The OZ Minerals Limited (ASX: OZL) share price jumped this morning and it isn't only the broader market rebound that's pushing it higher.
Shares in the copper and gold miner gained 1.6% to $9.94 while the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index inched up 0.4% in early trade.
The market slumped yesterday on worries about the coronavirus and market sentiment improved overnight. This should help commodity prices but that isn't the main driver for the OZ Minerals share price.
Expanding margin
Management released a pleasing quarterly production report for its flagship Prominent Hill mine and its smaller Antas asset. The miner reported better than expected costs while group production was in-line with the miner's guidance.
The so-called C1 cash cost (which is essentially its operating costs) dropped by early half to US46.8 cents per pound in the December quarter. This puts OZ Mineral's full year C1 cost at US66.9 cents a pound compared with its guidance of between US75 cents and US80 cents a pound.
It's all-in sustaining costs (AISC) was also lower than forecasts at US$1.11 a pound. The company was guiding for US$1.20-US$1.30 a pound.
Operating costs benefited from less stope filling activity in the underground and the absence of a planned plant shutdown. Gold output was also high during the quarter and sales of the by-product helped lower costs.
Quarterly output
Meanwhile, total copper production across the two assets hit 109,289 tonnes and gold output was 128,874 ounces for 2019. This compares with its copper guidance of 101,000 to 111,500 tonnes and gold guidance of 120,400 to 130,800 ounces.
This isn't the only reason for shareholders to cheer. Management believes that the ramp up of its Carrapateena mine will be quicker than originally thought.
Faster ramp-up
"We built the Carrapateena mine which will be in ramp-up phase this year, having produced first saleable concentrate prior to year-end," said the miner.
"We're now targeting a shorter 12-month ramp-up to 4.25Mtpa run rates, down from the previous 18 months."
Foolish takeaway
OZ Minerals hasn't performed well over the past year. The stock only managed a 3% gain in the last 12-months when the ASX 200 jumped around 20%.
Fellow copper miner Sandfire Resources NL (ASX: SFR) is even worst. The stock is down 19% over the period.
Concerns of an oversupplied copper market and valuation issues have dogged both stocks. But you won't find consensus on the outlook for the red metal. If global growth rebounds from the second quarter, copper producers could find renewed support.
