OZL -3.80%: Confession session is underway for the miners and today saw another production downgrade leading to an increase in unit costs. So far, we have seen 6 names within the top 50 Australian miners downgrade based on production issues that have led to cost pressures, so this feels like a widespread thematic. Today it was Australia’s largest listed copper producer who lowered group copper production guidance due to Covid causing higher absenteeism while weather-related issues in quarter 1 didn’t help, Resourcing issues at Carrapateena & a one-off equipment failure with Carrapateena affected by a material handling system belt damaged in the second quarter. All of this, fed into a downgrade of Carrapateena copper production guidance by circa 13%. Importantly for MM though, while these issues are negative, they are transient rather than structural and given OZL is one of the best, if not the best, run copper company in the world, with a long-standing track record of operational and financial delivery, we think Andrew Cole and his team will sort these out.
MM is now cautiously bullish OZL into current weakness
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