at $2.50/lb for copper, assuming mining costs and peripherals were $1, and remember that OZL will pay out a max of 60%, that comes to 6cps. OZL will be really mindful of the cash flow required to bring C to production and to extend the LOM of P Hill. Also,if copper was $2.50, OZL would probably do some M & A, and again would want to conserve cash. I do not think that maintaining the payout and curtailing other activities is what the board would do. In fact, I think the exact opposite would happen. Why? Because they all saw what happened when BHP kept spending through the downturn and others did not. BHP is reaping the benefits of that decision more than RIO or Xstrata or AA.
Now, though, the market may keep pure play base metals under the pump for a while until a risk appetite returns. Remember, OZL is still regarded as a risky investment, one mine, one commodity, so IMO, OZL is not a "risk free" investment.
Hope this helps
HT1
OZL Price at posting:
$14.80 Sentiment: LT Buy Disclosure: Held
