OZ Minerals Ltd.said May 6 that it has decided to accelerate the pre-feasibility study on its copper projectin South Australia, using a larger scope of 4 million tonnes throughput per annumfrom the previous 2.8 million-tonnes-per-annumoperation, with a view to achieve first copper concentrate productionin 2019.
The company also plans to start the development of the mine'sdecline soon after the decline contract is awarded, which is expected to be in June,as building the decline now will translate to an incremental net present value ofA$90 million.
The PFS optimization work completed over the past two monthsdetermined that a conveyor with the required tonnage capacity can be installed withinthe single decline, giving the miner flexibility for future capacity upgrades. Theoptimization work also confirmed that building the concentrate treatment plant inWhyalla will yield significant cost benefits and potentially allow for the treatmentof concentrates from the company's ProminentHill copper project and from third parties.
South Australia's state government has already invited OZ tosubmit the concentrate treatment plant at Whyalla for assessment as a major project,which — if granted — will improve the plant's permitting process. OZ also signeda nonbinding memorandum of agreement with the administrators of to explore the possible site,infrastructure and port options at Whyalla.
Based on detailed engineering and scoping studies, the plant'sconstruction will cost about A$150 million, including a A$10 million contingency,and create over 100 jobs in the construction phase between 2017 and 2019 and around100 local ongoing jobs.
The Carrapateena project and the proposed plant are estimatedto have a combined net present value of about A$800 million and an internal rateof return of 24% using a 9.5% discount rate. The combined project will have an expectedpayback period of six years, at consensus pricing, with approximately A$4.8 billionlife-of-mine net cash flow before tax.
The total preproduction CapEx is estimated at about A$975 million,including A$100 million in contingency, and production is forecast to reach approximately67,000 tonnes of copper and 76,000 ounces of gold per annum in the first three years,and about 53,000 tonnes of copper and 53,000 ounces of gold per annum over the minelife of over 20 years.
OZ noted that the updated Carrapateena project and the Whyallaplant can be fully funded from the company's existing cash and cash flows and thata drilling program is underway at Carrapateena to collect samples for metallurgicaltest work and potentially upgrade the resource classification.