GROWTH PIPE­LINE

Mo­men­tum is build­ing across the OZ Min­er­als port­fo­lio as con­struc­tion ad­vances at the $916 mil­lion Car­ra­p­ateena pro­ject, while open pit min­ing picks up pace at Prom­i­nent Hill to ex­pe­dite it’s tran­si­tion to an un­der­ground-only op­er­a­tion.

The Australian Mining Review - - OZ MINERALS - ELIZ­A­BETH FABRI

IN Au­gust, the OZ Min­er­als board green lit the de­vel­op­ment of its Car­ra­p­ateena cop­per-gold pro­ject, 160km north of Port Au­gusta.

The de­ci­sion to de­velop the pro­ject was a defin­ing mo­ment for OZ Min­er­als as it gears up to be­come a low cost, multi-as­set cop­per pro­ducer.

The miner’s one op­er­at­ing mine Prom­i­nent Hill is a lu­cra­tive as­set that pro­duces more than 100,000 tonnes (t) of cop­per a year; but OZ Min­er­als is about to take the next step.

Sched­uled to be­gin com­mis­sion­ing in the fourth quar­ter of 2019 – in line with pro­jected ris­ing cop­per de­mand – Car­ra­p­ateena will have an an­nual out­put of 65,000t of cop­per and 69,000 ounces (oz) of gold over a 20 year mine life.

The mine will be con­structed over two stages, with the first phase of de­vel­op­ment al­most com­plete.

“The Car­ra­p­ateena pro­ject has seen con­sid­er­able progress with key con­tracts fi­nalised and or­ders placed for long lead items as­so­ci­ated with the process plant,” OZ Min­er­als managing director and chief executive An­drew Cole said.

“De­cline de­vel­op­ment is on plan with the sec­ond de­cline break­ing through to the box cut, pro­vid­ing the pri­mary ven­ti­la­tion cir­cuit and greatly en­hanc­ing ac­cess and egress.

“We are now in the Woomera Shale and have de­vel­oped an ef­fi­cient cy­cle of blast, bog, rapid shotcrete and sup­port to main­tain a steady pace.

“De­cline de­vel­op­ment now to­tals 3017 me­tres.”

Mr Cole said a two-pronged approach to con­struc­tion low­ered on-site con­struc­tion per­son­nel and re­duced the size of the camp by 30 per cent.

“By do­ing it in two phases like this we can keep the size of the con­struc­tion work­force down to under 550 peo­ple on site at any one time, but spread over a few years,” he said.

“This makes us much easy to man­age and make the op­er­a­tion safer.

“A lot of the ac­tiv­ity will also be off­site with mod­u­lar com­po­nents; it’s about keep­ing the man­ning lev­els down on site.”

Re­cent work on site in­cluded de­vel­op­ment of the airstrip, con­struc­tion of a pre-owned 550-per­son ac­com­mo­da­tion vil­lage, and mo­bil­i­sa­tion of the con­struc­tion work­force.

Pend­ing a min­ing lease ap­proval ex­pected early next year, the sec­ond phase is sched­uled to be­gin in Q2 2018 and will in­volve the con­struc­tion of the pro­cess­ing plant, tail­ings fa­cil­ity and other above ground in­fra­struc­ture.

“Car­ra­p­ateena is a fan­tas­tic resource, it’s very big and the grades are very good,” Mr Cole said.

“In a nut­shell if you com­pare Car­ra­p­ateena to other projects [glob­ally] it has got to be one of the strong­est cop­per de­vel­op­ments in the world.”

Prom­i­nent Hill

Fur­ther north, the Prom­i­nent Hill mine was grow­ing with an up­dated mine life ex­tend­ing out to 2026.

The north­ern South Australian op­er­a­tion first came on­line in 2009, and now pro­duces more than 100,000t of cop­per a year.

In 2012, the first un­der­ground mine Ankata was es­tab­lished, and in 2015 OZ Min­er­als com­mis­sioned the sec­ond de­cline Malu un­der­ground, as min­ing at the open pit ap­proached com­ple­tion in 2018.

In Oc­to­ber, OZ Min­er­als an­nounced it would fast track the clo­sure of the open pit to the first quar­ter of next year (in­stead of mid-2018) to de­liver cost sav­ings.

“An ac­cel­er­ated mine plan will bring for­ward open pit clo­sure to Q1 2018 with as­so­ci­ated net fixed cost sav­ings of circa $10 mil­lion over the re­main­ing pit life,” Mr Cole said.

Mr Cole added dur­ing the Septem­ber quar­ter, Prom­i­nent Hill’s un­der­ground mine per­formed strongly with pro­duc­tion up 15 per cent and unit costs 21 per cent lower than the prior quar­ter.

“The sec­ond de­cline broke through to the open pit in Au­gust, en­abling pro­duc­tiv­ity and ef­fi­ciency gains as the un­der­ground works to in­crease pro­duc­tion to 3.5-4.0mtpa in 2019,” he said.

“The op­er­a­tion is on track to de­liver all other guid­ance met­rics.”

How­ever, in Au­gust BHP an­nounced it would be ter­mi­nat­ing Prom­i­nent Hill’s power con­nec­tion and ac­cess agree­ment from 30 Au­gust 2020 to fa­cil­i­tate the planned ex­pan­sion of its Olympic Dam op­er­a­tion.

Under the ex­ist­ing agree­ment, Prom­i­nent Hill shares BHP’s power line from Daven­port to Olympic Dam, with elec­tric­ity fixed at Prom­i­nent Hill to the end of 2018.

OZ Min­er­als as­sured share­hold­ers the power ter­mi­na­tion was not ex­pected to af­fect the mine’s guid­ance un­til FY19, but may in­crease AISC from mid-2020.

“In a nut­shell, if you com­pare Car­ra­p­ateena to other projects [glob­ally] it has got to be one of the strong­est cop­per de­vel­op­ments in the world.”

Mr Cole said OZ Min­er­als had been work­ing on a power strat­egy over the last cou­ple of years, for Prom­i­nent Hill and Car­ra­p­ateena.

In its Septem­ber quar­terly re­port, OZ Min­er­als con­firmed com­mer­cial ne­go­ti­a­tions were near­ing com­ple­tion in re­la­tion to pro­vi­sion of emer­gency diesel gen­er­a­tion op­tions should this be re­quired.

Re­new­able en­ergy op­tions were cur­rently in the de­sign stage, and a range of other en­ergy sav­ing pro­grams were un­der­way.

“We cer­tainly have long term op­tions for power at Prom­i­nent Hill, which will also help us with fu­ture site scal­ing op­tions at Car­ra­p­ateena,” Mr Cole said.

“Over the next few years we’re not go­ing to see any changes to Prom­i­nent Hill or its costs.

“After that we could see a few per cent in­creases in All in Sus­tain­ing Costs at Prom­i­nent Hill as we put in longer term power so­lu­tions, but those longer term power so­lu­tions, while they might have a few per cent in­crease at Prom­i­nent Hill, they will ac­tu­ally en­able us to look at more ex­pan­sion op­tion­al­ity for Car­ra­p­ateena and Prom­i­nent Hill over the longer term.”

Growth op­tions

Be­yond Car­ra­p­ateena, OZ Min­er­als was about to kick off a pre-fea­si­bil­ity study at the West Mus­grave JV in WA.

In Au­gust 2016, the com­pany signed an agree­ment with Cassini Re­sources to earn up to 70 per cent of the cop­per-nickel pro­ject.

On 14 Novem­ber, OZ Min­er­als an­nounced it would be­gin a pre-fea­si­bil­ity study at the pro­ject fol­low­ing pos­i­tive re­sults from a scop­ing study of the Nebo-Ba­bel de­posit.

OZ Min­er­als would also pro­ceed to the next stage of its earn-in agree­ment and earn a 51 per cent stake in the pro­ject by spend­ing $19 mil­lion within 18 months.

“The Fur­ther Scop­ing Study has con­firmed the eco­nomic vi­a­bil­ity of the Nebo-Ba­bel pro­ject and has in­creased our con­fi­dence in the po­ten­tial of the pro­ject,” Mr Cole said.

“This is an ex­cit­ing new min­eral prov­ince with at­trac­tive near mine and dis­trict op­por­tu­ni­ties.

“In­vest­ment will be made dur­ing the prefea­si­bil­ity to fo­cus on In­ferred to In­di­cated Resource con­ver­sion for in­clu­sion into the min­ing in­ven­tory thereby ex­tend­ing mine life within the cur­rent pre-pro­duc­tion cap­i­tal pro­file.”

The pro­ject has an ini­tial eight year min­ing life, with a clear view to in­crease this to be­yond 15 years.

“In five years’ time, if all of the works go well, West Mus­grave will be at the tail end of con­struc­tion,” he said.

Mov­ing for­ward, Mr Cole said the com­pany would also look at grow­ing Car­ra­p­ateena once it had en­tered pro­duc­tion.

“The Cara­p­ateena de­vel­op­ment right now is fo­cused on just over 80 mil­lion tonnes of min­ing in­ven­tory; the to­tal foot­print of the min­er­alised ore body there is 800 mil­lion tonnes, so there’s op­por­tu­nity to grow Car­ra­p­ateena in time,” he said.

“There’s also other min­er­al­i­sa­tion in the area, namely Fre­man­tle Doc­tor and Kham­sin, which we will study and drill over the com­ing cou­ple of years to un­der­stand what our fu­ture op­tion­al­ity of Cara­p­ateena is.

“We’ve got an­other num­ber of projects in the pipe­line which we’re work­ing on now and we’ll keep adding to that pipe­line so we can cre­ate real value by tak­ing re­sources and con­vert­ing them into op­er­at­ing mines.”

All im­ages: OZ Min­er­als.

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