Tag: ASX:OZL

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

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

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.

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

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

Since posting a low of $2.90 per pound on March 26th, the price of US High Grade Copper has risen over 6% and closed at $3.08 in NY Today.

This is good news for shareholders of OZL as the share price has traded back over $9.20 in early trade.

Our ALGO engine triggered a buy signal in OZL on December 12th at $8.60, and the stock is also included in our ASX Top 100 portfolio.

We see a key resistance area in the $9.35 area; once that level is broken, we expect to see solid range extension back into the $10.00 handle.

OZ Minerals

Our ALGO engine triggered a buy signal in OZL at $8.60 on February 12th. Since then, the share price hit a high of $10.00 on February 27th.

OZ Minerals has a market cap of $2.793 billion. They primarily focus on exploration, development, mining and processing of  projects within  Australia.

OZL are mainly focused on mining Copper and Gold, while holding ownership of the Prominent Hill mine in South Australia.

The company is largely debt-free while holding an overall cash balance of $729 million back in late December 2017.

We see good support at the $9.00 area and upside potential of $10.45 over the medium-term.

OZ Minerals