OZ Minerals (OZL) has produced its first saleable copper concentrate at Carrapateena and has forecasted a faster ramp-up to achieve the design 4.25mtpa run-rate within just 12-months. The Company has also committed the development of the Pedra Branca project in Brazil, as part of a Carajás Hub strategy whereby ore will be trucked to the existing Antas processing plant. Argonaut regards OZL as the best positioned mid-cap stock heading into an expected copper price recovery in the early 2020s. Recent macro data out of China indicates the onset of a demand recovery, which coupled with easing US/China trade tensions, bodes well for copper prices. Towards the mid-2020s, we see copper heading into a significant supply deficit driven by low new deposit discovery rates and declining grades at existing mines. OZL offers production growth from Carrapateena, high margins generated by lowest quartile costs, long mine life from producing assets and a quality pipeline of development assets (i.e. West Musgrave, CentroGold). BUY maintained.
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