OZ Minerals CEO Andrew Cole
JOHANNESBURG (miningweekly.com) – South Australia-focused miner OZ Minerals has delivered a strong operational performance in 2017, which enabled the miner to exploit improved copper prices and deliver a 114% net profit after tax increase to $231-million.
OZ Minerals also managed to generate revenue of more than $1-billion, as well as delivering an earnings-a-share increase of 117% to 77c a share in the year ended December 2017.
Underlying earnings before interest, depreciation and amortisation of $539-million was a 44% improvement compared to 2016, with an 18% improvement in margins, despite comparable volumes of copper sold and a lower allocation of costs to deferred stripping as the strip ratio in the openpit reduced.
Ore stockpiles, recognised at the lower of cost or net realisable value, grew to $676-million, with these stockpiles being planned to be processed this year, thereby generating significant cash margins, with openpit-related costs having been already incurred.
The miner reported it had no debt as of December 2017, with a cash balance of $729-million.
Following investments of $119-million into Carrapateena, $67-million into ore inventory and $79-million tax payment, the company has significant flexibility in executing its growth strategy and the ability to reward shareholders with a fully franked final dividend of 14c a share.
“With net cash generation of $133-million after investment in the Carrapateena project, a cash balance of $729-million and no debt, the board has declared a final fully franked dividend of 14c a share,” said CEO Andrew Cole. This brings total dividends for 2017 to 20c a share, which is in line with 2016.
He noted that 2017 was a year of “significant achievement” with the company progressing its growth strategy.
In terms of operations’ performance, OZ Minerals’ Prominent Hill mine achieved its copper production guidance for the third consecutive year and exceeded its gold guidance with bottom quartile operating costs. Mine life of this operation was extended by a further year to 2029 on 18% growth in underground ore reserve.
The board also approved development of the Carrapateena project with the first phase of work progressing on schedule and budget.
The West Musgrave copper/nickel project advanced to prefeasibility and the exploration pipeline experienced the addition of new partnerships in Portugal, Mexico and Punt Hill, which is near Carrapateena in South Australia.
Meanwhile, going forward, the 2018 focus for OZ Minerals will be on maintaining a disciplined operating approach at Prominent Hill and further extending mine life; constructing Carrapateena safely, on time and within budget; advancing West Musgrave through prefeasibility and exploiting the wider provinces at Carrapateena, Prominent Hill and the Musgraves.
“We will also progress and turn over our exploration and current opportunity pipeline, moving swiftly to determine the viability of new and existing opportunities,” said Cole.
He added that the company’s performance would be driven by the efforts and support of its employees and other stakeholders, including the communities in which it operates, governments, suppliers and investors.