The Oz Minerals Limited (ASX: OZL) share price has edged slightly higher in today’s trade. This comes following the company’s announcement it plans to acquire Cassini Resources Ltd (ASX: CZI). Under the transaction, which will take place via a scheme of arrangement, Oz Minerals will acquire all the share capital of Cassini Resources. This will consolidate the company’s ownership of the West Musgrave Project and surrounding tenements to 100%.

What does Oz Minerals do?

Oz Minerals is an Australian-based mining company with a focus on copper. It owns and operates the Prominent Hill copper-gold mine and the Carrapateena advanced exploration copper-gold project. Both projects are located in South Australia. The Oz Minerals share price has recovered strongly from its March low of $5.99, rising 74% to its current price of $10.43.

In the first quarter of 2020, Oz Minerals produced 20,231 tonnes of copper and 55,606 ounces of gold. The company has provided full-year production guidance of 83,000-100,000 tonnes of copper and 207,000-234,000 ounces of gold. It ended the first quarter with net debt of $89 million. However, the Aussie miner is expected to move to a net cash-positive position in Q2 and remain there for the rest of the year. Net debt was $2 million as at 14 April which is good news for the Oz Minerals share price.

More about the acquisition

The acquisition will give Oz Minerals 100% ownership of the West Musgrave project. This will optimise the development approach, timing, and funding for the project. The West Musgrave Project, located in Western Australia, is Australia’s largest undeveloped copper nickel deposit. A pre-feasibility study released earlier this year estimated the project had a Net Present Value of $800 million and an operational life span of ~26 years.

Regarding the acquisition, Oz Minerals’ CEO Andrew Coles said, “This is a promising project with strong sustainability credentials both in terms of the copper and nickel to be mined, being critical inputs for the renewable economy, and also in relation to its low carbon footprint with some 80% of power generated through renewable sources including solar and wind”.

What’s the outlook for the Oz Minerals share price?

Oz Minerals responded to the COVID-19 pandemic by identifying $150 million in cost savings and deferring all but essential metal production activities. The miner is heavily exposed to copper and gold prices which have moved in opposing directions of late. The copper price came under pressure as a result of reduced global activity due to COVID-19, falling over 12.5% in March. It has since substantially recovered, however, and should be a much needed commodity as the world rebounds from the crisis. The gold price has climbed over the course of 2020, reaching levels not seen since 2013. Only time will tell whether these trends bode well for the Oz Minerals share price moving forward.

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Motley Fool contributor Kate O’Brien owns shares of OZ Minerals Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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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The ASX big bank shares have staged a U-turn and are trading higher as Morgans urge investors to buy these stocks with one exception.

The turnaround by the big banks helped the S&P/ASX 200 Index (Index:^AXJO) recover from morning losses with the index gaining 0.5% during lunch time trade.

But the big banks are outperforming the market. The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is the best performer with a 1.7% jump to $19.06 at the time of writing.

The Commonwealth Bank of Australia (ASX: CBA) share price isn’t far behind with a 1.5% increase to $69.72, while the National Australia Bank Ltd. (ASX: NAB) share price and Westpac Banking Corp (ASX: WBC) share price added just under 1% each.

Not so bad debt

The positive sentiment coincided with Morgans’ report that stated too much bad news have been factored into the sector.

The market marked down the big banks on worries about rising bad debts due to the COVID-19 shutdown of our economy.

“We believe the bad debt damage being factored into current major bank share prices is overdone with the exception of CBA, which is one of the key reasons why CBA is our least preferred major bank,” said the broker.

“WBC is the only major bank where we believe the bad debt damage being priced in is greater than that experienced during the GFC, and this is one of the key reasons why WBC remains our preferred major bank.”

ASX big banks to buy now

The remaining two big banks are also rated as “add” (equivalent to “buy”) by Morgans with ANZ Bank only just getting upgraded from “hold”.

The headwinds the sector is facing due to the pandemic isn’t as severe as those experienced during the GFC, according to the broker.

This is because the federal government and the Reserve Bank of Australia (RBA) have moved quickly to support the economy and banking sector.

“We generally describe the current credit loss provisioning of the major banks as effectively being predicated on the assumption of a ‘squeezed-U-shaped’ recovery for the Australian economy,” added Morgans.

“At this stage this continues to look justified, particularly given the easing of lockdown restrictions being experienced in Australia.”

Lost dividends

But it isn’t all good news. The broker thinks that ANZ and Westpac won’t pay their interim dividends, and the banks will announce this bad news in August.

Both banks deferred their dividend decision when they reported their first half profit results one to two months ago.

The broker also believes that CBA will defer its final dividend decision cum August, but will make this payment in November.

The other three banks are tipped to declare their final dividends in the same month.

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Motley Fool contributor Brendon Lau owns shares of Australia & New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, and Westpac Banking. The Motley Fool Australia has no position in any of the stocks mentioned. 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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