Sometimes it doesn’t pay to tell the market that you did well production-wise in a quarter, especially if you are producing commodities that are on the nose – such as gold and copper.
That was the fate which befell OZ Minerals (OZL) yesterday when it revealed a very solid production copper effort for the June quarter, but a dip in gold.
The shares fell 1.5% to $3.75 on a day when the wider market reached a seven week high.
OZ Minerals in fact revealed its highest quarterly copper production in five years, with the 32,991 tonnes of copper produced over the past three months more than 5% better than the March quarter.
That in turn means the company is well on the way to achieving its full year production guidance of between 110,000 and 120,000 tonnes of copper.
However, gold production was 25% less than during the March quarter at 24,790 ounces, and that slump was behind a sharper than expected increase in production costs in the quarter.
OZ said less gold was made available for processing during the quarter, and that trend will likely continue for the rest of 2015.
But it insisted the company would still achieve its annual gold guidance of between 100,000 and 110,000 ounces.
OZL 1Y – OZ copper output higher, gold slumps
OZ said its cost of production was about 19% higher than the March quarter at $US0.753 per pound of copper.
Prices for copper have been weak for most of 2015 after Chinese hedge funds staged a bear attack in late January, driving down the price of the metal to multi year lows, where it has traded.
Copper was fetching $US2.48 per pound on Comex overnight.
Gold fell sharply on Monday when it fell to five year lows and was trading $US1,097.80 an ounce yesterday.
Oz Minerals said yesterday it’s having little success hunting for acquisitions.
“While the current performance of our existing operations is encouraging at this early stage in our new strategy, several of the third-party assets that we’ve reviewed for potential acquisition have not met the strict investment criteria we set,” said chief executive Andrew Cole.
“We continue to undertake due diligence on several other potential assets.”
The company’s Malu Open Pit at Prominent Hill is expected to reach the end of its mine life in 2018.
But Oz said it will continue to generate revenue for a further four years due to stockpiles, supplemented by underground operations.
