Oz Minerals (OZL) beat its full year production guidance and with a new CEO in place, has launched a strategic review of its operations, according to its 4th quarter and full year production and sales report yesterday.
The review, which will look at ways to cut costs and find future opportunities, was announced alongside a new partnership with the South Australian government to develop further extraction possibilities at Oz Minerals projects, all of which are based in the state.
It seems as part of this new partnership, the miner has agreed to move its HQ from Melbourne to Adelaide, a shift that has cost it the services of its long term Chief Financial Officer who announced his decision to leave as well yesterday.
The flurry of announcements came as the company confirmed it had lifted its game in 2014, after disappointing shareholders the year before.
Investors were encouraged by the news and the solid production performance for the year and marked the shares up 4.9% to $3.61.
OZL 1Y – Oz Minerals heads to Adelaide
OZ said it produced more than 148,000 ounces of gold in 2014, well ahead of its 130,000 to 140,000 ounce target range, and more than 92,000 tonnes of copper, which also topped its 85,000 to tonne 90,000 target.
Production in the quarter was 26,002 tonnes of copper and 36,288 ounces of gold.
“Operations in the open pit at Prominent Hill realised significant improvements in 2014 and these contributed to the whole operation returning to the 100,000 tonne per annum copper production ‘run rate’ by the end of the third quarter of the year,” the company said in yesterday’s statement.
“The Malu Underground mine commenced commissioning on schedule in October and planned production output was successfully achieved,” it added.
Announcing the review and other changes yesterday, OZ told the market "Following the appointment of new Managing Director and CEO Andrew Cole, OZ Minerals today announces several key changes to meet the challenges of a changing resources sector and to position the Company for further growth. These are as follows:
A strategic review of the Company’s operations has commenced that will look at all aspects of the business from current costs to future opportunities, to be completed no later than April 2015; a multi-million dollar incentive partnership with the South Australian Government to further develop innovative extraction opportunities of OZ Minerals’ significant assets; the relocation of OZ Minerals’ corporate head office from Melbourne to Adelaide.
In the statement, the new CEO said the Company needed to reshape itself to meet the challenges of a changing resources sector.
“Over the last eight weeks I’ve spent a significant amount of time listening to key stakeholders including our shareholders and staff,” said Mr Cole. “While today’s quarterly production figures highlight that OZ Minerals is on a sound footing, all of those I’ve spoken with understand we need to respond to the changing dynamics of the sector we’re operating in. Our response begins today.”
Mr Cole said the multi-million dollar partnership announced with the South Australian State Government would not only open up future opportunities through joint development of infrastructure but also encourage innovation in partnering to develop a new copper production process which delivers a highly attractive end product.
“Not only is this an innovative partnership with both the State Government and local universities, South Australia is also where our key projects are located, it makes sense to be based there and I’m confident we can develop future local, national and international projects from Adelaide,” said Mr Cole.
Oz Minerals CFO, Andrew Coles also announced today that he will be standing down from his role once the head office transition is completed.
Mr Cole acknowledged the contribution Andrew Coles had made throughout his 12 years at the Company. “Andrew has decided for family reasons not to relocate to Adelaide. He will continue to work with us through the relocation transition and we have commenced an executive search process for his replacement.”
But how ’strategic’ will the review be with the company all but ruling out any cuts to its business in South Australia by signing this partnership deal with the Government? That is especially so if the review identifies significant cost savings to be made in Oz’s South Australian operations.
