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Capital Return and Share Consolidation

Posted 27 May 2011

Media Releases

At the OZ Minerals Annual General Meeting held on Wednesday 18 May 2011 resolutions proposing a return of capital to shareholders and share consolidation were approved by shareholders. Please find below some information and frequently asked questions in relation to these initiatives. Please refer to the calendar for key dates in relation to these events. 

Capital return

What is the capital return? 
The Company is making a cash payment to shareholders of $0.12 per fully paid ordinary share (representing approximately $390 million in total) as a return of capital. This was approved by shareholders at the Company’s Annual General Meeting on 18 May 2011. 

Am I eligible for the capital return? 
To be eligible to receive the capital return you need to be a registered shareholder on the record date for determining entitlements which is 7.00 pm on 26 May 2011. The last day to purchase shares which are eligible to receive the capital return was 19 May 2011. 

When and how will the payment be made? 
The return of capital will be made to entitled shareholders, being registered holders of shares in the Company, at the record date referred to above (26 May 2011) on 10 June 2011. 
As previously advised in relation to payment for dividends, all payments to shareholders with an Australian registered address will only be made by way of direct credit to an Australian bank account and this will include the payment of the capital return. Shareholders who have not already provided the Company’s share registry, Link Market Services, with their bank account details may complete and return the Request for Direct Credit Payment Form to Link Market Services. 

How much will I receive? 
You will receive 12 cents for each share you hold as registered holder on 26 May 2011. So, for example if you held 10,000 shares, you will receive 10,000 X 12 cents or $1,200 dollars. 

When will I receive my capital return? 
The payments will be made on 10 June 2011. 
Please note that all payments to shareholders with an Australian registered address will only be made by way of direct credit to an Australian bank account. Shareholders who have not already provided the Company’s share registry with their bank account details should do so by contacting Link Market Services.  

Why is the company doing the Capital Return? 
The Board proposed to return cash and capital surplus to the Company’s needs to shareholders in light of the Company’s strong balance sheet, as further described in the 2010 full-year financial results released to the market on 9 February 2011 and the 2010 Annual Report. 
The Directors believe that returning this amount will leave the Company sufficiently capitalised to grow its business while taking account of the interests of all stakeholders. 
The Company remains committed to pursuing future growth and maximising sustainable returns to shareholders. 

What will be the effect of the return of capital on the Company? 
The key financial implications of the capital return on the Company are as follows:

the Company’s share capital and cash balance will be reduced by approximately $390 million being the total amount of the capital return (subject to rounding); and 
the funds that are returned to shareholders will no longer be part of the interest earning cash balance available to the Company.

In determining to implement a return of capital, the Company’s Directors have carefully reviewed the Company’s assets, liabilities and expected cash flows. The Company’s Directors have also satisfied themselves as to the solvency of the Company following the return of capital. 

Where are the funds for the capital return coming from? 
The return of capital will be funded from the Company’s cash balance.  

What will the impact on the share price be? 
The Company’s shares traded at a lower share price from the ‘ex’ date for the return of capital than they would have done had the return of capital not been made. This was due to the return of funds which were once assets reflected in the share price being returned to shareholders. 

Will you still be paying dividends? 
The Company‘s current policy is to pay to its shareholders dividends equivalent to 30–60 percent of underlying profits from normal operations on an annual basis, taking into account the cash available for payment of a dividend and the competing capital and growth requirements of the business. It is the Board’s current intention for this policy to continue following the capital return. 

What are the tax implications of the capital return? 
No adverse tax consequences are expected to arise for the Company from the capital return. For information on the tax implications of the return please see OZ Minerals Notice of Annual General Meeting 2011. 

Can I sell shares after the record date and still be eligible for the capital return? 
Yes, if you bought shares on 19 May or earlier you can sell those shares on the ASX from 26 May (Record Date) onwards and still be entitled to the capital return. 

Can I sell shares before the record date and still be eligible for the capital return? 
Yes, normally if you bought shares on 19 May or earlier you can sell shares on the ASX from 20 May (Ex-Date) onwards and still be entitled to the capital return. 

I have heard you are also doing a share buy back. When is the buy back happening? 
OZ Minerals announced at the time of the 2010 full year financial results that the Company intends to conduct an on-market share buy back following the completion of the capital return and share consolidation.

In June 2011 OZ Minerals announced that the share buyback period will commence on 17 August 2011 (following the release of the 2011 half year financial report) and end no later than 16 August 2012. The on-market share buy back program will be up to the equivalent of $200 million.  

How can I find out more about the capital return? 
Please contact our dedicated Shareholder Information Line on 1300 306 089 or if you are calling from overseas, +61 2 8280 7763. 
 

Share Consolidation

Please note as a result of the consolidation of the Company’s shares, from 30 May 2011 until 10 June 2011, OZ Minerals’ ASX code OZL will change to OZLDA to indicate that the shares are trading on a deferred settlement basis. 

What is the 1 for 10 share consolidation? 
The Company is undertaking a consolidation of its share capital through the conversion of every ten ordinary shares in the Company into one ordinary share in the Company. This was approved by shareholders at the Company’s Annual General Meeting on 18 May 2011. 

When will the consolidation occur? 
The consolidation will take effect from 10 June 2011. 

Why are you doing the consolidation? 
OZ Minerals has a very large number of shares on issue (over 3.2 billion) due to historical equity-based capital raisings and corporate transactions. The number of shares is disproportionate to OZ Minerals’ peers, so the Company proposes to reduce this number by way of this share consolidation. 

What will the effect of the consolidation be? 
The number of OZ Minerals shares on issue will be reduced from approximately 3.2 billion to approximately 324 million. 
As the consolidation applies equally to all of the Company’s shareholders, individual shareholdings will be reduced in the same ratio as the total number of the Company’s shares (subject only to the rounding of fractions). It follows that the consolidation will have no effect on the percentage interest of each individual shareholder in the Company, except for rounding up.  

Here is an example: 
If a shareholder currently has 3,240,000 shares representing approximately 0.1 percent of the Company’s issued capital, then after the share consolidation is implemented, the shareholder will have 324,000 shares following the consolidation, still representing the same 0.1 percent of the Company’s issued capital.  

What will happen to the share price? 
While the share consolidation will have no effect on the underlying value of the Company, the effect on OZ Minerals share price at the time of the conversion should be to trade at ten times the price at which it previously traded. The share price will continue to be influenced by other factors.  

What are the tax implications of the consolidation? 
For information on tax implications see OZ Minerals Notice of Annual General Meeting. 

What will happen if my holding results in entitlement to a fraction of a share? 
Where the consolidation of a shareholder’s holding results in an entitlement to a fraction of a share, the fraction will be rounded up to the nearest whole number of shares. 
If the Company reasonably believes that a shareholder has been a party to the division of a shareholding in an attempt to obtain an advantage from this treatment of fractions, the Company will take appropriate action, having regard as appropriate to the terms of the Company’s constitution and the ASX Listing Rules. In particular, the Company reserves the right to disregard the division of the shareholding for the purpose of dealing with fractions so as to round up any fraction to the nearest whole number of shares that would have been received but for the division. 

When is the last day I can buy shares on a pre-consolidation basis? 
The last date you can buy shares on a pre-consolidation basis is 27 May 2011.

When will the consolidated shares start trading? 
The consolidated shares will start trading on 30 May 2011 (on a deferred settlement basis).

When will I receive my new shareholding statement? 
New holding statements will be dispatched to shareholders by OZ Minerals’ share registry, Link Market Services, on 10 June 2011 when deferred settlement ends. If you are receiving your communication by post, you will receive your statement some time after that. 

When does normal trading recommence? 
Normal trading recommences on 14 June 2011. 

How can I ask another question about the share consolidation? 
For any enquiries, please contact our dedicated Shareholder Information Line on 1300 306 089 or if you are calling from overseas, +61 2 8280 7763.

Key dates:

  • 20 May 2011
    OZ Minerals commences trading on an ‘ex-return of capital’ basis.
  • 7.00 pm 26 May 2011 
    Record date for determining entitlements to participate in return of capital (entitlements will be determined by reference to OZ Minerals’ pre-consolidation capital).
  • 30 May 2011 
    Trading in post-consolidation OZ Minerals shares commences on a deferred settlement basis.
  • 3 June 2011 
    Last day for registration of transfers on a pre-consolidation basis.
  • 10 June 2011 
    Payment date for capital return. 
    Deferred settlement trading ends. 
    Post-consolidation holdings entered into holder’s security holdings
  • 14 June 2011 
    Normal trading commences following share consolidation.