OZ Minerals (ASX:OZL) share price slips despite record $2 billion revenue

The Aussie mining company’s shares are struggling today. Here are the details…

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The OZ Minerals Ltd (ASX: OZL) share price is sliding during this morning’s session and is now trading 1.48% in the red at $25.88.

Investors are selling positions in OZ Minerals today following the release of the company’s fourth-quarter report for the 3 months ending 31 December 2021.

It was a busy quarter that included several investment highlights and challenges. Let’s take a look.

OZ Minerals achieves guidance, share price slides

Highlights from the quarter include:

  • Record FY revenue of $2.1 billion for the quarter
  • Strong closing cash balance of $215 million (unaudited) after growth investments
  • 2021 group production and costs guidance achieved
  • Copper guidance met for a 7th successive year
  • Growth projects advanced, including Carrapateena block cave expansion, Prominent Hill Wira shaft mine expansion
  • West Musgrave study on track for investment decision in H2 2022
  • Carajas East hub strategy in place with Pedra Branca now mining from multiple stopes and a maiden Mineral Resource estimate for Santa Lucia

What happened last quarter for Oz Minerals?

The OZ Minerals share price is in the red despite some seemingly impressive results. The company delivered on production and cost guidance and reduced its injury rates while doing so. Impressively, OZ achieved record revenue of more than $2 billion and the company ended the year with a cash balance of $215 million.

Unaudited net revenue for the year was $2.09 billion, a 56% year-on-year increase. This was underpinned by an “increased production from a strong operating performance together with a higher copper price”.

OZ had provisionally priced 37,000 tonnes of copper at US$9,730/tonne by the end of the quarter, whereas working capital increased by $62 million.

The company also invested $5 million in Carnaby Resources Ltd (ASX: CNB) as part of its exploration strategy.

The Carrapateena site processed 4.6 million tonnes (Mt) while recording the highest production month on record in December, treating 493 thousands of tonnes (kt) of ore in that month alone.

Furthermore, the Prominent Hill site delivered on its production and cost targets as well. OZ says the construction of a hoisting shaft at the site will “extend the mine life to 2036, lowering operating cost, reduces operational risk, and lowers emissions intensity”.

It also enables “generational province potential with further mine life extensions possible as circa 67 million tonnes of resource remain outside the shaft expansion mine plan”.

The company had also anticipated completing study updates for its Carajas East and West hubs. However, it now expects to deliver these updates in 2022.

Management commentary

Managing director and CEO Andrew Cole was positive on the announcement, despite the fall in the OZ Minerals share price. He said:

2021 saw OZ Minerals deliver operationally, despite a challenging environment, again achieving Group production and cost guidance, as well as advancing our growth projects at Carrapateena and Prominent Hill and the West Musgrave study.

We also commenced production at Pedra Branca and declared a maiden Mineral Resource estimate for Santa Lucia, potentially the next satellite mine at our Carajas East hub. However, these achievements were marred by the tragic death of one of our team in September, a Byrnecut underground workforce member at Prominent Hill. We again extend our condolences to his family and friends.

What’s next for OZ Minerals?

In 2022, the company is “committed to safely delivering our operational targets and advancing our growth projects across [its] portfolio”.

It sees 127,000 to 149,000 tonnes of total copper production in 2022 and 208,000 to 230,000 ounces of gold production. Each of these ranges are small downsteps from FY21 guidance.

It also updated average gold production to 90,000 ounces per annum from 2022-25, and adjusted copper production estimates down from 70,000 to 68,000 tonnes per year.

This includes progressing the expansions at Prominent Hill and Carrapateena and continuing to develop opportunities within its Carajas hub strategy in Brazil.

It also hopes to have the West Musgrave project study for a final investment decision in H2 2022.

OZ Minerals share price snapshot

In the last 12 months, the OZ Minerals share price has climbed more than 36%. However, it has struggled this year to date and is down almost 8%. It has also fallen 7% in the past month.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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