OZ in $512m hole after big restructure

OZ MINERALS has signed off on what was a miserable 2009, posting an annual loss of $512 million after being forced into a drastic restructuring by its bankers when the global financial crisis was at its worst.

The restructure reduced the group's portfolio of mines from five to one and led to the appointment in August of a new managing director, Terry Burgess.

According to an upbeat Mr Burgess yesterday, it was time to focus on OZ's future. He said the group's remaining operating asset, the new Prominent Hill copper and gold mine in South Australia, made an excellent start, and that the results of a study of underground mining there would be ready by June. The market should also look out for a maiden-resource estimate next month for the group's gold exploration project in Cambodia, he said.

OZ Mineral's declared loss of $512 million does not look bad when compared with the $2.5 billion loss recorded in 2008, when there were some massive asset-value write-downs following the creation of OZ through the merger of Zinifex and Oxiana. But it was the performance of Prominent Hill that was the main focus at yesterday's profit briefing to analysts.

Prominent Hill's maiden profit was $203 million. After taking in $91 million in charges on the refinancing of bank loans and foreign exchange losses of $113 million, the group's net profit for the year was $31 million.

Including the $607 million loss recorded on the $2 billion sale of the four mines last June (offset by $63 million in earnings before their sale) took OZ's bottom line to the loss of $512 million.

The upside from last year's drastic restructuring is that OZ has minimal debt and cash of $1.07 billion. Despite the cash bundle, it is not paying dividends, preferring to earmark the funds for regrowth.

OZ intends to expand through the acquisition of copper projects, either at the exploration, development or production stage.

Gold was not mentioned, but Mr Burgess said later that OZ had not gone cold on gold.

He pointed to the looming maiden-resource estimate for Cambodia as an indication of OZ's continuing interest in gold. The market believes a maiden resource of at least 2 million ounces will be required to maintain OZ's interest in the project.