OZL - Oz Minerals

[systematic]

Remains a hold for me at ~8.5% of portfolio

 

[rederob]

Nice quarterly report yesterday:

Chart trend points to continued upside:

 

[Sean K]

Nice quarterly report yesterday:
View attachment 128049

All looks pretty good, had an amazing 12 months. I thought copper would be just as important as gold going forward. Projections of $15k a tn by 2025. What are they going to do with all that cash?

 

[Dona Ferentes]

What are they going to do with all that cash?

get taken over?

from one commentator:
As far as OZ Minerals is concerned, it’s full speed ahead deeper into copper with a side of gold as the company looks to exploit its considerable prospects for the red metal here and in Brazil.

And yet some investors didn’t see what the company was getting at in a half year result that was full of benefits – higher revenue profits, higher dividends and an ultra-strong balance sheet.

OZL shares were up, then down to a low of $21.34, then recovered to end at $22.01 fora small loss of 0.4% on the day. The shares eased 0.3% to $22.015, valuing the company at $7.35 billion, which, in these days of multi-billion-dollar bids and deals, would be a snip for a major looking to bolster its position in one of the hot renewable metals of the future.

OZ Minerals produced an impressive triple-digit surge in the first half, driven by a strong operational performance, higher copper volumes and record copper prices.

Net revenue of $986.1 million was 71% higher than the first half of 2020, primarily due to higher copper volumes and price, with copper sales 14,000 tonnes higher and the net Australian dollar copper price 61% higher.

That saw net profit of $286.6 million for the half, up 236% on the $79.8 million earned in the first six months of 2020.

Revenue would have been more than $1 billion for the half but for a $34 million loss that was included within net revenue as final gold hedge contracts were extinguished. Earnings would have therefore topped $300 million for the period.

The surge in copper output and prices saw operating cash flows of $457.4 million for the half, up a huge $306.7 million than in the comparative period in 2020.

The Company ended the half-year with a cash balance of $133.8 million after repaying the $100.0 million corporate debt balance existing at the end of 2020.

Shareholders will get an unchanged interim of 8 cents a share and a special dividend of the same amount. That 16 cents a share leaves most of the 81 cents a share of earnings in the company to help finance the rapid expansion plans it has.

Earnings before interest, tax, depreciation and amortisation jumped 123% to $561 million.

In addition, the company finalised its next growth phase with expansions at key copper-producing projects, Prominent Hill (a $600 million new shaft) and Carrapateena. According to Wednesday’s announcement, the go ahead for the mine expansion at Prominent Hill will create “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 new Prominent Hill expansion would enable an increase of mining rates to between 4 and 5 million tonnes a year from 2022 onwards, ahead of the shaft mine expansion which will lift mining rates to 6 million tonnes a year from 2025 (ie a 50% plus expansion in annual capacity).

Looking at Carrapateena (to the southeast of Prominent Hill) the company said production at 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 12 million tonnes a year Mt. 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 5 million tonnes a year from 2023.”

CEO Andrew Cole said in the statement “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.

“The Board was keen for shareholders to share in the significant uplift in first half profit, prior to heading into our next growth phase with expansions to commence this year at both Prominent Hill and Carrapateena and a decision on West Musgrave expected in 2022.

The company said that in addition to the first half approvals of the Block Cave expansion at Carrapateena and mine shaft expansion at Prominent Hill 2022 will also see the following decisions:

• West Musgrave project on track for an investment decision in the rest of this year and 2022
• An integrated targeted geophysics and drilling program planned to commence in Q3 2021 at the Succoth copper deposit with a view to growing the West Musgrave Province
• A maiden Mineral Resource at Santa Lucia (within the Carajás East Hub) in Brazil to be declared and a study update during Q3 2021
• A Mineral Resource and study update at Pantera (within the potential Carajás West Hub) during Q4 2021
• A Mineral Resource and Ore Reserve and study update at CentroGold currently nearing completion. That’s in Brazil as well.

………
Investors should watch for the West Musgrave copper nickel decision – it could mean a third huge mine in South Australia for OZ. it has taken years of exploration, rumours, failures and quiet determination to find and outline what could be a major new metals province.

In its half year report, OZ Minerals said the West Musgrave copper-nickel project has progressed through the last stage of study with drilling at Nebo- Babel, “increasing confidence in our understanding of the ore bodies.”

“The study team continues to develop the business case, with increasing levels of accuracy around project definition and optimisation. This includes developing a business case around the development of a downstream intermediate nickel product. “There remains strong alignment with representatives of the Traditional Owners and government approvals continue to progress as planned.

“The investment decision remains on track for 2022. The West Musgrave province strategy was also advanced during the first half with the integration of a targeted geophysics and drilling program scheduled to commence in Q3 2021 at the Succoth copper deposit located 13 Km from Nebo-Babel. Succoth has the potential to add upside to the West Musgrave project.”

OZ Minerals clean balance sheet gives it the strength to finance not only the expansion of Prominent Hill and Carapateena but also the start at West Musgrave.

 

[divs4ever]

Resolution Minerals Announces Farm-in Agreement with Oz Minerals - Wollogorang​

Morningstar, 85 minutes ago
Resolution Minerals announced for the execution of multi-year farm-in and JV agreement with copper focussed mid-tier mining company, OZ Minerals (OZL). The agreement will allow the Company and OZL to track the search for copper discoveries on the Company's Wollogorang Project (Project), located in the McArthur Basin in the Northern Territory

i hold OZL ('free-carried' )

DYOR

took a lot of 'averaging down ' to get into a comfy spot here

nice to see they are keeping up the exploration for new projects

 

[rederob]

OZL is likely to return to around the $26 level on the basis of overnight copper and gold price rebounds, although it will not occur instantly. Copper's price may push to a new record based on incredibly tight present supply, but gold has been mercurial. However, a continuation of gold's rise over coming weeks is likely to propel OZL to a 2021 record high.
Either way, OZL in or above its present price band looks good for the near term.

 

[Sean K]

OZL is likely to return to around the $26 level on the basis of overnight copper and gold price rebounds, although it will not occur instantly. Copper's price may push to a new record based on incredibly tight present supply, but gold has been mercurial. However, a continuation of gold's rise over coming weeks is likely to propel OZL to a 2021 record high.
Either way, OZL in or above its present price band looks good for the near term.

Agree, the stars are aligning for OZL. Barring any major market correction/crash this is in the right place at the right time. Well, they have for the past 2 years.

 

[rederob]

POG equivocations have restrained OZL while strong copper prices keep its upward trajectory intact:

I put a $30 target price on OZL in July, but unless it perks up a bit more then $29 is the best it will do on trend continuation.
In a separate thread on copper I have been tracking inventories; incredibly tight with less than 100K tonnes available via the SHFE/Comex/LME.

 

[divs4ever]

Sale of Jericho and Eloise joint venture interests to Demetallica

• Sale provides joint venture partner the opportunity to progress the projects
• Realises value while optimising exploration portfolio OZ Minerals (ASX: OZL) today announced it would sell its Jericho and Eloise Joint Venture interests (80 per cent and 70 per cent respectively) to Demetallica, a subsidiary of partner Minotaur Exploration (ASX: MEP), for consideration of A$6.6 million.
The sale also includes a deferred contingent consideration of up to US$8.82 million, calculated at the rate of US$0.04 per pound of payable copper above 200kt contained copper and a further A$2.75 million upon completion of a pre-feasibility study.
The sale is subject to the key transaction terms set out below.
OZ Minerals has copper focused exploration joint ventures with MEP in the Cloncurry region of Queensland and Gawler Craton region of South Australia.
The Jericho project (OZL 80%; MEP 20%) and Eloise project (OZL 70%; MEP 30%) are the subject of today’s announcement. A maiden Mineral Resource estimate of the Jericho copper-gold system of 9.1Mt @ 1.4% Cu and 0.3g/t Au1 was announced in July 2020.
OZ Minerals Managing Director and Chief Executive Officer, Andrew Cole, said: “Ground EM proved to be effective in the search for buried, non-magnetic but conductive minerals systems Minotaur and OZ Minerals discovered copper and gold mineralisation at the Jericho prospect late in 2017.
Subsequent drilling during 2018-2019 led to a Maiden Resource being released to the market in mid-2020. “Whilst a discovery, the resource at Jericho did not meet our requirements to continue so we have agreed for our partner’s subsidiary, Demetallica, to gain 100% ownership of the project. 1 Maiden Jericho Resource and Cloncurry exploration update, released 16 July 2020, available at https://www.asx.com.au/asxpdf/20200716/pdf/44kkzdc6ljty34.pdf

“Our Exploration strategy is to partner with junior explorers who bring new ideas and regional expertise in a way that allows us to test theories and quickly determine the attractiveness of a project. This is a good example of how our partnering approach allows us to continually turnover our portfolio of exploration projects as we search for our next material discovery. “We look forward to continuing to work in partnership with MEP under our various joint ventures.”

DYOR

i hold OZL ( 'free-carried ' )

 

[rederob]

My third pick in the 2022 tipping comp:

On trend continuation we get a possible $38 outcome in a year's time.
That's a tough ask given we are not in a mining boom.
However, if BEV production continues at present rates then copper scarcity will keep prices elevated well beyond 2022.

 

[divs4ever]

was some worrying times when i first stated buying OZL

from $1.45 ( pre-consolidation ) in April 2011 ( then the 10 into one consolidation ) i continued to average down until $2.72 ( post consolidation aka down over 80% ) in December 2013 ... and have since recovered all that investment cash ( so only the profits are running currently )

but yes certainly has been a test of faith ( and another lesson in consolidations .. aka when do you hold or buy the drop , and when do you DUMP and run )

if i hadn't 'averaged down ' i would have currently been up less than 100% ( on the equivalent $14.90 paid for the first parcel )

now this strategy does NOT always work ( BLY and ARI/OST were brilliant examples of an epic fail ) so be careful when and where you use it

 

[mullokintyre]

Have put OZL in the yearly comp.
Expecting big things from copper this year as EV vehicles really start to ramp up.
My realm preferred copper plays are under 10 cents so don't qualify, OZL is my proxy.
Mick

 

[Sean K]

This recent dip and fall through a support line to the next might have been a good opportunity. Another leg down in the XAO might mean we hit the next more significant support line.

Whichever resource analyst I watch on you tube talking about key metals and fundamentals, they all say copper.

 

[Sean K]

This recent dip and fall through a support line to the next might have been a good opportunity. Another leg down in the XAO might mean we hit the next more significant support line.

Whichever resource analyst I watch on you tube talking about key metals and fundamentals, they all say copper.

View attachment 137024

Significant bounce off that support at 24 bucks. Doubtful it will make it to the bottom line above at 21 unless there's a general crash.

 

[Sean K]

OZL FY21 Highlights. They are definitely in a sweet spot at the moment. Can't see copper crashing down any time soon.

 

[divs4ever]

yes turned out to be worth all the worry and calculations ( averaging down )

am currently up just over 400% ( but weren't there some anxious moments getting there )

 

[Sean K]

OZ definitely bounced off support. World's running out of copper deposits. World needs more copper. Can only mean one thing.

 

[Gunnerguy]

Considering .....

OZL : Buy 1,000 @ 26.89 = $26,890.
Sell 27C option, 21April, 27 DTE, PM = $1,000.
If assigned => Net $1,110 on $26,890 = 4% in 27 days.
If no assigned => Retain PM of $1,000.

I like OZL for long term so if my shares don't get called away I am happy.

Yes I could just buy OZL in the current environment and hope/expect copper to do well in the short/intermediate term, however I am looking for income.

Any thoughts ?

Gunnerguy.

 

[finicky]

While a ST rally looks likely soon, I think the longer term still looks dodgy on the basis of the overhead height from $20 as well as the recent rate of descent. Not a high conviction view though. As to valuation, I don't see it as undervalued yet based on historical performance but I haven't any idea of growth prospects that have been mentioned by others. FY21 was boom time, whereas now doubt is seeping in - which would attract contrarians. James Gerrish backing it at this price for the fund(s) he manages seems a plus.

Not Held

James Gerrish on livewire today:

• We made a number of changes to portfolios today, generally increasing our exposure to resources into prevailing weakness – an international alert out shortly.
• Goldmans went the other way and have downgraded their commodity price assumptions and outlook on the sector – Oz Minerals (OZL) cut to neutral but $20.50 price target v this mornings open of $15.93…We have gone the other way buying OZL today.

 

[divs4ever]

BHP ANNOUNCES NON-BINDING INDICATIVE PROPOSAL TO ACQUIRE OZ MINERALS LIMITED​

BHP has submitted a non-binding indicative proposal to the Board of OZL on 5 August 2022
to acquire 100% of the issued share capital in OZL by way of a scheme of arrangement (the
Proposal).
BHP’s Proposal to acquire all of OZL’s shares for cash consideration of A$25.00 per share1
,
represents a compelling value proposition for OZL shareholders. The consideration represents
an attractive premium of:
• 32.1% to OZL’s closing price of A$18.92 per share on 5 August 2022; and
• 41.4% to OZL’s 30-day VWAP of A$17.67 per share up to and including 5 August 2022.
BHP’s Proposal represents a significant premium to the market value of OZL at the time the
Proposal was submitted, at a price that was materially above the average broker price targets.
The cash offer would deliver immediate value to OZL shareholders and de-risk any value which
may (or may not) eventually be reflected in OZL’s share price.
BHP’s Proposal is subject to certain conditions including completion of confirmatory due
diligence to the satisfaction of BHP, entry into a scheme implementation agreement and a
unanimous recommendation from the OZL Board that OZL shareholders vote in favour of the
Proposal in the absence of a superior proposal.
BHP CEO Mike Henry said:
“Our proposal represents compelling value and certainty for OZ Minerals shareholders in the
face of a deteriorating external environment and increased OZL operational and growth related
funding challenges.
“We are disappointed that the Board of OZL has indicated that it is not willing to entertain our
compelling offer or provide us with access to due diligence in relation to our proposal.”


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DYOR

i hold OZL ( 'free-carried' ) and BHP

am not particularly attracted to an all cash offer