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OZ Minerals H1 profit down 43%

AAP logoAAP 9/08/2016 Trevor Chappell

Copper and gold miner OZ Minerals expects 2016 will be another strong year for production despite booking a 43 per cent drop in half-year profit.

OZ Minerals' net profit for the six months to June 30 fell to $29.5 million, from $51.8 million a year earlier, dragged back by lower copper prices and costs associated with legal action against the company.

But underlying profit rose to $55 million, from $51.8 million.

The statutory result was pulled back by $25.5 million in legal costs associated with the settlement of a class action filed by former Zinifex shareholders who received shares in OZ Minerals following the merger between Oxiana and Zinifex in 2008.

OZ Minerals maintained its full-year guidance for contained copper production at 115,000-125,000 tonnes, following a record year of production in 2015.

The company owns and operates the Prominent Hill copper-and-gold underground mine and open pit in South Australia, and the Carrapateena Project, one of Australia's largest undeveloped copper deposits in South Australia.

"We expect 2016 to be another strong year of production, with increasing high-grade copper ore from the underground," OZ Minerals chief executive Andrew Cole said on Wednesday.

"As a result, the dividend declared today reflects the board's expectation of strong cash flows through the remainder of 2016 and indeed over the next several years."

OZ Minerals will pay an unfranked interim dividend of six cents per share.

In the first half, OZ Minerals produced 58,368 tonnes of copper and 57,662 ounces of gold in concentrate - in line with company guidance.

Production costs came in at 73.8 US cents per pound of copper, in line with the company's guidance for the 2016 calendar year of 70 to 80 US cents.

OZ Minerals said commodity prices had been volatile in the first half in the face of demand pressure, higher inventories and persistent economic uncertainty.

The average copper price in Australian dollars was 15 per cent lower than the prior corresponding period and down 21 per cent in US dollars.

However, a lift in the gold price partly offset the lower copper price.

OZ Minerals said scoping studies for a new mine at Carrapateena and a concentrate treatment plant at Whyalla remain on track.

Shares in OZ Minerals were five cents higher at $6.32 at 1340 AEST.

LOWER COPPER PRICE, LEGAL COSTS WEIGH ON OZ MINERALS

* Half-year profit down 43.1pct to $29.5m

* Revenue up 2.1pct to $398.3m

* Interim dividend of six cents per share, unfranked, unchanged

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