Copper cathode production during the December quarter at MMG Limited’s Sepon project in Laos was 10% higher than the corresponding period of 2016 and 12% higher than the previous quarter. The company produced 22,527 tonnes of copper cathode during the three months, which was the strongest 2017 quarter from the mine.

Annual Sepon production of 78,492 tonnes was 12% lower than the previous year. This was lower than the guidance of 80,000-85,000 tonnes with the C1 cost of US$1.32 per pound being above guidance of US$1.10-$1.25.

This contributed to the company’s overall 2016 copper production of 502,510 tonnes against the guidance range of 415,000-477,000 tonnes.

The Las Bambas mine in South America was the major driver of this growth with 330,227 tonnes of copper in concentrate during the year, which was above the guidance range of 250,000-300,000 tonnes. MMG expects to produce 420,000-460,000 tonnes from Las Bambas in 2017.

Sepon’s December quarter was encouraging for MMG as the operation is transition to lower grade and more complex ores.

The lower 2016 production reflects lower grades, with ore milled grades of 3.7% compared to 4.9% in 2015. Copper ore mined in 2016 was 61% higher than 2015. Mining is now concentrated primarily in the western areas of the lease 15km to 20km away from the main processing facility.

Copper ore milled was 20% higher in 2016 than 2015 and strong operational improvements have been achieved to maximise plant throughput, and therefore copper production, from the lower grade, more complex ores.

Increasing strip ratios, lower grades and higher geological complexities associated with deposits in the western areas will continue having an impact. Production is also now more reliant on the processing of long-term low grade stockpiles. MMG expects to produce 65,000-75,000 tonnes of copper cathode in 2017.

C1 costs are expected to be within the range US$1.25-US$1.40 per pound for 2017 with continued operating efficiencies and efforts to restructure the cost base expected to partially offset the impact of mining and processing lower grade and more complex ores.

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