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Why shares in this ASX 100 miner are rising today

The OZ Minerals Limited (ASX: OZL) share price has climbed higher this morning following the release of the ASX 100 miner’s full-year results.

Although below 2018 results, 2019 copper and gold production were at the upper end of guidance with bottom quartile all-in sustaining costs below the guided range. 

OZ Minerals results 

OZ Minerals reported gross revenue of $1,174 million, down $17 million on the previous year. Lower copper sales were largely offset by the higher Australian dollar realised copper and gold prices. The realised AUD copper price was 2% lower than in the comparative period while the AUD gold price was 12% higher. Net revenues of $1,107 million were reported, down from $1,117 million in 2018. 

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $462 million at a 42% margin, down from $540 million last year. This resulted from strong mining performance at Prominent Hill which delivered segment EBITDA of $587 million. Expenses investment into the wider growth pipeline and expansion evaluations of $94 million were recorded, $27 million up on the prior year. 

OZ Minerals reported net profit after tax (NPAT) of $164 million, down from $222.4 million in 2018. This was attributed to lower copper sales as Prominent Hill transitions from higher copper grade open pit stockpiles. Earnings per share came in at 50.7 cents, down 20.8 cents from 71.5 cents per share in 2018.

A final dividend of 15 cents per share (fully franked) was declared, bringing total dividends for FY19 to 23 cents per share. 

Strong operating cash flows of $511 million were reported, up 14%, primarily due to lower tax payments following OZ Mineral’s transition to progressive installments in 2018 and the reclassification of certain payments as financing cash flows.

The miner ended 2019 with a net cash balance of $134 million plus a $300 million working capital facility in place. This leaves OZ Minerals well positioned to advance the growth pipeline in 2020 while new assets ramp-up to full production. 

Chief Executive Andrew Cole said, “The reliable and consistent operation of Prominent Hill enabled another strong financial performance for OZ Minerals, creating a solid foundation to progress to our growth strategy and bring on new assets in Carrapateena and the Carajas during 2020.” 

Outlook

The Prominent Hill mine life has been extended to at least 2031 with Proved underground Ore Reserves increasing to 77% of underground reserves. Carrapateena has moved into production with the first saleable concentrate produced.

The Carajas strategy has advanced with decline development underway at Pedro Branca, while Antas has exceeded 2019 copper and gold production guidance and Vale agreements have been established. 

Mineral Resources and Ore Reserve updates will be provided in 4Q2020 for Prominent Hill, Carrapateena, and Carajas. 

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Motley Fool contributor Kate O'Brien owns shares of OZ Minerals Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Kate O'Brien