Oz Minerals – Update

OZ Minerals was recently added into our ASX 100 model portfolio.

We’re mindful of the selling pressure base metal prices have been under since the beginning of last month, with copper and nickel prices down 8% and 9%, respectively.

Commissioning of the Carrapateena mine later this year remains a key near-term catalyst to help support the OZL share price.  On  a valuation basis, we have OZL trading 10x FY20 earnings on a 2.4% dividend yield.

The company goes ex-div $0.08 on the 31st August.

 

 

 

 

OZ Minerals – Add to Watch List

OZ Minerals is under Algo Engine buy conditions and we add this name to our watch list. Early buying support is building just above the $9.00 price level.

OZL goes ex-div $0.08 on the 31st August and the stock trades on a forward yield of 2.7%.

OZ Minerals – FY18 Earnings

OZ Minerals was removed from our ASX100 model late last year after generating 144% return.

The stock is now under algo sell conditions.

OZL reported FY18 earnings that beat consensus with NPAT of A$228m. Dividends were lifted to $0.15

We’re buyers of OZL on the next algo engine buy signal. We will remain patient as the general price backdrop for resources  is  over extended in the short-term.

 

OZL and Origin Removed From The Model Portfolio

Over the last 24 hours, our ALGO engine has triggered sell signals for both Oz Minerals and Origin Energy. 

Both OZL and ORG have been longstanding components in our ASX model portfolio.

As illustrated in the summary below, ORG returned a respectable 30.93% over the 584 day holding period and OZL returned a whopping 144.21% gain, including dividends, since July of 2015.

Both of these names have been popular with investors and we’ll update with current ALGO signals in the near-term.

Oz Minerals

Origin Energy

Oz Minerals Is Back In The Buy Zone

As a result of trade tensions between the US and China, prices of raw materials and precious metals have been trading sideways to lower.

The same price pattern has emerged for the shares of mining companies that export these materials.

In this environment, the shares of the lower cost producers will generally perform better as the raw material price begin to improve.

During the last quarter, OZL reported that their production costs for copper had dropped from 97 cents a pound to 72 cents a pound. In addition OZL has a strong balance sheet and may expand their share buyback plans over the next 6 months.

OZL is part of our ASX model 100 portfolio. We see good support in the $8.80/90 area with an upside target near $10.20 over the medium-term.

OZ Minerals

 

 

 

ALGO Update: OZL Firms On Lower Production Costs

Our ALGO engine triggered a buy signal in Oz Minerals on July 12th at $8.80.

Since then, a broker note from Citi has raised their 12-month target from $10.70 to $11.10.

While the guidance for Gold and Copper production was lifted to the top end of the company’s 2018 targets, the more significant surprise was the drop in production costs.

During the latest quarter, OZL reported copper production costs fell from US 97 cents in March down to 72 cents per pound. Further, we believe a steady slide in the AUD/USD will be a net positive for the share price.

Internal momentum indicators have turned positive and we see good support at $9.00 with an initial upside target of $10.20.

Oz Minerals

 

 

 

 

Algo Update – Buy OZ Minerals

Our Algo Engine generated a buy signal recently in OZ Minerals, with the stock making a higher low at $8.80.

OZ Minerals key asset is a copper mine at Prominent Hill in South Australia. Further expansion in nearby mine at Carrapateena will start in late 2019.

FY18 EBITDA will likely be around $550m and the stock trades on a forward yield of 2%.

We consider OZL a high risk opportunity and encourage investors to apply a stop loss on a break below $8.70.

ALGO Update: Keep OZL On The Radar

Since posting a high of $10.70 on June 12th, shares of OZL have dropped over 12% and reached a 2-month low of $9.35 in early trade today.

As illustrated in the chart below, the price of High Grade Copper has dropped a similar amount over the same period of time.

The negative slide in copper prices has overshadowed the positive news that OZL has acquired the remaining 10% interest in Avanco Resources in  Brazil.

We consider this acquisition a fundamental boost to miner’s extensive mine life and will add to their “lean business” model outlined at the Macquarie  Mining Forum earlier this week.

Our ALGO engine triggered a buy signal on OZL at $8.60 on February 12th and the stock has been in our ASX Top 50 model portfolio since June of 2015.

We will look to add to long positions around the $9.20 support level over the near-term.Oz Minerals

High Grade Copper

 

 

Keep OZL On Your Radar

Shares of OZL are flat in early trade as their $418 million takeover of Brazilian-based Avanco Resources is close to finalized.

The final vote from Avanco’s largest shareholders is expected to be accepted by June 14th. We consider this acquisition timely and a net positive for the Adelaide-based miner.

The share price of OZL has mirrored the 8% gain this week in the spot price of copper to reach a 6-year high of $10.68.

OZL has been part of our ASX top 100 portfolio for just over three years from $4.25.

We don’t currently have an ALGO buy signal for the stock, but will look for a “higher low” pattern on a pullback into the $10.00 area.

OZL

High Grade Copper