Australian copper miner OZ Minerals Limited‘s (ASX: OZL) share price rocketed 24.3% in July. Over that same time, the S&P/ASX 200 Index (ASX: XJO) gained a meagre 0.5%.
OZ Minerals wasn’t spared from the COVID-19-driven market rout that savaged most ASX shares. From 21 February through 23 March, the OZ Minerals share price plunged a gut-wrenching 40%.
Since then, it’s been uphill all the way for the copper miner. By the end of the trading day on 31 July, the share price had gained a whopping 128% from it 23 March low.
Year-to-date, OZ Minerals share price is up 35.3%. The current price of $14.34 per share gives the company a market cap of $4.6 billion.
What does OZ Minerals do?
Based in South Australia, OZ Minerals is mining company primarily focused on copper. It owns and operates the high-quality Prominent Hill copper-gold mine and the Carrapateena advanced exploration copper-gold project. Both sites are located in South Australia.
The company had $15 million in net cash (unaudited) at 30 June and had a $480 million revolving credit facility.
What fuelled the OZ Minerals share price rise in July?
OZ Minerals has clearly benefited from the rising price of copper, its primary focus. During July, the price of copper went from US$6,015 per dry metric tonne to US$6,413, an increase of 6.6%. It’s also worth noting that the price of copper gained 39% from its 24 March low through 31 July.
Topping off the big gains in copper for OZ Minerals mines, July kicked off nicely for the company when JP Morgan upgraded the company from “neutral” to “overweight”. That came after the big name broker re-evaluated its initial value ascribed to OZ Minerals’ Carrapateena block cave project, with both ore grades and the mine life upgraded.
JP Morgan put its 12-month target for the OZ Minerals share price at $12.80 a share. In late afternoon trading today, the miner was trading at $14.34 per share.
A second top broker, Macquarie Group Ltd (ASX: MQG) named OZ Minerals as one of its “counter consensus calls“, believing the miner’s financial year 2020 earnings per share estimates will come in higher than consensus forecasts.
This was borne out by OZ Minerals’ quarterly report, released on 22 July. The company raised its financial year 2020 production guidance from 83,000-100,000 tonnes of copper to 88,000-105,000 tonnes. If that holds true, the OZ Minerals share price could have further to run.
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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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