Morningstar | Proposed Carrapateena Expansion Looks a Valuable Option for Oz Minerals, Shares Fairly Valued
Oz Minerals is a growth orientated, midtier, copper-focused mining company. The Prominent Hill mine in South Australia began life in the bottom half of the cost curve and except for a brief bout of industry cost inflation around 2013, has remained there since. Reserve life is relatively short, at less than 10 years based on 2018's production rate, and grades will decline with stockpile processing. Management has so far met the challenge to extend life at Prominent Hill, albeit at lower production rates in future, while developing a range of other options. Prominent Hill's production decline will be at least offset by development of the nearby Carrapateena mine, starting late 2019. Carrapateena should initially produce copper and gold at about 60% of Prominent Hill's rate before expanding to a similar rate from 2028. The acquisition of Brazil-based Avanco Resources should grow volumes from 2020.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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