OZ Minerals recorded a satisfactory year with a solid operational performance at Prominent Hill, the acquisition of a new copper project in Carrapateena and a capital management program.
An unfranked dividend of 30 cents per share was announced in February 2012, and in addition to the dividend of 30 cents per share paid in September 2011, the total dividend for 2011 was 60 cents per share.
2011 was the second full year of operations at Prominent Hill after the commencement of production in 2009. Strong financial results in 2011 were driven by good operations and cost control measures at Prominent Hill and other continuing operations supported by strong prices realised for the Company’s main products of copper and gold.
Net profit after tax for the Consolidated Entity was $274.5 million for the year (2010: $586.9 million) with the reduction mainly due to non-operational factors including the absence of the impact of asset impairment reversal of $141.1 million after tax which was recognised in 2010, a litigation settlement expense of $42.2 million net of tax and an impairment loss recognised in relation to the investment in Toro of $15.2 million in 2011. Other factors included a higher tax expense, higher operating costs and lower gold production.
The average price received for copper and gold was higher in 2011 with the copper price averaging US$4.00 (up 16.8 percent) per pound and the gold price averaging US$1,572 (up 28.2 percent) per ounce. However the impact on Australian dollar revenue was reduced due to the strength of the Australian dollar relative to the US dollar with the average exchange rate for the year being $1.03 (2010: $0.92).
OZ Minerals’ operational performance resulted in strong operating cash flows with $647.1 million for the year which allowed the Consolidated Entity to maintain a rigorous and disciplined exploration program, conduct capital management programs and undertake an acquisition, while retaining a healthy cash balance to support growth initiatives.
The Consolidated Entity’s cash balance of $886.1 million as at 31 December 2011 was lower than the prior year of $1,334.2 million due mainly to capital management programs comprising a capital return of $388.6 million and on-market share buyback of $99.9 million, the acquisition of Carrapateena for $253.1 million, acquisition of additional shares in Sandfire for $13.0 million, and payment of dividends of $226.7 million. Total cash spent on investments, capital management programs and payment of dividends was $981.3 million.