Investors weren’t greatly impressed that OZ Minerals (OZL) has resumed dividend payments after posting a $51.8 million profit for the first six months of this year. Shareholders can thank a weakening Aussie dollar which offset softer global prices for gold and copper in the half.
The shares dipped 5.1% to $3.52 yesterday, although some of those losses came yesterday afternoon in the wake of the market confusion caused by the second big fall in the Chinese yuan in two days.
The wider market was down 1.7%, or 91 points as investors reacted negatively to the move in China and weak Chinese economic data.
But for patient shareholders in the copper and gold miner they will get a 6 cents a share payout, the first in almost a year.
The payment is the first under a new dividend policy installed by new CEO Andrew Cole, where shareholders will receive at least 20% of OZ’s “net cash generation”, so long as a major acquisition has not been made in the period.
Such a big deal has been on the cards now for a year or more, but so far OZ has not sealed a deal.
The higher profit was struck on an 11% rise in revenue (the boost from the fall in the Aussie dollar was a big help) to $390 million, despite copper and gold prices slumping lower.
The lower Australian dollar has offset the fall in gold and copper prices, and ensured the copper price has in effect remained this year in Australian dollar terms.
Revenue was also boosted by the $125 million sale of a stake in Sandfire Resources, and reduced waste rock movement at the company’s flagship mine Prominent Hill in South Australia.
OZL 1Y – OZ Minerals turns from loss to profit
Mr Cole said in yesterday’s statement, “The new strategy is already starting to drive business performance and creates an excellent framework to deliver superior shareholder returns over the long term”.
OZ Minerals has boosted quarterly production this year and in the June quarter, reported its best figures since 2010, boosted by a jump in copper output at its Prominent Hill.
The Malu Open Pit at Prominent Hill is expected to reach the end of its mine life in 2018, but will continue to generate revenue for a further four years due to stockpiles, supplemented by underground operations. The company is building another mine underground.
The company’s assets include the $2 billion-plus South Australian Carrapateena project (acquired in 2011) which is close to Prominent Hill and BHP Billiton’s Olympic Dam.
