missionx mentioned this article in AFR Street Talk today. Hope it doesn't scramble- I've just copied it from the AFR (igf it scramble,s I'll annotate it). Should not be copyright, Mods, as members can "gift" some articles per month, and I've gifted this one to HC.
The cut to OZ Minerals’s interim dividend should be taken as a “clear indication” that a major acquisition is becoming more likely, says CLSA analyst Hayden Bairstow.
He notes that the copper miner still has around $650 million of cash. Since November 2009, it has outlined a strategy of acquiring a late-stage development play or producing asset with the potential for 50,000 to 150,000 tonnes of copper a year but has yet to make a move apart from its $US250 million purchase of the undeveloped Carrapateena project from Teck Resources.
OZ Minerals has examined and then turned down or failed to complete deals in Saudi Arabia and Romania among others. Bairstow believes OZ Minerals needs a copper price of $US3.20 a pound to justify the development of Carrapateena.
“We would encourage OZ Minerals to make a sizeable acquisition over developing Carrapateena, which we view as a marginal project,” Bairstow said.
He cut his recommendation on OZ Minerals from “outperform” to “underperform” following a “weak” earnings result and the cut to the dividend. CLSA’s preference for PanAust has been enhanced by the Oz Minerals result, he said.
Bairstow has a 12-month price target of $7.80 on OZ Minerals.
OZL Price at posting:
$7.25 Sentiment: None Disclosure: Not Held
