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Lates press - FIN review

 

Hard work and luck pay off for miner

Author: Martin Pretty

Date: 13/11/2003 20:14:00

Words: 671

Publication: Financial Review

Section: Special Report 1

Page: 10

Source: AFRBreaking

 

Gold and copper miner Oxiana used its better than average knowledge of the Asian region to grab a now-valuable asset while most other buyers steered well clear. That asset has become the driving force behind Oxiana's annualised total return to shareholders of 140 per cent for the past three years.

 

More recent rises in Oxiana shares have been attributed to takeover speculation. The fact that a small mining company focused on Laos - and with interests in Cyprus and the Philippines - is considered a prime candidate for acquisitive international miners is testament to the judgement and hard work of Oxiana's well-credentialled management team.

 

It also reflects the massive level of consolidation in the mining sector that has pushed Oxiana into third place on the rankings of Australian-based gold producers. Oxiana is now getting very close to entering the S&P/ASX 100 Index.

 

Owen Hegarty brought 25 years of experience with Rio Tinto's predecessor, CRA, with him when he took the position of managing director of Oxiana in 1995. He had run Rio's copper and gold mining and smelting business unit between 1988 and 1993 but was just an observer when Rio entered Laos to scope out the asset.

 

When the merger of CRA and RTZ created Rio Tinto, the conglomerate's scales increased and assets like the Sepon copper and gold project in Laos were no longer considered of significant size.

 

Oxiana completed due diligence on Sepon in April 2000 and took an 80 per cent stake off Rio Tinto, which had already spent $US26 million on exploration at Sepon from 1992 and remained a 20 per cent partner.

 

The total purchase price was $US22 million, in staged and conditional payments.

 

"I never had a confidence issue given I'm really familiar with the territory," Hegarty says.

 

"I had never seen anything like it before in my life," he says of Sepon - "a beautiful copper body surrounded by gold bodies."

 

Rio retains clawback rights into areas outside Sepon's main mineralised zones. And the Laotian government also has an option to buy up to 10 per cent of the project on a pro-rata basis, diluting Rio to 18 per cent and Oxiana to 72 per cent.

 

"The government of Laos gave 100 per cent support, encouragement and accommodation. They see us at the forefront of new developments," says Hegarty, who was this week on a roadshow in Europe.

 

Gold production has recently commenced at Sepon. About 84,000 ounces were produced at an operating cost of $US211 an ounce in the first half of calendar 2003. That placed Sepon among the lower quartile of gold miners on the cost curve and helped Oxiana report an interim net profit of $4.6 million for 2003, compared with a $6.2 million loss in 2002.

 

Copper production is expected to begin in 2005, following the finalisation of funding that includes a long-term off-take agreement with Outokumpu and a $US185 million finance facility.

 

UBS has forecast that in 2005, earnings will be split roughly 50/50 between gold and copper. But copper should move to 70 per cent by 2006.

 

Oxiana is trading on one of the highest price-earnings multiples of any major gold company.

 

Its share price has risen by 170 per cent in the past year as gold production became a reality and copper production moved closer to fruition.

 

Hegarty attributes the success to good resources, good people, persistence and a bit of luck.

 

"The harder you work, the more luck you have," he says. "And we've pretty much done everything we said we were going to do."

 

In the longer term, Oxiana is looking at moving across the Laotian border into China.

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Digging for proof of desert bonanza

By Business Editor ANTHONY KEANE

22nov03

A DRILLING program costing $3.5 million is underway south of Coober Pedy to define what is expected to become South Australia's next big mine.

 

Adelaide-based Minotaur Resources and new joint-venture partner Oxiana this month began proving up the Prominent Hill copper and gold deposit.

 

Two years ago Prominent Hill set the stock market on fire, with Minotaur's initial success delivering it the biggest one-day share price rise in more than 30 years.

 

In late 2001, Minotaur's share price rocketed from 17c to $1.17 on one day. It reached $3.02 a few months later amid speculation that Minotaur and its joint-venture partner at the time, BHP Billiton, had found a deposit in the size range of WMC's big Olympic Dam mine.

 

The shares then lost their sparkle as follow-up drilling showed the discovery would not be the monster mine a global giant such as BHP was looking for.

 

BHP left the joint venture in May, putting more pressure on Minotaur's share price. It hit a low of 47c mid-year, before the new deal with Oxiana breathed life back into it.

 

Yesterday Minotaur shares remained unchanged at 99c.

 

Under the new deal, Oxiana is funding the current $3.5 million program and will have to spend another $5 million to earn any equity in the project, in which Minotaur now holds 100 per cent.

 

Oxiana could spend up to $34 million on Prominent Hill to earn a 65 per cent stake in the project ahead of a decision to mine.

 

The two-year anniversary of the discovery passed last week with little fuss.

 

Minotaur managing director Derek Carter ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ a self-confessed rugby fanatic ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ was celebrating, but it was in Sydney after Australia beat New Zealand for a spot in tonight's Rugby World Cup final.

 

Nevertheless, Mr Carter is excited about the new drilling program and confident a mine will be developed.

 

"It's a huge step for us," he said.

 

"The general size and grade that we can see from preliminary drilling suggests that it will become a mine."

 

But don't hold your breath. Mr Carter said it could take another 2 1/2 years before a mine would start.

 

The current drilling program is due to end in mid-2004, to be followed by an 18-month feasibility study and other detailed planning.

 

Mr Carter said the progress of Prominent Hill had been delayed by six months by BHP Billiton's withdrawal, "but it gave us the opportunity to get a better deal".

 

The slow-going should not deter investors, analysts said.

 

Baker Young Stockbrokers research manager Duncan Gordon said the project was far more advanced than when it sparked the initial excitement in 2001.

 

"The fact that Minotaur shares are trading lower than what they were a couple of years ago doesn't reflect the increased maturity of their project," Mr Gordon said.

 

"There is major potential upside in Minotaur's share price from current levels."

 

Minotaur was now more likely to "bring real value to shareholders rather than just attracting short-term traders in the stock".

 

Mr Gordon said bringing Oxiana on board was "very positive".

 

Oxiana has a market capitalisation of more than $1 billion and is a good example of how a small company can transform itself into a top-100 stock.

 

Oxiana shares were trading below 8c three years ago, and closed yesterday at $1.02c, down 3c on the day.

 

Oxiana bought an 80 per cent stake in the Sepon copper and gold project in Laos in 2000, and had initial production from the mine in the March quarter of this year.

 

"Oxiana languished for a long time before they got their project up and running," Mr Gordon said.

 

"The benefit of Oxiana is they set up a major mining operation from scratch, and I think that will be very helpful for Minotaur."

 

Taylor Collison resources analyst Keith Goode said Oxiana's willingness to spend up to $34 million on Prominent Hill showed it was serious.

 

"They are not going to make that kind of punt if there's not going to be a mine there," Mr Goode said.

 

"Minotaur delineated an orebody but it's not the mega size that BHP wanted.

 

"But it's still a mineable orebody."

 

Mr Goode said while Minotaur's discovery was yet to result in a concrete project, it had sparked interest in all mineral explorers that had not been there before Prominent Hill.

 

SA Chamber of Mines and Energy chief executive Phil Sutherland said Prominent Hill generated a lot of activity in SA's mining sector.

 

"In many ways, it put SA back into the spotlight," he said. "It came at a very good time because things were looking a bit grim."

 

Mr Sutherland said that since Prominent Hill, other big companies had begun searching in SA.

 

They include the world's biggest gold miner, Newmont, in a joint venture with Adelaide Resources.

 

SA also had benefited from the opening of the Challenger gold mine in 2002, Mr Sutherland said.

 

He shares Mr Carter's confidence about a mine going into production at Prominent Hill.

 

"The state could then point to three commercially viable mines whereas, two years ago, you could only point to Olympic Dam," Mr Sutherland said.

 

"Success breeds success.

 

"SA is geologically very prospective ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ it's about getting people to spend money on the exploration effort."

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QUOTE
on: Nov 10th, 2003, 10:29pm 

Oxiana Resources Now Ranked 86TH Biggest Australian Listed Co

Oxiana Resources Ltd (ASX:OXR) continued to shine today after crashing into the top 100 Australian stocks and adding five per cent to its share price.
An Oxiana spokeswoman said the Victorian based gold miner was now the 86th biggest Australian listed company.

Earlier today the miner reached a market cap of more than A$1 billion (US$702 million) when its share price hit $1.07.

The stock surged to a high of $1.15 before closing up six cents at $1.11 with more than nine million shares changing hands.

Oxiana has traditionally been supported by retail investors who make up 80 per cent of the market share.

Now, although Australian fund manager remain reluctant to take up the stock, off-shore funds are starting to take notice, an Oxiana spokeswoman said.

At a briefing last month Oxiana chief executive Owen Hegarty said the stock's market cap had increased tenfold in two years.

The company had a target market cap of $1 billion by 2007.

"Now that's done early people are taking notice," the spokeswoman said.

Oxiana Resources only commenced gold production in January 2003 and changed its name in July from Oxiana Resources NL to better reflect its new status.

The company will have to maintain a top 100 ranking before being included in the official ASX 100 index.

Meanwhile gold analysts said the stock was over-priced but had a strong future.

http://asia.news.yahoo.com/031110/4/17j54.html 
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  • 2 weeks later...

http://www.asxboard.com/html/emoticons/biggrin.gif I have been in this stock for over 3 years and think the future is very good for some stong growth over the next couple of years. Some very good drill results over the past few months and the gold production up with all the predictions.

Allen

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  • 2 weeks later...

Saving the best for last. Those that know me, are well aware of my feelings on Oxiana. It was & still is an absolute "NO BRAINER".

It's all be said many times, so I won't bore you with the details, unless some here are not familiar with it.

 

Outstanding management & board are guiding OXR as it becomes an emerging global mid cap miner of gold (mid cost) & copper (lowest cost). Plus very prospective tenements elsewhere in Laos, Thailand, China & with MNR at Mt Woods in South Australia (drill results due soon).

 

I have >40% of my total shares in OXR.

 

cheers,

 

ned, that's it for now, off to dinner with mrs ned & some mates.

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Hi REd. Good to see you here. Worried about Ozestock durability. Hope new mabnagement stabilises it. Those OXR stalwarts can acess it by typing in only 202.92.112.134 .

 

As for OXR I've been in it for four years now, steadily increasing my holding. I'm seriously overweight in OXR, but the management/directors are absolutely first class and have delivered all they have promised and more.

 

Looking forward to the Minotaur Prominent Hill drill results this coming week. With FRiday's strong movement in MNR and OXR price, good results might emerge on Monday or Tuesday.

 

Im my humble opinion OXR is one of those stocks that emerges only once in a decade.

 

Cheers all

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QUOTE (Marsupial @ Dec 14 2003, 10:28 AM)
In my humble opinion OXR is one of those stocks that emerges only once in a decade.

Cheers all

but arn't you glad that Its in this decade Minion http://www.asxboard.com/html/emoticons/cool.gif

ps any one looked at hdr this morning? regards dmcphail

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