Oz Minerals opens weaker on Wednesday despite a triple-digit surge in earnings.
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At the time of writing, the Oz Minerals share price is down 0.77%, trading at $21.93.
Oz Minerals share price weaker despite profit surge
Oz Minerals delivered triple-digit increases across key financial metrics, signalling a great year for the copper miner. Highlights for the half-year ended 30 June 2021 include:
Underlying net profit after tax (NPAT) of $269 million, up 237% on the prior corresponding period (pcp)
Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $561 million, up 123%
Operating cash flows of $457 million, up 204%
What happened in the half-year for Oz Minerals
The Oz Minerals share price appears to be unfazed by an impressive triple-digit surge in the first half, driven by a strong operational performance, higher copper volumes and strong copper prices.
In addition to today’s result, the company finalised its next growth phase with expansions at key copper-producing projects, Prominent Hill and Carrapateena.
According to today’s announcement, the company confirmed its final investment decision for the shift mine expansion at Prominent Hill.
Management said the expansion created “an exciting future for the asset by extending the mine’s life, lowering unit operating costs, increasing annual copper production by 23% and enabling lower emissions. Importantly, investment in the shaft mine expansion not only provides access to areas previously thought uneconomic, it also opens up potential new prospects”.
Oz Minerals said the investment into Prominent Hill would enable an increase of mining rates to between 4Mtpa and 5Mtpa from 2022 onwards, ahead of the shaft mine expansion which will lift mining rates to 6Mtpa from 2025.
Looking at Carrapateena, management highlighted that: “Production at Carrapateena has continued to increase during the half year as expected. In January the board approved the block cave expansion … to increase mine production to a proposed 12Mtpa. The block cave decline early works are scheduled to begin in Q4 2021 while the team continues to focus on debottlenecking and optimising the current sub-level cave production rate to 5Mtpa from 2023.”
What did management say?
Oz Minerals CEO Andrew Cole commented on the surge in earnings, saying:
A three-fold increase in our financial performance for the first half of the year has been driven by a strong operational performance and higher copper production, supported by favourable copper pricing.
Cole was also pleased to highlight the special dividend as a result of the company’s strong financial performance.
This first half performance, combined with robust market conditions and strong operating cashflow, informed the board’s decision to pay a fully franked special dividend of 8 cents per share. The board also decided to maintain the payment of a fully franked interim dividend of 8 cents per share consistent with our policy of paying a sustainable ordinary dividend from pre-growth cash flow, while having regard to near term, identified capital investment opportunities that create superior value, and the need to maintain a strong balance sheet.
What’s next for Oz Minerals?
The Oz Minerals share price has moved broadly in line with copper prices, hitting a 13-year high of $27.15 in early May before pulling back to the low $20 level.
Looking ahead, the company aims to drive organic production growth with an investment decision for its West Musgrave Copper-Nickel project in 2022 and a number of exploration results to be announced before year-end.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.