Oz Minerals, the miner that was given a second life after nearly imploding in the GFC, is looking to boost output at its Prominent Hill mine in South Australia next year and wants to speed the underground expansion of the operation.
“Our immediate focus is targeting higher mill throughput for 2010, unit cost containment and margin improvement” at Prominent Hill, the Melbourne-based company said today in a statement to the Australian stock exchange .
Chief Executive Officer Terry Burgess said last month that the company focus more on copper and gold production growth in South Australia following a three month review ordered after becoming CEO in August.
“Good progress has been made on the underground feasibility study at Prominent Hill and, with a positive outcome and board approval, we plan to fast track development to maximize value from the asset,” the company said.
OZ shares rose 3.4% or 4c to $1.22, in yesterday’s strong rebound.
The company revealed an update of reserves and mineral resources at Prominent Hill.
"The Prominent Hill June 2009 Mineral Resource has been estimated to be 189.7 million tones (Mt) of copper-gold mineralisation grading 1.32% Copper (Cu), 0.5 grams to the tonne (g/t) gold (Au) and 3.1g/t silver (Ag); this represents a 15.6Mt (or 9%) increase in tonnes and 64.3,000 (Kt) (or 2.6%) increase in contained copper metal from the June 2008 estimate.
"There is also 78.8Mt of gold-only mineralisation grading 1.4g/t Au and 0.9g/t Ag; this represents a 30.3Mt (27.7%) decrease in tonnes and 0.8 million oz, or 800,000 ounce, (or 19.2%) decrease in contained gold metal, from the June 2008 estimate.
"The Mineral Resource includes drilling results received until 30 June 2009.
"Since then, drilling has continued in the Western Copper Deposit with the aim of increasing confidence in this Resource and exploring for extensions laterally and at depth. 18,000 meters has been drilled since the drilling cut-off for the resource model.
"The increase in copper tonnes and reduction in copper grade in the 2009 Mineral Resources compared to 2008 are due to additional Resources from the Western Copper Deposit and improvements in Resource modelling which reflect reconciliation with processing of mined ore and grade control drilling."
OZ Minerals said in yesterday’s statement that it is currently undertaking studies to investigate the viability of mining underground in the area immediately beneath the current open pit and at the Western Copper Deposit.
"Based on these studies, cut-off grades applied to the Resources below the base of the final open pit have been increased to reflect OZ Minerals’ current understanding of the likely mining methods, costs and hence economic cut-off grades.
"The application of these higher cut-off grades is the main reason for the reduction in gold metal in the Resource.
"The Prominent Hill June 2009 Ore Reserves are derived from the copper-gold and gold-only Mineral Resources.
"At the end of June 2009 Ore Reserves were 75.7Mt at 1.19% copper, 0.59g/t gold for 0.9Mt copper and 1.4 Moz of gold.
"Compared to the 2008 Ore Reserves, ore tonnes have increased by 3.3Mt, contained copper metal has decreased by 41kt in line with depletion and gold ounces are unchanged.
"Ore processing commenced in February 2009 and to the end of June 2.52 million tonnes of copper ore were processed.
"The higher tonnes and lower copper grade in the 2009 Reserves compared to 2008 are due to changes to the Resource model and processing of higher than average grade copper ores to the end of June 2009.
"An increase in the assumed gold price to US$800/oz (from US$700/oz in 2008) resulted in the gold Ore Reserves remaining steady in spite of depletion," the company said.
OZ also said it will form a joint venture with IMX Resources Ltd. to explore and develop copper-gold projects at IMX’s areas in South Australia.
OZ will buy 26.1 million IMX shares, or about 13% of the company, at 38.5 cents a share, it said in a separate statement.
IMX’s Mt Woods tenements in SA abut tenements held by OZ Minerals. So there are claimed synergies if any discoveries are made.
IXR shares closed on Friday at 33 cents.
