Fresh from updating the rapid development and expansion of its Prominent Hill gold and copper mine in South Australia at a cost $1.08 billion, Oxiana yesterday revealed more modest plans to expand the copper component of its Sepon operation in Laos at a cost of around $200 million.
Oxiana said in a statement to the ASX that production will be increased to 80,000 tonnes a year from the present 60,000 by 2010.
"The overall life-of-mine operating costs will decrease by approximately 10% and the incremental cost to produce the additional copper is less than US 50 cents per pound," Oxiana said.
"This expansion will continue to ensure the operating cost competitiveness of the Sepon mine."
The operation commenced production in 2005, and this year copper output will end up in the range of 60,000 to 63,000 tonnes of copper metal cathodes: "By the end of 2007 more than 150,000t of copper cathodes will have been produced since commissioning.
"The potential for discovery of additional copper Resources in the Sepon area remains high.
"Many target areas remain to be tested and recent drilling results, including those from the newly discovered Pha Bing deposit, indicate that further high grade copper mineralisation like that at Khanong and Thengkham is likely to be discovered elsewhere in Oxiana's tenement," Oxiana said
Oxiana said a full resource update on Sepon will be published next March.
"Throughput of the plant will be increased from 1.35Mt/a to 2Mt/a. Introduction of lower-grade ore from the Thengkham deposits will see the head-grade reduced from 5.3% copper to 4.3% copper. Sepon will remain one of the world's highest grade copper mines.
"The main additions to the plant under the approved expansion will be a larger new primary crusher, an additional 8 CCD tank train, commensurate leaching capacity additions and 24 new electro-winning cells.
"A number of de-bottle necking and improvement projects will also be undertaken within the expansion scope of works. Work will begin immediately and forecast construction completion is 4th quarter 2010. The mine life will be 10 years,
"The total capital cost for the project has been estimated at US$178 million.
"The original Sepon Copper operation, which cost US$240 million to construct, and which has a current replacement value of around US$500 million, has been an outstanding investment for Oxiana. With operating costs in the lowest third, it has generated an EBITDA contribution of around US$750 million," the company said in its statement.
OXR shares slipped 4c to $3.89.
Meanwhile Australia's biggest gold miner, Newcrest, is expanding into Fiji with confirmation that a previously possible joint venture has been formalised.
Newcrest told the ASX yesterday that it had signed a definitive joint venture agreement with Nittetsu Mining Co. Ltd (Nittetsu) and Mitsubishi Materials Corporation (MMC) to explore for copper-gold in the Namosi region of Fiji.
The joint venture agreement formalises and supersedes the Memorandum of Understanding (MoU) that was announced on July 19, 2007. Nittetsu and MMC are substantial Japanese companies with strong records in copper smelting, refining and mining investment.
Newcrest may earn a 65% interest in the joint venture by funding $21.5 million on exploration over a 5.5 year period. During this time and after it has earned its interest, Newcrest will be the manager of the joint venture exploration activities in cooperation with Nittetsu and MMC.
"The Namosi tenement is located about 30 km northwest of Fiji's capital city, Suva. Newcrest considers that the area is prospective for large copper-gold porphyry mineralised systems to which it will apply its exploration expertise and deep drilling.
"Since signing the MoU, Newcrest has, on behalf of the joint venture, initiated aeromagnetic and topographic surveys over parts of the tenement. An initial drilling program will test depth extensions to the mineralisation at the Waisoi prospects where previous work and drilling by Placer Pacific, in the early 1990s, identified an open pit copper-gold resource in excess of 900Mt grading 0.43% Cu and 0.14 g/t Au*.
"Core drilling is planned to commence in December 2007," Newcrest added.
Newcrest shares finished down 60 cents on the lower gold price, at $33.16.
