OZ takes advantage of higher copper price, lifts 2018 guidance

JOHANNESBURG (miningweekly.com) – ASX-listed OZ Minerals has marked 2017 as a year of strong production and financial performance, with the miner reporting on Wednesday that it had achieved its copper production guidance for the third consecutive year, and that it had exceeded its gold guidance.

Noting that it had made significant progress towards becoming a multi-asset company, the miner said its South Australia-based Prominent Hill operation’s copper production had been revised upwards by 15 000 t over 2018 and 2019, following a strong performance in 2017.

The miner produced 29 886 t of copper in the fourth quarter, resulting in full-year production of 112 008 t, which was in the upper-half of the guidance.

For 2018, OZ increased its copper guidance to between 100 000 t and 110 000 t, and for 2019, to between 95 000 t and 105 000 t. The previous forecast was for copper output of between 90 000 t and 100 000 t in both years.

Gold production increased from 29 264 oz in the third quarter to 39 178 oz in the fourth quarter, taking full-year output to 126 713 oz.

Despite the uptick in gold production, the company lowered its guidance for 2019 by about 20 000 oz as it would prioritise higher margin copper production. The mine is forecast to produce between 120 000 oz and 130 000 oz in 2018 and between 100 000 oz and 110 000 oz in 2019.

“Prominent Hill delivered at the top end of production guidance and at the bottom of cost guidance, enabling us to take advantage of improved copper prices and grow revenue to over $1-billion,” said MD and CEO Andrew Cole.

“Prominent Hill is now a reliable, long-life, low-cost producer. In November, we announced an 18% increase in underground ore reserves, enabling an expected underground production rate of 3.5-million tonnes a year to four-million tonnes a year for 2019 through to 2029,” he added.

Looking ahead, Cole said that Prominent Hill’s disciplined year-on-year performance provided a robust base to enable its growth plans.

“Stockpile processing from the second quarter will maintain our plant at full capacity to mid-2023 and we expect substantial value to be realised during this period given openpit related costs have already been incurred. Our aim is to continue extending underground mine life year-on-year, with an estimated 80-million tonnes of underground resource not converted to reserve.”

C1 cash costs of 63c/lb and all-in sustaining costs (AISC) of 96c/lb were lower than the 91c/lb and 136c/lb, respectively, of the prior quarter. This is predominantly owing to higher by-product credits, lower processing costs as a result of having no shutdowns in the fourth quarter, and lower treatment charge and refining charge and transport costs owing to the customer mix for the quarter.

Openpit unit mining costs increased from $7.45/t in the third quarter to $8.41/t in the fourth quarter, as volumes continued to decrease with the upcoming openpit closure. The full-year cost of $7.16/t mined was within the revised lower guidance range of $7.00/t to $7.25/t mined.

Underground mining operating unit costs increased from $45/t in the third quarter to $49/t, as less capital development and more stope filling was completed. The full-year cost of $53/t mined was within the guidance of $50/t to $60/t mined.

Shipments of Prominent Hill concentrates for the quarter totalled 65 710 t, containing 30 706 t of copper, 38 796 oz of gold and 229 402 oz of silver. Full-year shipments totalled 243 777 t, containing 112 288 t of copper, 132 285 oz of gold and 843 159 oz of silver.

Meanwhile, Cole reported that OZ had progressed its growth strategy in the year, with construction starting on its Carrapateena copper project, 160 km north of Port Augusta in South Australia's Gawler Craton, while the West Musgrave copper/nickel project, in Western Australia, advanced to prefeasibility.

The miner has also added three new exploration projects to its growth pipeline.