StoneBridge Research – OZ Minerals Limited

StoneBridge Snapshot – OZ Minerals Limited (OZL $0.87) – Prominent Hill site visit review

• OZL hosted a site visit to its Prominent Hill mine in South Australia on 3 June 2009.
• The site visit confirmed our view that Prominent Hill is a world class asset with excellent near mine and regional exploration upside.
• OZL has successfully commissioned the asset and aside from some stability issues in the upper parts of the pit wall the ramp up to full production has been completed without any major issues.
• There is still some uncertainty as to the outcome of the Minmetals transaction ahead of the shareholder vote on the 11 June 2009.
• We expect that the Minmetals transaction will be approved, although there has been some media speculation of an alternative proposal which would see the current OZL structure remain intact.
• Our $0.85/share valuation for OZL is assumes the Minmetals transaction is approved by shareholders, hence includes only Prominent Hill, OZL’s listed investments and around $500-600M in cash that the company should hold post the Minmetals transaction and the sale of the Martabe Gold project.
• The stock is trading in line with our valuation and given the level of uncertainty that remains ahead of the shareholder vote on 11 June 2009 we have downgraded our recommendation from Buy to HOLD.

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