OZ Minerals Limited

OZL Details

Strong copper mineralisation intersected at ‘Jericho’ for Eloise JV: OZ Minerals Limited (ASX: OZL) has provided the drilling update for Eloise JV, northwest Queensland. The inaugural drilling into 4km long Jericho target has intersected multiple copper sulphide zones in first two holes. The second hole, testing 3 separate EM conductors, has copper sulphide rich mineralisation at each of the western and central zones. The central zone demonstrated massive and semi-massive copper sulphides in two horizons up to 7.2m wide. Additionally, OZL in the third quarter had reported for production of 28,880 tonnes of copper and 29,264 ounces of gold. The company has identified an optimised mine plan and has implemented the same to accelerate mining of the open pit and bring forward its closure to Q1 2018 from mid-2018. At Prominent Hill, the open pit unit mining cost guidance has now been revised downwards to $7.00-$7.25 from $7.25-$7.75, which will save the company around $10 million over the remaining pit life. The underground mine performed strongly with production up 15 per cent and unit costs 21 per cent lower than the prior quarter. OZL’s Prominent Hill mine had otherwise reported a mixed 3QCY17 production result. The group’s gold output was a miss during the third quarter while development risks have been prevailing at Carrapateena.

OZL has now appointed former Rio Tinto senior executive, Warrick Ranson, as the Chief Financial Officer. Meanwhile, OZL stock has risen 12.89% in three months as on October 25, 2017 and is trading at slightly high levels. We give an “Expensive” recommendation on the stock at the current price of $8.37


OZL Daily Chart (Source: Thomson Reuters)

Avanco Resources Limited

AVB Details

Enhanced production at low AISCC:Avanco Resources Limited (ASX: AVB) seems to be on track to exceed its 2017 full-year production targets given the recent result. In the third quarter ending September 2017, AVB has posted the best production performance this year from the Antas Mine. The copper and gold has exceeded the guidance, with a strong increase in the copper price. AVB also realised record free cashflows. The company has completed the reserve infill drilling program and aimed for an upgrade to existing reserves and extension to mine life. The Pedra Branca Project continued to advance with the commencement of a resource extension and reserve definition drilling program. This program compliments the Definitive Feasibility Study that is progressing well, and has confirmed that the Pedra Branca East orebody remains open along strike. For the Centro Gold Project, the company has accelerated acquisition agreement that will enable it to realise the value sooner. Moreover, in the third quarter, the production of copper in concentrate has been 3,698 tonnes while year-to-date production has been 10,792 tonnes. On an annualised basis, this is 3% above the top-end of the annual guidance range of 13,500 – 14,000 tonnes. The company has reported the third quarter sales of 3,433 tonnes copper and 2,699 ounces gold in concentrate, generating provisional sales revenue (excluding costs) of $25.6m.
 

Performance for the third quarter (Source: Company Reports)
 
The group’s All in Sustaining Cash Costs (AISCC) has decreased by 5% to $1.78/lb. AVB’s cash has increased to $28.5m after capital expenditure of $5.0 million for the third quarter compared to the second quarter of $2.4 m, and AVB now remains to be debt-free in the third quarter. Meanwhile, AVB stock has fallen 8.7% in last six months as on October 25, 2017. Given the prospects, group’s ability to optimise and de-risk the assets, and an anticipated boom from the copper prices, we put a “Speculative Buy” recommendation on the stock at the current price of $0.10


AVB Daily Chart (Source: Thomson Reuters)

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