Copper Strength Helps OzMin to Revenue Record

Oz Minerals earned record annual revenues (December balance) of $2.09 billion as it lifted production and sales of gold and copper to take advantage of high prices for most of the year – especially copper.

Thanks to higher production and prices, especially for copper, annual revenue was up 56% year on year, pointing to record earnings when the company reports its financial figures next month.

OZ said in the ASX statement the record revenue was thanks to “increased production from a strong operating performance together with a higher copper price”.

OZ reported underling earnings before interest, tax, depreciation and amortisation of $606 million in 2020 on revenue of $1.3 billion (and EBIT, or earnings before interest and tax of $323 million.

On present indications and with solid cost control a doubling of both figures for 2021 cannot be ruled out.

In its 4th quarter and 2021 financial year production and sales report, Oz confirmed that it met its 2021 production and costs guidance with copper guidance met for a 7th successive year.

The Carrapateena mine processed 4.6 million tonnes while recording the highest production month on record in December, treating 493,000 of tonnes of ore in that month alone.

The older Prominent Hill mine delivered on its production and cost targets as well as it undergoes a major expansion.

Oz says the construction of a new hoisting shaft now well underway at the site will “extend the mine life to 2036, lowering operating cost, reduces operational risk, and lowers emissions intensity”.

The shaft will also enable what Oz said in the statement will be “generational province potential with further mine life extensions possible as circa 67 million tonnes of resource remain outside the shaft expansion mine plan”.

The company had also anticipated completing study updates for its Carajas East and West hubs. However, it now expects to deliver these updates in 2022. The West Musgrave feability study is also due in the second half of this year.

CEO Andrew Cole said in the statement that “2021 saw OZ Minerals deliver operationally, despite a challenging environment, again achieving Group production and cost guidance, as well as advancing our growth projects at Carrapateena and Prominent Hill and the West Musgrave study. We also commenced production at Pedra Branca and declared a maiden Mineral Resource estimate for Santa Lúcia potentially the next satellite mine at our Carajás East hub.

Looking to 2022 the company set guidance for 127,000 to 149,000 tonnes of total copper production and 208,000 to 230,000 ounces of gold production.

2021’s outcome of 125,486 tonnes of copper (guidance 120,000-145,000 tonnes) and gold – 237,263 ounces (220,000-243,000 was the 2021 guidance). 2022’s gold guidance is more than 10% lower than the 2021 outcome.

OZ said group copper production increased “with improving grades at Carrapateena partially offset by lower grades at Prominent Hill and marginally lower gold production at Prominent Hill.

“Group All-in Sustaining Costs are expected to be broadly in line with 2021 with a reduction in sustaining capital partially offset by increased Group C1 costs due to additional underground ore mined per unit of production at Prominent Hill with no material change in total mining unit costs,” OZ said.

OZ said it ended the year with $215 million in cash.

The shares ended the Thursday trading session down nearly 3% at $25.51, although a lot of that fall was due to another day of weakness in the wider market as well as in gold prices overnight Wednesday.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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