OZ Minerals has been forced to lower its group production and cost guidance for the year, but expects the copper market to remain resilient.
The company had to contend with a number of uncontrollable factors such as a softer start to the year due to weather and COVID-enforced absenteeism, which continued into Q2; material handling system belt damage at the Carrapateena mine in South Australia in Q2; and increased unit costs guidance due to lower volumes, labour pressures, and inflation on other inputs.
OZ managing director Andrew Cole said the combination resulted in an update in the June quarter to the group copper production and cost guidance for 2022.
“Our financial position remains strong with $82 million net cash balance at the end of the quarter and we increased our corporate debt facility limit, early in the quarter, from $480 to $700 million for an extended five-year term. Combined, they provide substantial working capital liquidity and a solid foundation for investment in our brownfield expansion projects at Carrapateena and Prominent Hill.”
Cole said the Carrapateena conveyor belt damage resulted in a reduction of about 4300 tonnes of copper metal produced. The material handling system returned to operating at full capacity during the quarter and has continued to operate without issue.
“The installation of additional semi-continuous condition monitoring of the conveyor and an alternate splicing method provides confidence on minimising further unplanned conveyor interruptions,” he said.
“A stronger operational performance is expected over the second half of the year at our Australian assets with remediation plans being actioned. However, new COVID variants and increasing infection rates across the community more broadly continue to pose a risk to operational productivity and guidance.
“The assets continue to actively manage resources to maintain safe and productive operations and to minimise disruption.
“Looking ahead, at Prominent Hill, work continues to advance future growth opportunities including increasing mining rates to fully utilise the increased capacity of the hoisting shaft from 6 mtpa to 6.5 mtpa.
“At Carrapateena, cave management remains the priority with the cave developing towards breakthrough to the surface. The tailings storage facility main embankment lift was completed ahead of schedule and under budget and the liner installation is on track for completion in Q4.
“The West Musgrave study in Western Australia progressed well during the quarter with the mining lease granted. Extensive engagement with the Ngaanyatjara Community continued during the quarter and positive progress was made towards completion of the mining agreement.
“The team continues to assess the impact of cost inflation and the operational environment on project cost and schedule, an important consideration as we approach a final investment decision.”
The company continues to explore the province potential of West Musgrave with the assessment of the Succoth copper deposit where drilling was completed in June.
OZ also furthered growth by entering into a conditional binding terms sheet during the quarter with Havilah Resources. It sets out the basis of a new strategic relationship in the prospective Curnamona Province in South Australia, including the grant of an option to acquire the Kalkaroo project,” Cole said.
“Our teams are finalising definitive binding agreements and work plans ahead of the Havilah shareholder vote (expected at the end of August 2022) to approve the grant of the Kalkaroo Option,” Cole said.
“Whilst the copper price has weakened recently, the medium to long-term outlook remains strong for minerals linked to the renewable energy industry, like copper and nickel. Our focus for 2022 remains on safely delivering our operational targets, advancing our current growth projects and adding new growth options to the portfolio while we continue to strengthen our unique company culture, placing us in a positive position against forecast demand trends.”
Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content). View all posts by Ray Chan →
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