The Oz Minerals Limited (ASX: OZL) share price could come under pressure today after the company released its results for the June quarter 2019 this morning showing mixed results. Here’s what you need to know.
About Oz Minerals
OZ Minerals was formed in 2008 through the merger of two mining businesses; Oxiana and Zinifex. Now based in Adelaide, OZ Minerals predominantly operates in the copper and gold mining sectors through their copper-gold mine at Prominent Hill and they are developing one of Australia’s largest copper-gold resources at Carrapateena.
The 3 Key Points
- Total copper production was up 3.9% on Q1 2019 to 28,525 tonnes
- Gold production declined 21.8% to 27,072 ounces
- All-in Sustaining Costs (AISC) increased 15% to 119 US cents per pound (cents/lb)
Operations Update
Oz Minerals reported that the Carrapateena project is on schedule for the first concentrate in Q4 2019. During the quarter, 2,824 development metres were achieved, and the total development reached 15,127 metres and a depth of 630 metres.
The Prominent Hill operations are on track to reach FY19 guidance. Andrew Cole, the Managing Director and CEO, said, “Both major assets, Prominent Hill and Carrapateena, are on plan. The strategy for realising value in the Carajas and Gurupi provinces in Brazil has been released, West Musgrave study work has advanced, and two new exploration earn-in agreements were established.”
Cash Flow
Oz Minerals’ cash balance fell from $342 million to $187 million during the quarter mostly as a result of the $177 million cash investment in Carrapateena. While the cash balance decreased, cashflow before the investment was positive.
FY19 Guidance
Oz Minerals expects total copper production to be between 103,000 and 115,000 tonnes in FY19 and total gold production to be between 122,200 and 135,600 ounces. Its AISC is estimated to be 125-135 US cents/lb.
Meaning, to match FY18 results, both copper and gold production would have to come in at the top end of guidance with FY18 copper production of 115,998 tonnes and gold production of 135,647 ounces.
Summary
While it was good to see copper production increase during the quarter, the FY19 guidance suggests results will be down on last year and possibly by a significant amount.
I tend to avoid commodity-based businesses and the forecast increase in AISC further puts me off investing. I’d rather invest in one of the businesses mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
