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OZ Minerals Limited (OZMLF) Q4 2022 Earnings Call Transcript

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OZ Minerals Limited (OTCPK:OZMLF) Q4 2022 Earnings Conference Call February 21, 2023 6:00 PM ET

Company Participants

Andrew Cole - MD, CEO and Director

Warrick Ranson - CFO and Finance & Governance Executive

Conference Call Participants

Operator

Good day, and convey you for opinionated by and invited to nan OZ Minerals 2022 Full Year Financial Results. At this time, each participants are successful a listen-only mode. After nan speakers' presentation, location will beryllium a question-and-answer session. [Operator Instructions] Please beryllium advised that today’s convention is being recorded.

I would now for illustration to move nan convention complete to your speaker today, Mr. Andrew Cole, Managing Director and Chief Executive Officer. Thank you. Please spell ahead.

Andrew Cole

Thank you very overmuch operator, and bully greeting everybody. Thanks for joining our convention telephone today, which taxable to nan independent master conclusion and our strategy shareholder ballot successful nan coming months whitethorn very good beryllium OZ Minerals' past financial results call.

Today I americium connected Ghana land, and I would for illustration to salary my respect to their elders, past, present, and emerging. I besides for illustration to admit and salary my respect to nan accepted owners of each nan lands connected which we work.

Joining maine coming is Warrick Ranson; our Chief Financial Officer. The adjacent mates of slides are disclaimers for your reference and I'll time off you to publication nan specifications of these materials connected our website.

First, nan highlights for 2022, it was a very large twelvemonth for OZ Minerals. We tackled immoderate operational challenges successful nan first half and faced immoderate outer headwinds including costs unit and weaker copper prices.

However, we came retired powerfully and Q4 saw nan highest group quarterly copper accumulation connected grounds for nan company. The mixed twelvemonth is reflected successful our profit of AUD207 million.

We progressed our maturation strategy. We invested significantly, astir AUD1 cardinal predominantly, since nan description is underway astatine our South Australian mines, Prominent Hill and Carrapateena. These description s are expected to widen excavation life and little operating costs.

We started building of our 4th mine, West Musgrave, and we were granted an option to acquisition nan Kalkaroo copper task pursuing a study period. As nan twelvemonth drew to a adjacent though, nan astir defining arena for america was nan connection by BHP to get OZ Minerals for a rate value AUD28.25 per share.

OZ Minerals' Directors unanimously urge shareholders ballot successful favour of nan strategy successful nan absence of a superior connection and taxable to nan independent master concluding and continuing to reason that nan strategy is successful nan champion liking of shareholders. The strategy booklet is expected to beryllium disposable successful early March, pinch nan shareholder strategy gathering expected to beryllium held successful April.

Prior to nan strategy meeting, nan Board intends to state a afloat franked typical dividend of AUD1.75 per share, which would person up to AUD0.75 of franking credits attached per share. The shareholders are eligible to usage them. The dividend is conditional connected strategy gathering becoming effective.

You will beryllium acquainted pinch nan OZ Life schematic connected this slide. It shows really our stakeholder worth creation is astatine nan halfway of our strategy. Over nan past respective years, we progressively embedded worth creation for stakeholders into nan OZ way, which includes our governance framework.

It is now still requiring immoderate maturity, nan lens done which we look astatine everything we do erstwhile making day-to-day decisions, assessing imaginable acquisitions, completing consequence assessment, building valuations, and our attack to sustainability. And it provides a nonstop statement of show to achieving our intent of going beyond what's imaginable to make lives better. It helps thrust our culture.

This year, we evolved our strategy to bespeak our modern minerals exposure, namely copper, and besides now nickel done West Musgrave. We proceed to beforehand our culture, which really came to nan level arsenic we tackle nan challenges of nan first half.

And we person matured our attack to creating worth for our stakeholders by embedding nan conception further wrong our frameworks, systematizing our expectations, assuring that it is being applied.

This is nan 3rd twelvemonth we person published an appraisal of our capacity pinch respect to really we are creating worth for our stakeholders. We do this done a suite of stakeholder worth creation metrics, which will germinate overtime arsenic we get amended and much aligned pinch our stakeholders' expectations of what that chiefly intends to them. This patent is published towards nan beforehand of our yearly study and our Sustainability Review successful nan capacity section.

I'd for illustration to telephone retired conscionable a fewer highlights. [Indiscernible] 2022, we published our decarbonization roadmap and during nan year, we made dependable advancement connected its implementation. A larger proportionality of our Scope 1 reductions successful nan roadmap comes from nan electrification of our materials handling systems astatine some Prominent Hill and Carrapateena.

We are besides moving pinch our suppliers connected tests of electrical vehicles into including a ore OZ Trial, ray vehicles and dense mining equipment. We are connected South Australian energy grid, which continues to move towards greater penetration of renewables, which assistance our Scope to emanation profiles, arsenic does nan hydroelectricity we usage successful nan Carajas successful Brazil.

We besides made advancement connected inclusion pinch accrued female information successful our workforce, though we still person a agelong measurement to spell successful creating a afloat inclusive environment, wherever diverseness successful each its forms is coming and thrives.

This representation shows our floor plan pinch 3 operating mines and a pipeline of imaginable opportunities. These opportunities see options specified arsenic our business pinch Havilah connected nan Kalkaroo project, a number of associated ventures pinch explorers and a rich | copper region successful nan Carajas. We're nan 2nd largest holding and are exploring successful our ain right.

So, turning now to a speedy recap of our capacity successful 2022. Having covered this item already successful our 4th fourth study a fewer weeks ago. After a challenging first half, we ended nan twelvemonth strongly, which saw a 21% assistance successful copper accumulation complete nan anterior quarter.

As a result, Q4 is our highest group quarterly copper accumulation connected record. We met our revised copper accumulation and costs guidance. Gold accumulation was supra original guidance. Prominent Hill met its copper guidance for an eighth consecutive year, reaffirming its estimation arsenic a reliable operation.

So, now I'm going to manus complete to Warrick and inquire him to return america done nan financial results, please.

Warrick Ranson

Thanks Andrew and bully greeting everyone. So, contempt nan accumulation headwinds knowledgeable successful nan first half and nan twelvemonth of inflationary uplift crossed a number of input costs areas, we maintained our attraction connected productivity and margins and ended pinch a stronger 2nd half delivering a nett operating profit aft taxation of conscionable complete AUD217 cardinal and operating separator of 36%, whilst providing tangible worth for each our stakeholders.

Net gross of AUD1.9 cardinal was marginally little than nan erstwhile year, pinch reduced income volumes and weaker comparative US waste of copper prices. However, I should statement that this was against nan important marketplace tightness that we knowledgeable successful 2021 and our higher golden sales. We saw a simplification of immoderate 40,000 ounces complete a comparative play aft depleting nan high-grade golden ore stockpiles astatine Prominent Hill successful 2021.

Total accumulation costs were AUD176 cardinal higher than nan comparative period. Once we person accrued underground accumulation levels astatine Pedra Branca successful Brazil, halfway costs drivers reflected nan challenging operating situation present successful Australia, pinch a number of one-off disruptions successful nan first half, utmost bedewed upwind during nan first quarter, nan isolated conveyable failures astatine Carrapateena, and while it now seems a agelong clip ago, our operating assets managing COVID-related disruptions and absenteeism.

Pleasingly, nan 2nd half of nan twelvemonth demonstrated a much-improved accumulation capacity pinch progressively decreasing COVID absenteeism, a little constrained processing travel astatine Carrapateena, and Prominent Hills underground operations providing higher copper grades and elevating works performance.

Insurance costs and scheme-related expenditure pursuing progression of nan BHP connection contributed to higher overhead costs.

Exploration and improvement expenditure reflected a continued finance successful our maturation pipeline pinch a number of activities undertaken, which are not yet astatine nan capitalization stage. This included acquisition costs some astatine Pantera and Santa Lucia task successful Brazil, nan Kalkaroo task present successful South Australia, and further exploration drilling arsenic we progressively returned to nan section aft COVID.

Our income taxation disbursal reduced successful statement pinch a little comparative net position pinch a somewhat higher effective taxation complaint owed to nan non-deductible quality of exploration and improvement expenditure from Brazil.

I've covered nan main contributors to our operating rate travel already, driven principally by our little gross result and higher operating costs environment. As nan past practice, we've provided immoderate further guidance from nan effect of our inventory drawdown connected nan depreciation and amortization nether nan 2023 arsenic a supplementary descent to today's presentation.

As Andrew mentioned, during nan year, we invested AUD951 cardinal successful building and description activities crossed each our operations arsenic we proceed to advancement our maturation strategy resulting successful an summation to our property, plant, and instrumentality balances.

The West Musgrave study continued during nan twelvemonth pinch a affirmative last finance determination taken successful September. Construction astatine Prominent Hills were shaft excavation description and Carrapateena’s good pad description besides progressed and arsenic antecedently mentioned, we invested successful further pipeline maturation to our exploration and improvement activity.

Financing activities see some nan activity successful our indebtedness accommodation and dividend payments to shareholders. Similar to nan anterior year, we distributed conscionable nether AUD18 cardinal to shareholders this year, pinch nan Board declaring some an AUD0.18 last dividend for 2021 past February, and past different AUD0.18 interim dividend successful September.

Increasing that drawdown connected our accommodation this twelvemonth pinch an summation successful finance activity, arsenic good arsenic managing nan timing of moving superior movements pinch a important uplift successful our waste and acquisition receivables astatine nan extremity of nan year, wherever we loaded astir 24,000 tonnes of provisionally priced ore successful nan past fewer days of December.

On descent 11, we summarized nan movements successful nan comparative year-end equilibrium sheets. Again, I've talked astir immoderate of nan cardinal drivers down these items already, pinch a resulting accrued driving plus spot of conscionable AUD182 cardinal complete nan people of nan year.

As mentioned, nan timing of investing our rate flows contributed to further drawdowns connected our indebtedness accommodation arsenic we proceed to retrieve from nan accumulation interruption and nan slow [Indiscernible] to operating rate flows from nan first half of nan year. We ended nan twelvemonth pinch a nett indebtedness position of AUD254 million.

The group's revolving in installments installation was extended successful May 2022 for a further 5 years, expanding nan limit of nan installation by AUD217 cardinal to AUD700 million. And successful October, nan group entered into a caller AUD1.2 cardinal 18-month syndicated word indebtedness installation to support nan improvement of nan West Musgrave project.

Working superior increased, principally, arsenic a consequence of shipment timing and nan extremity onto receivable. Although, this was offset by nan continued drawdown of our unfastened pit worldly astatine Prominent Hill arsenic we proceed to supplement underground accumulation to maximize much efficiencies.

Our spot assets accrued by a nett AUD759 cardinal aft depreciation, arsenic we proceed to put successful our brownfield description projects astatine some Carrapateena and Prominent Hill, on pinch ongoing excavation improvement and sustaining superior investment.

We spent AUD74 cardinal post-FID connected nan West Musgrave project, arsenic immoderate of this expenditure besides flowing connected to nan higher payables position astatine nan extremity of nan year. Our nett taxation balances increased, principally driven by nan appraisal of our eligibility for conclusion nether nan Temporary Full Expensing Provision introduced successful nan 2021 national fund aft assessing OZ Minerals' taxation balance.

And conscionable to publication retired my section, confirming a alteration successful our superior walk guidance for West Musgrave. As revised successful our 4th fourth accumulation report, a determination was made to alteration nan task Scope and present nan West Musgrave Living Hub nether design-and-construct exemplary requiring astir AUD110 cardinal successful superior funding.

The Board is now approved an accrued to nan wide superior fund by that amount, pinch nan alteration besides resulting successful a simplification to operating costs for nan task of astir AUD170 cardinal complete nan 10-year. We've subsequently updated nan West Musgrave 2022 superior guidance to bespeak nan timing of expected costs [ph].

And pinch that, backmost to you Andrew.

Andrew Cole

Thank you very much, Warrick. Before I unfastened up for questions, I'd conscionable for illustration to admit and convey our galore stakeholders for nan spot and support complete galore years. Thanks for celebrating nan wins we've had together. Thanks for being diligent pinch us, while we've corrected mistakes we've made on nan way. And I hope, successful return, that you consciousness we've created worth for each of you successful immoderate way.

I would besides for illustration to specifically convey our shareholders, galore who person been pinch america and supported america for galore years, and nan galore analysts who person respectfully covered our company.

We person formed a different way pinch our agile approach, focused connected civilization and stakeholder worth creation, which I understand isn't ever easy to exemplary aliases easy to forecast. But it very overmuch pleased to spot really good analysts person travel to bespeak our attack now successful your reports. So, convey you very much.

I'd for illustration to unfastened up to questions now. I've sewage Matt Reed who is our Chief Operations Executive connected nan telephone pinch Warrick and I. So, operator, tin you please punctual group really to inquire questions?

Question-and-Answer Session

Operator

Sir, I'm not showing immoderate questions astatine this time.

Andrew Cole

Well, convey you very overmuch operator. This will beryllium a grounds for our shortest telephone ever I think. So, convey you very overmuch for listening successful today. If you do immoderate questions, please driblet a statement to Travis and we will shape -- to reply your question.

Thank you very overmuch everybody. Thank you. Have a safe time and person a awesome week. We'll talk again.

Operator

Thank you. And ladies and gentlemen, this concludes today's convention call. Thank you for participating and you whitethorn now disconnect.

Editor: Naga



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