OZ Minerals profit, revenue down on lower copper sales
South Australian copper-gold miner OZ Minerals has reported a fall in revenue and profit for the full year ended December 31, but shareholders will still receive a 15c dividend.
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SA copper-gold miner OZ Minerals has reported a fall in revenue and profit due to lower copper sales and higher expenditure.
Net profit after tax for the year came in at $163.9 million to December 31, compared to $222.4 million at the end of 2018.
The decline was due to lower copper sales related to the transition of its SA operating mine Prominent Hill from higher copper grade open pit stockpiles.
Higher exploration and corporate development expenditure were also to blame.
“Base metal markets remained volatile throughout the year as trade tensions and geopolitical uncertainty dominated over robust fundamentals, albeit a weaker Australian dollar improved comparative A$ copper pricing,” the company said in a statement.
Underlying net profit after tax was also lower at $163.9 million, compared to $228.3 million in the comparative period.
Group revenue came in at just over $1.11 billion, down from $1.12 billion in 2018.
OZ Minerals’ closing cash balance of $134 million decreased by $371.1 million during the year with strong operating cashflows used for further significant investment at Carrapateena, expenditure on exploration and evaluation activities, tax payments and dividends.
Prominent Hill delivered a reliable production and cash cost performance, as underground mining rates stepped up and higher-grade underground ore was supplemented with open pit ore stockpiles, the company said.
Full year copper production came in at 109,289 tonnes and total gold output was 128,874 ounces.
Managing director and CEO Andrew Cole said it was “another strong financial performance” for OZ Minerals.
“Prominent Hill delivered a fifth consecutive year of meeting or exceeding copper production guidance,” Mr Cole said.
“2020 will be a transitional year.
“Our focus will be on the Carrapateena ramp-up and maintaining our reliable production and cost performance at Prominent Hill as expansion studies in each of these provinces reach
significant milestones.
“With a number of quality growth options likely to progress through their stage-gates during 2020, we will apply our disciplined capital management strategy and allocation framework to ensure we prioritise and focus our efforts to create maximum value for shareholders and our other stakeholders whilst remaining within our conservative gearing limits,” Mr Cole said.
Exploration and evaluation expenditure increased as OZ Minerals’ growth pipeline further developed, with concurrent expansion studies and exploratory drilling at its Prominent Hill and Carrapateena projects in SA, Carajás and Gurupi in Brazil and Musgrave in WA.
Carrapateena is ramping up to its stated annual production goal of 4 million tonnes this year, while construction began on the Pedra Branca mine in the Carajás province in December 2019, with first development ore expected to be reached in mid-2020.
Last week, OZ Minerals and its partner Cassini Resources released a feasibility report into its West Musgrave project, saying a $995 million mine with a 26-year mine life would be viable. But it’s early days on the project, Mr Cole said.
A new exploration joint venture between OZ Minerals and Minotaur Exploration’s Conclurry Alliance and Sandfire Resources was also announced on Tuesday, which would support creating a ‘minerals hub’ near Cloncurry, near Queensland.
“We are comfortable with investing in our assets with the fundamentals of the copper market quite strong,” Mr Cole said.
“There is short term volatility but the demand for copper is going to be strong because of its use in the clean green energy market.”
OZ Minerals shares were trading half a per cent higher at $10.18 in afternoon trading.
A final divided of 15c per share will be paid to shareholders on March 26.