OZ Minerals Ltd., Australia’s third-biggest copper producer, said profit will drop more than 15 percent this year, with higher costs and lower production continuing into next year.
“The expected operating result for the full year ending 31 December 2012 will be less than that of the corresponding previous period by more than 15 percent,” the Melbourne-based company said today in a statement. OZ Minerals is estimated to book A$198 million ($207.4 million) in operating profit this year, based on the average of 11 analyst estimates compiled by Bloomberg, which would show a 44 percent decline from 2011.
Copper output will drop to between 90,000 metric tons and 100,000 tons next year from a range of 100,000 tons to 110,000 tons this year. Costs will increase further due to underground mining and as the company expects to dig harder material at its open pit mine.
For this year, the company said net income will be within 5 to 10 percent of the consensus estimate of A$156 million. OZ Minerals is scheduled to report earnings in February.
OZ Minerals shares fell 9.8 percent in Sydney yesterday, the most in almost four years, on speculation it will miss its production targets due to issues at its main Prominent Hill mine in South Australia. The company denied it has production issues and reiterated today it will meet its output target range at a cash cost of between $1.10 and $1.20 a pound.
The stock rose 3 percent to A$6.91 at the close of trading today, after slumping 9.8 percent yesterday. It has declined 31 percent this year while the benchmark stock index gained 14 percent.