OZers here is the email i have just sent to all OZL directors -...

OZers here is the email i have just sent to all OZL directors - FYI

To all directors cc natalie worley

As we close on the long awaited update to OZL direction and the plan with shareholders money, I would like to highlight one of the greatest strains on OZL management creditability. What you did with the cash…

The US cash situation never made any sense at the time or now. I know from shareholder forums this is a common theme.

• I don’t understand OZL high risk strategy of keeping money in US$. Everyman and his dog was saying the AU$ was on the rise. It just made sense where money would flow.
• A 50% US / 50% AU strategy would have been low risk allowing movements either way to have been covered.
• If we were going to take a risk currency wise, then I would have said to do the 100% AU$ call
• Where you have your money bears no relationship to where you can spend it. i.e. if you have AU$ then paying for US$ items means less AU$ are needed.
• With most of the money being earned is in US$ then the prudent thing would be to have more cash in AU$ / Euros or whatever. The statements at http://www.ozminerals.com/Investor-Information/Hedging.html make no sense. It is crazy to have earnings and cash in the same currency.
• PH is going to need money for future phases, most of this will need to be in AU$. Unfortunately you don’t have this unless you have an excess of AU$ earnings from selling metals locally in Australia ? This would mean AU$200M+ for operating costs + PH next stages.

(sorry, this is in a table)
Mix 100% US$ 50% US$ / 50% AU$ 100% AU$
June 30 (rate 0.80) 780 390 / 487 975
Now (rate 0.92) 780 390 / 487 975
Interest (5 months) 0.8M 0.8M / 6.6M (assume 3.25%) 13.2M (NB: Libor higher than 3.25 now)
Equivalent Total AU$ (0.92) AU$ 849 425 + 493.6 = AU$ 918.6 AU$ 988.2
AU$ difference in strategy AU$ 0 AU$ 69.6M AU$ 139.2M

My estimate of OZL inflexible approach has cost shareholders AU$70M given a 50 / 50 mix. Do you dispute these figures ? Is $70M loose change and to be taken lightly? Given further appreciation of the AU$ and increases in libor rates, the situation is only going to get worse. Also not factored in guaranteed deposits in AU$ could have earned above libor.

You can tell by the way the OZL share price has cycled relative to other copper peers, that new investors are sitting on the sides. I don’t blame them. No direction announced and cash in US$ at libor.

I urge you for the 30Nov update to either make sense of the US$ cash situation and explain the benefits or have a mea culpa and change your position.

It is in your hands to show you are capable of running the company and instilling hope. OZL holders need more than just people going through the motions, we need you to rise to the salaries and benefits we pay you, putting shareholder interests ahead of egos/pride and personal interests. If you can’t do this (note to longer standing directors), please stand down. I personally would like to see the main players in the US$ cash position moved on, so you can have a fresh start.

Won’t you agree from the disasters of late 2008 and 2009 where you valued the entire company at 85c per share that OZL shareholders deserve the best out of its directors and management ?


Shareholder
Chatswood, NSW