OZ Minerals signals lower production and earnings
Responding to a share price slump of almost 10 per cent on Wednesday, the copper and gold producer told the stock exchange heavy trading was likely to be the result of analysts updating their evaluations based on previously disclosed information.
"The company is aware that some analysts are updating their modelling and reports for OZ Minerals' 2012 production and costs, and 2013 expected production and costs," the company said in a statement.
OZ has previously said its South Australian operations have moved into lower grades of copper in recent months, and would continue to do so next year.
The company has also increased expenditure on trucks and other fleet, and said a combination of factors was likely to result in earnings for the year ending December 31 to be "more than 15 per cent" lower than last year. The numbers could translate into a net profit after tax of about $150 million for the year.
The combination of lower grades and higher costs will continue next year, with OZ stripping large amounts of waste rock and spending on exploration below its Prominent Hill mine in an attempt to extend the mine's life.
The company said copper production could fall by nearly 10 per cent next year, but was expected to remain above 90,000 tonnes per year.
The explanation helped OZ shares recover 20¢ to close at $6.91 on Thursday.
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OZ Minerals warned earnings will be lower mainly because of rising costs and slipping copper production. The company pointed to lower grades at its South Australian operations and higher spending on trucks and fleet as key contributors to a drop in earnings.
The company said earnings for the year ending December 31 are expected to be around 15% lower than the previous year, with a statement noting they could be more than 15% lower.
OZ Minerals indicated the weaker earnings could translate into a net profit after tax of about $150 million for the financial year.
The company said copper production could fall by nearly 10% next year but is still expected to remain above 90,000 tonnes per year.
Higher costs are being driven by several operational factors: a shift to lower copper grades at South Australian operations, increased expenditure on trucks and other fleet, and large amounts of waste rock stripping.
OZ Minerals is spending on exploration below its Prominent Hill mine and stripping large amounts of waste rock in an attempt to extend the mine's life.
Shares slumped almost 10% on Wednesday amid heavy trading, which the company said was likely due to analysts updating their modelling based on previously disclosed information. The stock later recovered 20 cents to close at $6.91 on Thursday.
According to the company, the combination of lower grades and higher costs is likely to continue into next year, so the slide in production and earnings could persist as costs rise and copper output slips.
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