BASE METALS

Reborn OZ Minerals gets a Prominent profit

OZ Minerals which emerged from the ashes of what had been one of the world's biggest lead-zinc and copper miners has given a strong financial performance despite the overhang of residual losses from the dismantling of the originally troubled company.

Author: Ross Louthean
Posted: Thursday , 25 Feb 2010

PERTH - 

OZ Minerals Ltd (ASX: OZL), the company which had to sell four major operating assets to China Minmetals Non-Ferrous Metals Co in mid 2009 had to make a living off the ramping-up Prominent Hill copper-gold mine in South Australia's far north.

Prominent Hill was only retained because the Australian Defence Department claimed security issues were involved as the mine was within the Woomera defence ground, albeit hundreds of kilometres from any rarely-used defence facilities.

The company announced today that Prominent Hill had a net after-tax profit for 2009 of A$203 million (US$180 million) - based on the first eight months of the newly commissioned mine.

While the market warmed to this result on a negative trading day, the bottom line for resource analysts was that OZ Minerals closed the 2009 year with a cash balance of A$1.076 billion (US$955 million) which has had speculators suggesting the now lean company may want to add to its portfolio.

Prominent Hill reached name plate capacity in the December quarter and exceeded production targets for the year.

The company said Prominent Hill's maiden EBITDA result of A$381 million (US$338 million) and the NPAT of A$203 million was "an excellent result." For 2009 the mine milled 6.538 million tonnes of ore for 96,310 tonnes of contained copper and 75,535 ounces gold.

When the remainder of the continuing business is included, the NPAT was A$31 million, reflecting charges incurred during the first half of A$91 million associated with refinancing of the company's bank loans, together with foreign exchange losses of A$113 million due to the appreciating Australian dollar to the American Greenback.

As a consequence of the sale of assets to Minmetals for A$1.731 billion (US$1.536 billion) the company repaid all bank debt facilities totalling A$987 million. OZ Minerals also sold the Martabe gold project in Indonesia to China Sci-Tech Holdings Ltd for A$269 million (US$238 million).

Including the results from the discontinued assets, comprising the A$607 million loss recorded on the sale of assets in June, offset by the NPAT of $63 million these assets earned before sale, the loss after tax - in net deferred tax terms -- for the group was A$512 million (US$454 million). This provided deferred tax assets of A$110 million.