OZ Minerals reported strong production results for the quarter ending 31 March 2020, despite the ongoing COVID-19 pandemic. All operations remain on track for 2020 production guidance based on current operating conditions.
The company’s Prominent Hill copper-gold operation in South Australia produced 15,580 tonnes of copper and 49,049 ounces of gold at a negative C1 cost during the quarter. Underground operations delivered 842 kt of ore at 1.47% copper.
The Carrapateena operation in South Australia produced 2,495 tonnes of copper and 5,041 ounces of gold during the quarter with progressive production increases expected through the second half of the year following plant commissioning. Underground development continued to progress well with 3,765 metres achieved.
“Carrapateena continues to stockpile ore on surface with the materials handling system enabling progressive efficiencies as the underground development progresses. The plant ramp-up is ahead of schedule with a five-day continuous period at 12,000t/day nameplate capacity achieved in March and impressive early metal recoveries averaging over 90% for copper and 85% for gold,” said Andrew Cole, managing director and CEO of OZ Minerals.
Total surface stockpiles at the end of the quarter were approximately 18 Mt at Prominent Hill and approximately 300 kt at the Carrapateena operation, added Mr Cole.
“In Brazil, development of the Carajás Hub saw significant progress with Pedra Branca underground development now reaching 274 metres, installation of ore sorting equipment at Antas nearing completion and the implementation of the first phase of the strategic Vale-OZ Minerals cooperation agreement, utilising Vale rail and port infrastructure to realise operational and cost efficiencies,” said Mr Cole.
Carajás produced 2,156 tonnes of copper and 1,516 ounces of gold during the quarter.
In light of the COVID-19 pandemic health implications and travel restrictions, a prudent and extensive review of all growth, exploration and other expenditure was undertaken, with overall 2020 cash spend reduced at this stage by approximately $150 million to further strengthen the company’s robust financial position.
“Some $150 million of 2020 costs were removed through the deferral of growth capital, exploration and study expenditure, along with general company-wide cost savings as part of the COVID-19 business response,” explained Mr Cole. “Following this review, exploration fieldwork and other projects, including West Musgrave, have been pared back to preserve cash during 2020 and protect community and employee health in line with government requirements and our own operating strategies.”
He continued, “No material production impacts have been experienced to date as a result of our COVID-19 response or government restrictions. The company has in place a comprehensive management plan to protect the health and safety of our people and other stakeholders, including the early introduction of travel restrictions, improved hygiene measures and social distancing initiatives. Both Prominent Hill and Carrapateena have moved toward a full South Australian based workforce with the temporary relocation of some interstate based contractors and employees to the state. We have however planned for a range of potential worsening scenarios, some of which may necessitate a future change to guidance if production is impacted and costs or capital are further reduced.
“We are also working on a post COVID-19 recovery plan to ensure the company is able to accelerate out of the crisis. Our scenario planning seeks to preserve jobs with redeployment across the organisation wherever possible.
“The company’s financial position has been further strengthened with the extension of the revolving credit facility to $480 million, providing an additional liquidity buffer should it be required as we continue to fund the ramp-up of Carrapateena and development of the Carajás Hub. At the end of the quarter we moved to a net debt position of $89 million as planned, which is expected to progressively move net cash positive though Q2 and further strengthen though the remainder of the year with Carrapateena’s cash generation principally covering operating and capital costs going forward. Net debt stood at $2 million as at 14 April.
“The Board and Executive team thank our frontline and support employees, contractors, suppliers and State and Municipal Governments for their contribution and support as we rapidly respond to a changing environment to protect the health of our people and maintain site operations,” Mr Cole concluded.