If bad news comes in threes, trouble plagued Oz Minerals has a fortnight to release yet another disaster before its earnings report.
Last week it was a shocker of a production report that sent the company’s share price plunging. This morning it decided to downgrade its earnings by up to $240 million following the drop in copper and gold prices (see Tim Treadgold's Losing its lustre).
Why it wasn’t released last week with the production report – that missed targets by a significant margin – is difficult to fathom unless the management has a deliberate policy to maximise weakness in the share price.
After the price slide last week, following a year of falls, the stock shed another 2% at the opening bell before settling with losses of 1.5%
It wouldn’t be unreasonable to expect the stock to drop below $4 in coming days, the lowest since its restructure and in the wake of its rights issue two years ago.
Oz is being squeezed on all fronts. Mine slippages and production problems, falling prices – including another sharp drop in copper of 2.4% over the weekend – along with the costs associated with bringing its new Carrapateena project on stream.
The problem for investors is that Carrapateena won’t begin production until at least 2016. That’s a long way off and gives the company plenty of time to discover a problem in some other area.