from Crickey article on 5th Dec 08. First 2 lines are the bases in running any co. Mitch got excited with the cash and spent like a drunken sailor with no approval from his wife.
The primary role of any executive is to efficiently allocate shareholders' capital. In OZ Minerals' case, the company has been spending billions of dollars on developments which, based on current commodity prices, are marginal at best. Had the company used its cash pile conservatively, repaid debt and reduced dividends earlier this year, it could have easily sustained an extended period of lower metals prices.
Instead, the company gambled with shareholders' equity and appears to have lost, badly. In the last 10 months, OZ Minerals (and Oxiana/Zinifex) have spent around $2 billion on development and acquisitions. That expenditure could have easily covered OZ Minerals' debt. OZ Minerals executives and directors have failed to properly foreshadow global economic weakness and reduced demand for base metals like copper, nickel and zinc (instead believing that commodities would be "stronger forever"). If OZ Minerals executives aren't able to forecast underlying demand for the products they sell, one wonders exactly what they are there for? We suspect Andrew Michelmore doesn't spend much time extracting zinc at Century and Owen Hegarty is too busy banking his $8.35 million golden parachute to mine copper at Sepon.
OZL Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
