OZ beats expectations

COPPER producer OZ Minerals has posted a better-than-expected half-year profit and dividend, despite challenges at the Prominent Hill mine in South Australia.
OZ beats expectations OZ beats expectations OZ beats expectations OZ beats expectations OZ beats expectations

Kristie Batten

The half-year underlying net profit after tax was $A55 million, while underlying earnings before interest, tax, depreciation and amortisation was $178.4 million, beating UBS forecasts of a $16 million NPAT and $119 million EBITDA.

Operating cashflow was $116 million.

Prominent Hill was hit by an unscheduled plant closure and heavy rainfall in the June quarter, but produced 58,368 tonnes of copper and 57,662 ounces of gold over the six months.

OZ CEO Andrew Cole said with C1 cash costs of US73.8c per pound, Prominent Hill was in the lowest quartile of global copper producers.

Corporate and administration costs were also lower due to the company’s relocation last year from Melbourne to Adelaide.

“Our persistence in focusing on our strategy is continuing to deliver results,” he said on a teleconference this morning.

An interim dividend of A6c per share ($18.1 million) reflected the company’s expectation of strong cashflow for the remainder of the year, Cole said.

The dividend beat UBS’ estimate of 1c per share, and RBC Capital Markets’ forecast of 4c.

“All in all a strong result, as once accounting for inventory adjustments and building stockpiles, the company bettered our cost and revenue expectations, whilst also awarding a larger dividend than we forecast,” RBC analyst Paul Hissey said.

At Carrapateena, Pybar has started building the decline and the project remains on track to deliver first concentrate in early 2019.

OZ has cash of $564.3 million and no debt.

Shares in OZ dropped by 7.5c to $6.195.

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