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OZ Minerals Limited, foundations in place for next growth phase

Team Veye | 23 Feb 2021 ASX - OZL
OZ Minerals Limited, foundations in place for next growth phase

OZ Minerals Limited (ASX: OZL)

The company OZ Minerals Limited (ASX: OZL) on 18 February 2021, reported its full financial year results.

The company delivered strong operational and financial performance.

(Chart source: TradingView)

Operational Highlights:

  1. CARRAPATEENA successful ramp up
  • Mine ramp-up to 4.25Mtpa completed within 12 months,6 months earlier than originally planned
  • Cave growth progressing in line with predictions
  • Advancement with Block Cave Expansion
  1. CARAJÁS Hub strategy is taking shape
  • Full year production of 8,613 tonnes of copper and 6,312 ounces of gold
  • Carajás East Hub progressing with Pedra Branca supplementing Antas ore supply
  1. Prominent Hill Reinforcing position as low-cost reliable operation
  • Copper production guidance met for sixth consecutive year with full year production of 61,375 tonnes of copper and 198,586 ounces of gold
  • Annual record of 3.9Mt underground ore movement with annualised run rate of 4.2Mtpa sustained for the second half of the year
  • Expansion study confirming the feasibility of a vertical hoisting shaft and potential to increase production and extend mine life

Financial Highlights:

The company delivered a strong financial performance for 2020.

(Graphic Source – Company Reports)

Highlights:

  • Net Revenue of $1,342 million, the revenue excludes $43 million net revenue from Carrapateena & Pedra Branca allocated against capital costs
  • Underlying EBITDA of $606 million
  • Underlying EBIT of $323million as compared to $234million in FY2019
  • Underlying NPAT of $213 million as compared to $164million in FY2019
  • Trade receivables increased to $160m from $83m in FY2019, due to the inclusion of Carrapateena
  • Increase in PP&E to $2914m from$2696m, with capex at Carrapateena and Prominent Hill underground, partially offset by depreciation
  • Earnings per share of 65 cents
  • NPAT increased by 30% to $213 million driven by higher gold volumes and stronger gold prices.
  • Operating cash flows were reported at $550 million
  • Closing cash balance at $132 million
  • Reported Debt balance $100 million on credit revolver and $480 million working capital facility in place

2021 Growth Expectations:

  • Prominent Hill will continue to draw down open pit ore inventory through 2021
  • Ore stockpile costs of $110 -$120 million (mining costs ~$60 million and capitalised depreciation ~$50-$60 million) will be recognised in the income statement during 2021
  • Following Board approval to proceed with the Block Cave Expansion and support additional funding for key SLC optimisation projects, the 2021-2025 capital spend provided in the 5-year guidance schedule in January 2020 now totals $1.75 billion (Data Source – Company Reports)

 

Veye’s Take

OZL has its foundations in place for the next growth phase driven by the advancements in its growth projects' strong financial and operational performance reported during the year. The Company delivered a sixth consecutive year of meeting or exceeding copper production guidance. Its Operating cash flows improved by 8 percent to $550 million due to higher revenue receipts from customers. The stock is rejecting the downside move and standing well above the middle band of the Bollinger, With RSI and MACD well supporting the upside trend strength, it is expected to maintain the uptrend in the near term. While trading above its MAs it broke the previous high with good volumes. Initial “Buy” was given to “OZ Minerals Limited” at the price of $10.61 on 25 June 2020. It has given very good returns of more than 113% in less than eight months till now. Veye maintains a "Buy" on “OZ Minerals Limited” at the current price of $22.63

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