OZ Minerals surprised analysts with a lift in final dividend for the year to December despite a small dip in profit.
The final dividend was 15 cents a share, up from 14 cents for the final for 2017 and well above very conservative market forecasts for 12 cents a share.
The full year of 23 cents a share was up 15% on the 2017 payout and came despite weak copper prices during 2018-9 down 20%) and a small rise in gold prices.
Since the end of the year, global copper prices have reclaimed more than half that loss, rising more than 11%.
Investors initially liked the news and the confidence in the report and bid the shares up 1% to $10.80 before selling to push them down 0.7% to $10.61.
Oz said revenue hit a high $1.117 billion and underlying post-tax profit was $228 million was in line with the 2017 result, despite the company expensing an extra $46 million on 2018 on its growth projects at the Prominent Hill mine and Carrapteena project in South Australia.
Underlying Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) was $540 million, meaning a gross profit margin of 48%. Prominent Hill mine reported EBITDA of $618 million, up 6% as higher production more than offset the slide in copper prices during the year.
The company says it still has more than half a billion in cash which is being used to finance the expansion work and explore several near projects around Prominent Hill and Carrapteena.
“Prominent Hill exceeded copper and gold production guidance with bottom quartile operating costs below their guided ranges,” CEO Andrew Cole said yesterday.
“Mine life was further extended to 2030 with a 50% increase in Proved underground Ore Reserves and underground expansion options are being reviewed. The Mt Woods crowdsourcing exploration challenge was also launched for the province.’ Prominent Hill’s output is being expanded to 3.7 million to 4.1 million tonnes a year of ore.
“The Carrapateena project continues to develop on schedule with first concentrate production on track for Q4 2019. The outcomes of the expansion Scoping Study, which aims to maximise value from the Carrapateena orebody and wider options for the province are expected next month.
“The West Musgrave copper-nickel project Pre-Feasibility Study is advancing, and we have seen positive early results from metallurgical testing and drilling activity through the year.
