As expected, Oz Minerals (OZL) says it will need a partner or partners to develop its Carrapateena copper and gold prospect in South Australia.
Last week Oz said in its interim profit report that it would soon release a pre-feasibility report on the proposed mine.
Estimates put the project’s cost close to $3 billion or more. Oz said in yesterday’s statement Carrapateena could generate $A22.1 billion in revenue over more than 20 years.
Oz Minerals is capitalised at $1.34 billion and that relatively small size for a major miner, has seen the company go looking for help to meet the estimated $2.985 billion it forecasts will cost to get the mine up and running later this decade.
But in a major surprise, Oz made it clear it would not proceed with the mine if it can’t get partners.
Media reports suggest it has been talking to Chinese companies about taking up equity in the project.
Carrapateena is located 100 kilometres from the BHP-owned Olympic Dam mine, another giant copper gold mine.
Oz Minerals’ Prominent Hill mine is northwest of Carrapateena.
The report’s release didn’t spook the market and Oz shares rose 3% to $4.40.
OZL 1Y – Carrapateena feasibility boosts OZ Minerals
The company’s projections are based on a target of 114,000 tonnes of copper and 117,000 ounces of gold a year for 24 years, at an annual production rate of 12.4 million tonnes.
Copper is the most popular base metal at the moment because of the growth in demand from China (and potentially from India)
BHP Billiton includes copper as one of its "pillars of growth" and owns a majority stake in the world’s biggest copper mine, Escondida, in Chile.
And Rio Tinto is investing heavily in Mongolian copper mining through its 51% stake in Canada’s Turquoise Hill Resources, while China’s MMG Ltd and its partners have paid $US7 billion for the Las Bambas copper project in Peru. They bought the mine from Glencore (which reports its June results tomorrow).
"We have reviewed in detail numerous copper-gold projects around the world over the past five years and there are very few like Carrapateena which offer the potential of multi-decade production at low operating costs," said Oz Minerals Managing Director Terry Burgess.
Oz Minerals has put a net present value on the project of $1.15 billion based on a pre-feasibility study, higher than previous estimates by analysts of around $500 million.
