Shares in OZ Minerals Limited (ASX: OZL) are down almost 5% following the release of impressive half-year results which saw a substantial increase in profit and the recommencement of its dividend program.
Copper and gold sales from its Prominent Hill mine in South Australia increased by 11% to $390 million delivering a net profit of $51.8 million, compared to a $7.4 million loss in the previous corresponding period.
Direct mining costs dropped by 33% which added $57 million to the group operating profit as a result of lower waste removal from the open pit mine. CEO Andrew Cole said: "Our strong first half results reflect the razor sharp focus our people have had on improving operational efficiency." This is important with the business facing declining copper and gold prices.
Total copper production for the half came in at 64,000 tonnes and is expected to help the company achieve the upper end of stated annual guidance of 110,000 to 120,000 tonnes for 2015.
Rare amongst mining companies, OZ Minerals is debt free and its cash hoard increased by $188 million to $410 million during the half and included the disposal of its 19.1% stake in Sandfire Resources (ASX: SFR) for $125 million. Adding to its firepower is a US$200 million debt facility in place for future expansion.
The company declared an unfranked interim dividend of 6 cents per share in line with its new policy, which targets a minimum shareholder return of 20% of net cash generation not required for investing or balance sheet activity.
OZ Minerals is a low-cost miner producing truckloads of cash. Carrying no debt as commodity prices decline, it is free to pursue value-enhancing acquisitions at a time when many companies are looking to offload assets.
It also holds a promising future project within its portfolio and provides a decent yield. There aren't many mining companies available on the ASX that boast these positive attributes and investors would be wise to start their research here if they are looking to invest in the sector.
