Morningstar | Oz Minerals' key focus is growth through the development of Carrapateena and acquisition of Avanco.
Lack of an economic moat and dominant exposure to copper mean that there is meaningful uncertainty about future returns. The sole mine at Prominent Hill in South Australia began life in the bottom half of the cost curve. There was a brief bout of severe industry cost inflation around 2013, but cash costs have been below USD 1 per pound since 2015. Reserve life is relatively short, at less than 10 years based on 2017's production rate, and grades will decline with stockpile processing. Management is driven to find and develop new ore sources, bringing risk and cost. Prominent Hill's production decline will be offset by development of the nearby Carrapateena mine, starting late 2019. Carrapateena should produce copper and gold at about 60% of Prominent Hill's rate. The acquisition of Brazil-based Avanco Resources is likely to add meaningful volume growth from 2020. The balance sheet is very strong with net cash.OZ Minerals is a mining company engaged in exploring for, developing and operating copper, gold and base metal projects. It owns the Prominent Hill copper-gold mine and Carrapateena copper-gold project, both located in South Australia. Co.'s operating segments are: Prominent Hill, which comprised of mining copper, gold and silver from the Prominent Hill Mine; Carrapateena, which comprised of exploration and evaluation associated with the Carrapateena project; Exploration and Development, which comprised of exploration and evaluation activities associated with the other projects and include interests and joint ventures with Minotaur and Toro Energy Ltd, and Corporate Development activities.
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