Copper Surge Sees OZ Minerals Deliver
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Shares in copper and gold miner OZ Minerals rallied nicely yesterday after the company topped market estimates with a 72% higher $231.1 million underlying net after tax profit for the 2017 calendar year.
Revenue was also better than expected at $1.02 billion, and the company has matched last year's dividend despite its increasing capital spending requirements at the Carrapateena copper project in South Australia.
The shares rose more than 3% to $9.39 on the ASX yesterday.
Directors announced a fully franked 14 cents a share final dividend which took full year dividends to 20 cents, 25% above higher than analyst consensus. The company has ignored some calls from analysts that it suspend or cut dividends while it builds the Carrapateena mine in outback South Australia OZ chief executive Andrew Cole said the company wanted to pay consistent dividends.
"The strong financial position and expected robust future cash generation allows us to progress our growth aspirations and reward shareholders with a consistent dividend," he said in a statement.
The company though is swamped with cash.
After spending $60 million on dividends, $67 million on ore inventory, $79 million on tax and $119 million on Carrapateena in the year, OZ’s cash balance still rose by more than $7 million during the year, and stood at $729 million at December 31.
The profit result was OZ’s best since 2011, with the one third surge in 2017 copper prices alone bolstering profits by $176.3 million. OZ’s solid result is in the same vein as those from Rio Tinto and BHP, but not Fortescue Metals. OZ, BHP and Rio all are involved in the copper 9and a small gold content). Fortescue is a single commodity producer of iron ore.
Oz is moving deeper into copper with its Carrapateena mine, BHP has singled out copper as one of two growth paths for the future - is is spending heavy revamping Olympic Dam in South Australia, has a major multi - billion dollar expansion at its Spence mine in Chile, has just completed a multi billion dollar expansion and revamp at its jewel, Escondida (Rio is a small shareholder) and is on the look out for a huge new mine or prospect.
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.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.