Survival pattern for OZ Minerals improves as cash starts to flow from Prominent Hill
The mood following Minmetals full bid offer for OZ Minerals Ltd (ASX: OZL) - with huge trading in the stock in the past week - has started to swing back towards acceptance, after the share price fell at one stage to almost its price before a long trading halt called by the company to try and resolve its grim debt scenario.Investors shrugged off the bitter news today of OZ Minerals declaring a full calendar 2008 loss of $A2.485 billion ($US1.6 B) generated mainly by massive write-downs on assets. Minus the write downs the bare loss was $A66.4 M ($US42.8 M).Two other positives today was the announcement of an extension of terms on major debts with banks to March 31 (a move that will put pressure on the Federal Government’s foreign takeover approvals) and that sale of two projects - the Martabe gold development in Indonesia and the polymetallic Golden Grove project in Western Australia are advancing. These are expected to realise at least $A450 M ($US290.2 M)OZ Minerals bank debt was about $A1.2 B ($US774 M), the Minmetals bid totals $A2.6 B ($US1.67 B), and the company’s cash flow position has just been improved with the first copper-gold concentrates being delivered from the new Prominent Hill mine in South Australia’s far north. Prominent Hill will ramp up over the next four months to reach 85% of nameplate production capacity of 8 M tonnes per annum of ore by mid year. Production for 2009 is expected to be between 85-100,000 tonnes of contained copper and 60-70,000 oz gold.