More signs of this will indicate a sentiment change in the...

More signs of this will indicate a sentiment change in the market is due in the medium term.

Courtesy of the Australian:

OZ Minerals to focus on copper, acquisitions

• The Australian
• April 20, 2015 11:24AM

• Print
• Save for later

Matt Chambers

Resources Reporter
Melbourne
Mitchell Neems

Business Spectator Reporter
Melbourne

OZ Minerals’ Prominent Hill copper-gold mine in South Australia. Source: Supplied

OZ Minerals’ new managing director, Andrew Cole. Source: News Corp Australia
OZ Minerals will become an Adelaide-based growth company focused on copper but searching for distressed assets of any size, and also in base metals and gold, chief executive Andrew Cole has declared.
Revealing OZ Minerlas’ new strategy today, Mr Cole said he would not be shackled by the miner’s previously-imposed size restrictions that had it looking at larger assets, as he looks to build a growth profile beyond its Prominent Hill copper and gold mine in South Australia.
“This is about positioning OZ Minerals as a growth company in a down resources cycle,” Mr Cole said.
“This new strategy is not business as usual and it is not a cost-cutting strategy.”
Mr Cole, who is facing the same issues as his predecessor Terry Burgess in the form of a strong balance sheet, a mine with limited life and lack of growth options, said assets were coming on to the market, many of them distressed.
“A mature resources company must have a balanced growth pipeline,” he said, noting OZ Minerals would focus on producing or nearly producing assets to fill a gap between the end of Prominent Hill and possible start of its Carapateena project, where development has been suspended to look for a partner.
OZ (OZL) said it had completed a strategic three-month review of its operations by concluding it needs to become “a leaner, highly agile and decisive company focused on growth and creating long-term value”.
“Our new strategy will touch every part of our operation and demand a new way of working,” Mr Cole said.
OZ Minerals ordered the review as it sought to cut costs following a downturn in commodity prices.
The miner said its search for value-accretive assets throughout Australia and globally will include other base metals and gold where core capabilities are easily transferable.
The company will implement a new, flatter corporate structure as well as a dividend policy targeting a minimum shareholder return of 20 per cent of net cash generation not required for investing or balance sheet activity.
“Changes in the resources cycle bring opportunities and this strategy is about ensuring we have the foundation and appropriate culture and discipline to capitalise on those,” Mr Cole said.
Credit Suisse analyst Michael Slifirski said there were few surprises in the strategy, which had the same themes as one delivered by Mr Burgess in 2009, when OZ had more cash.
“The broadly restated strategy will, in our view, have the same execution challenges but comes with higher risk and less capacity to participate due to the materially diminished balance sheet capacity,” Mr Slifirski said.
OZ shares were off 6.5c in early morning trading at $3.86.
The completion of the review comes as OZ Minerals unveiled its first-quarter production results.
In the three months to March 31, OZ Minerals produced 31,160 tonnes of copper and 32,874 ounces of gold. That compares to 18,182 tonnes of copper and 33,792 ounces of gold in the previous corresponding quarter.
The company said the result laid the foundation to deliver full-year production of between 110,000 and 120,000 tonnes of copper and between 100,000 and 110,000 ounces of gold.
C1 cash costs in the first quarter were reduced to US63.2c per pound