What: Copper, gold and silver miner OZ Minerals Limited (ASX: OZL) has announced a strong production result for copper in its second quarter update to investors.
So What: The increase in production of copper in the second quarter to 32,991 tonnes means the group is on track to meet the upper end of its guidance range. On the flip side, the production of gold fell significantly to just 24,790 tonnes in the second quarter.
Now What: Oz's share price is down 20% over the past 12 months and over 50% in the past three years. The poor share price performance has potentially created an enticing buying opportunity, however, there are both positive and negative factors which investors must weigh up.
The biggest negative is the recent sharp decline in the price of gold in recent weeks to a five-and-a-half-year low below US$1,100 an ounce.
The sell-off has been driven by large volumes of sales from China and the outlook for the gold price remains pressured due to the combination of a strengthening US dollar and the prospect of higher US interest rates.
On the flip side there are reasons to be positive about the future prospects for investing in OZ Minerals at current levels. Firstly, the outlook for copper prices appears reasonably good. Secondly, the company has a cash balance of $410 million which accounts for a significant proportion of the group's $1.16 billion market capitalisation.
For investors contemplating an investment in OZ Minerals deciding whether now is the right time or not to invest is a difficult decision. For some investors the risks may not outweigh the rewards and better opportunities may lie elsewhere.
