OZ Minerals Limited

OZ Minerals reported full-year revenue of $1.9 billion. Management said Q4 group copper production increased 21% and was the highest quarterly group copper production on record, and that revised 2022 group copper and gold production and cost guidance was met. At Prominent Hill, the company delivered 1.3 million tonnes at 1.3% copper, a 32% increase over Q3; at Carrapateena, underground ore mined was just over 1 million tonnes at just over 1.6% copper, with copper production of 15,300 tonnes and nearly 23,000 ounces of gold. For 2023, group production is expected to be broadly in line with 2022, with improving production at Carrapateena and Carajas East offset by lower Prominent Hill production, while group all-in sustaining costs are expected to increase versus 2022 due to inflation, a stronger Australian dollar assumption and higher electricity costs.

Andrew Cole emphasized that the quarter showed strong operational momentum, with improvement across the portfolio and progress on the company’s growth pipeline. He highlighted major milestones: Carrapateena’s cave breakthrough, Prominent Hill shaft pre-sink completion, West Musgrave construction start, and Kalkaroo exploration drilling. His tone was upbeat but disciplined, repeatedly framing 2023 around safe delivery, exploration, decarbonization, culture, and stakeholder value while the BHP scheme process runs.

Warrick Ranson said inflation across the year has been about 10% to 12%, with some areas higher, and that costs are not easing materially even if they are stabilizing at higher levels. He flagged a 60% increase in power charges, with the company currently playing the spot market, and said that adds about $0.17 to C1 costs; he also said FX at $0.72 versus an average 2022 rate of about $0.69 adds another roughly AUD0.30 to guidance. Cash flow was weaker than preferred because of year-end working capital moves, nearly 24,000 tonnes of provisionally priced concentrate loaded at the end of December, higher underground cost outlays, accelerated sustainable capital works, and a further $164 million invested into brownfield growth projects; West Musgrave is being funded by the $1.2 billion syndicated term loan facility.

Analysts focused first on cost inflation, power, and FX, and Warrick said the main inflationary impact has been 10% to 12% with no further uplift now, while power charges are higher and more volatile quarter to quarter because the company is using the spot market. Questions also centered on the BHP takeover and workforce retention; management said they are not seeing meaningful change in labor conditions and that BHP has indicated it intends to keep the vast majority of OZ Minerals people. On Carrapateena, management explained lower development rates and reserve changes as the result of better understanding of the orebody, shifting some higher-grade material into the sub-level cave, and production prioritization during cave breakthrough and ventilation constraints.