Lower production and soaring costs have seen the share price for OZ Minerals bounce up and down in recent days.
When BHP made its unsolicited $8.4 billion, $25-per-share takeover bid for OZ Minerals in August, the offer was quickly rejected, with OZ chief executive Andrew Cole saying it failed to properly value his company’s considerable future-facing mineral assets.
“We are mining minerals that are in strong demand for global electrification and decarbonisation … and we have a long-life resource and reserve base,” Cole told investors in a statement at the time rejecting the offer.
“We do not consider the proposal from BHP sufficiently recognises these attributes.”
While there has since been little movement in talks between the two miners, OZ Minerals has recently hit something of a rough patch. Weak production rates have forced a second guidance downgrade for the year, which has in turn seen the company’s share price dip below $25 multiple times in recent days.
After dropping just below the $25 threshold – the per-share price BHP offered in August – on Monday ($24.81), OZ quickly rebounded before starting a decline through the week that saw the share price get as low as $23.98 on Tuesday afternoon.
At the time of writing (10.00am Wednesday October 26), OZ Minerals’ share price remains below BHP’s takeover price.
This dip in share price has come as BHP chief executive Mike Henry reiterated that his company considers OZ Minerals a “nice to have” rather than a “must have”.
“We did put to OZ what we thought, or I am convinced, was a quite attractive and full non-binding indicative offer,” Henry said at a Financial Times mining summit at the end of last week.
“They have chosen to come out and reject it and, disappointingly, have not engaged us.
“We think that it was a compelling offer for their shareholders. And it was something that, from a BHP perspective, we thought would be a nice addition to the portfolio. But, at the end of the day, we will be disciplined about it.”
OZ Minerals has remained equally steadfast in its approach to the potential talks between the companies. When asked at an investor briefing on Monday whether he had held any further discussion with BHP since August, Cole was clear.
“No, I haven’t,” he said.
While there has been speculation BHP may raise the price of its takeover offer, it seems any potential deal between the two companies – which continues to fascinate the broader resources industry – remains at a stalemate.