateena iron oxide-copper-gold project, again in South Australia. With a projected mine life of 20 years and annual output of 65,000 tonnes of copper and 67,000 ounces of gold, the company is rapidly progressing with development works.
As of the time of the report, underground development of the mine was at 6,825 meters, with aboveground infrastructure coming along nicely. OZ projects first production by Q4 of next year.
Besides a number of other promising exploration-stage projects, OZ also detailed works at its West Musgrave copper-nickel project in Western Australia, where it is currently undertaking a prefeasibility study due to be completed in the first half of 2019.
During the first six months of 2018, OZ said “substantial progress was made on the prefeasibility study including progressing an extensive infill drilling program, metallurgical drilling and mineralogy test work and extensive heritage clearances undertaken with traditional owners.”
In Sydney, OZ’s share price didn’t get up to much on Thursday (August 16), closing up 0.45 percent on the Australian Securities Exchange at AU$8.99.
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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.
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