And it wasn’t just the likes of Rio Tinto and BHP Billiton that enjoyed a bounce back in sales and earnings in 2010 from the losses or big profit falls of 2009.
As we saw yesterday with BHP, it was its iron ore business (and with Rio earlier in the month) that drove its earnings sharply higher. And copper as well where BHP is very positive.
Oz Minerals is basically a one mine copper miner, but that didn’t stop it from yesterday revealing a very solid return to the black as strong production from its new Prominent Hill mine in South Australia and buoyant copper and gold prices boosted the bottom line.
The miner reported a first half net profit of $405.7 million, including a $141.1 million reversal of impairment in respect of a Prominent Hill property, plant and equipment.
That impairment reversal was revealed last week and netting it out produced a net profit of nearly $265 million, which is an $1800 million plus turnaround from the loss of $580.7 million in the first half of 2009.
Oz Minerals said a strong performance from the Prominent Hill operation generated revenue of $589.9 million, up from $89.6 million a year earlier when the mine was only ramping up to full capacity.
Copper, gold and silver sales contributed $472.7 million, $109.4 million and $7.8 million respectively.
The South Australian mine produced 60,145 tonnes of copper and 90,821 ounces of gold at cash costs of 49.1 USc per pound.
"This is an outstanding result for a new operation, with the mine and plant performing well and costs constrained to plan," chief executive Terry Burgess said.
Mr Burgess said the company was well placed to act quickly to acquire another asset in pursuit of its growth strategy.
"The company has also added $356.3 million of cash to its balance sheet during the period, increasing its capacity and flexibility in pursuit of the Company’s growth strategy, whereby we are seeking to acquire another operating or near operating asset.
"The ability to act quickly on good opportunities was demonstrated in our recent acquisition of the interest in Sandfire."
In fact the company said it has total cash reserves of $1.43 billion at the end of June.
Mr Burgess said the company was looking for acquisitions and had looked at four. It assembled a 19.9% stake in Sandfire, which is resisting OZ’s advances.
Exploration expenditure for the half was $24.9 million and would increase in the second half with increased drilling activity.
"The reversal of the $201.1 million impairment was due to improvement in the outlook for the global economy and the copper market in particular, strong proven production and financial performance from the Prominent Hill mine and improvement in the market valuation of Prominent Hill as reflected in the OZ Minerals share price," the company said.
OZ Minerals declared a dividend of 3c per share, unfranked, and has suspended its dividend reinvestment plan until further notice.
OZ Minerals shares were steady, at $1.23 for much of the day, but succumbed to selling pressure as the wider market fell in the afternoon.
They ended down 3c, or 2.4%, at $1.20.
