Shareholders who stuck with OZ Minerals through the dark days of 2008-09, or who bought the shares in 2009 amid considerable scepticism about whether it would survive, will get a nice fat payoff after the boom 2010 financial year result.
A huge profit, higher dividend, capital return, consolidation of shares to boost the share price and a buyback.
All up more than $900 million in dividends, the capital return and share buyback will have been delivered to shareholders by mid-year.
There’s the $123 million already paid in the interim dividend and the $223 million to be paid in the final in the next month.
The capital return will absorb nearly $390 million and the consolidation will be done in the ratio of ten for one (which should boost the share price considerably.
After that is completed the company will run a $200 million share buyback.
With the company holding a cash balance of $1.334 billion at December 31, 2010 it has ample fat to finance these payments, including the 12c a share capital return.
The news and that of the profit saw OZ Minerals shares hit a new high yesterday during trading of $1.825.
The profit confirmed that the company rode the copper and gold price booms very nicely in 2010.
OZ told the ASX in its 2010 profit announcement that it has now returned to a sound financial position after reporting a full-year after tax profit of $586.9 million.
The shares rose to the high before settling back to close at $1.79, up 2.5c or 1.4%.
That included the reversal of previously impaired asset charges.
The company said that underlying net profit after tax (NPAT) was $398.2 million, (excluding the reversal of impairment and discontinued operations) and overall net after tax profit was $586.9 million (which including the reversal of 2008 asset impairment of Prominent Hill of $141.1 million after tax and discontinued operations of $47.6 million).
A final dividend of 4 cents a share will be paid, unfranked, bringing total dividend in for 2010 to 7c a share. And its 19c a share once the capital return is included.
The result follows the first full year of operations at its copper and gold mine and follows a $517.3 million loss for 2009 when the company was emerging from near collapse in late 2008 under the weight of its debt, and the near sale to a Chinese company.
OZ was broken up, the Chinese buyer getting everything bar the Prominent Hill mine in South Australia.
That proved to be a wise move with revenue at the Prominent Hill mine in South Australia jumping 85.% $1.128 billion from $608.5 billion for 2009 as production rose (and ended up better than expected) and copper and gold prices soared (and copper has continue to soar this year).
"Revenue from Prominent Hill concentrate sales for the year was $1,128 million with 77.8% from copper sold, 21.1% from gold sold and 1.1% from silver sold. Other income was $28.4 million, including interest income of $36.3 million earned on cash deposits, partly offset by interest expense of $8.7 million, related to the convertible bond. Prices received for OZ Minerals’ products are based on spot prices of the commodities traded.
"Copper and gold prices strengthened during 2010. Copper traded at new record levels of US$4.42 per pound by the year end and gold prices reached a record of US$1,423 per ounce in early December 2010.
"In Australian dollar terms, the copper price rose by 14.6% over the year to reach A$4.34 per pound and the gold price increased by 9.3% to close the year at A$1,359 per ounce," OZ said in yesterday’s statement.
The company said its outlook for 2011 was for gold production to be maintained at the previous year’s levels and for copper to drop slightly.
Oz Minerals produced 112,171 tonnes of copper in 2010 and 196,400 ounces of gold.
It predicted gold production in 2011 would be between 185-205,000 ounces, while copper would drop to 100-110,000 tonnes.
