Copper and gold miner, OZ Minerals says it has so far avoided the impact of the COVID-19 pandemic but has loaded up its liquidity to make sure it can survive any problems.
In its third-quarter production report to the ASX on Wednesday the miner also revealed it had had a solid three months with no problems.
The company did, however, reveal that it had cut or deferred expansion and other spending plans to allow cash reserves to build.
At the same time, it has changed the makeup of its workforce to eliminate out of state contractors and set up a management plan in the event the virus does appear at its operations.
CEO Andrew Cole said in a commentary with the production report that “Some $150 million of 2020 costs were removed through the deferral of growth capital, exploration and study expenditure, along with general company-wide cost savings as part of the COVID-19 business response.
“Following this review, exploration fieldwork and other projects, including West Musgrave, have been pared back to preserve cash during 2020 and protect community and employee health in line with government requirements and our own operating strategies.
“No material production impacts have been experienced to date as a result of our COVID-19 response or government restrictions.
“The Company has in place a comprehensive management plan to protect the health and safety of our people and other stakeholders, including the early introduction of travel restrictions, improved hygiene measures and social distancing initiatives.
“Both Prominent Hill and Carrapateena have moved towards a full South Australian based workforce with the temporary relocation of some interstate based contractors and employees to the state.
“We have however planned for a range of potential worsening scenarios, some of which may necessitate a future change to guidance if production is impacted and costs or capital are further reduced.
“We are also working on a post-COVID-19 recovery plan to ensure the Company is able to accelerate out of the crisis. Our scenario planning seeks to preserve jobs with redeployment across the organisation wherever possible,” Mr. Cole said.
OZ said in the report that its financial position “has been further strengthened with the extension of the revolving credit facility to $480 million, providing an additional liquidity buffer should it be required as we continue to fund the ramp-up of Carrapateena and development of the Carajás Hub (in Brazil).
“At the end of the quarter we moved to a net debt position of $89 million as planned, which is expected to progressively move net cash positive though Q2 and further strengthen though the remainder of the year with Carrapateena’s cash generation principally covering operating and capital costs going forward. Net debt stood at $2 million as at 14 April,” the company said.
Looking at its quarterly performance OZ said all its operations remain in line with its 2020 production guidance.
The March quarter saw 15,580 tonnes of copper mined at the Prominent Hill mine in South Australia, while gold production reached 49,049 ounces and the company recording its highest monthly underground haulage volumes last month.
OZ Minerals said that the plant ramp-up at the Carrapateena copper-gold mine in also South Australia, was also ahead of schedule while it moved to a South Australian-based workforce alongside Prominent Hill due to COVID-19.
The Carrapateena plant will be “tested and optimised” through the first half of 2020 after it produced the first copper concentrate in December last year.
OZ Minerals achieved a 12,000 tonne per day capacity at Carrapateena in March, producing 2,495 tonnes of copper and 5,041 ounces of gold.
The company expects Carrapateena’s production to increase to 4.25 million tonnes per annum run rates by the end of 2020, with the mine’s 2020 financial year guidance sitting at 20,000–25,000 tonnes of copper and 35,000–40,000 ounces of gold.
OZ shares rose 2.4% to end at $8.73 on a day when the wider market closed in the red.
Meanwhile, BHP and its partners have revealed that their huge Antamina copper-zinc mine in the Peruvian Andes has been closed temporarily because of the spread of the COVID-19 virus.
BHP’s partners in the mine are Glencore 33.75%, the same as BHP), Teck Resources (22.5%) and Mitsubishi Corporation (10%). The mine is one of the world’s largest copper/zinc mines, producing 101 million tonnes of copper ore last year.
It has been operating with a reduced workforce under an exemption from the Peruvian government to its coronavirus emergency decree and Antamina’s current shift has been on site since the national state of emergency began four weeks ago.
In a statement, BHP said the Peruvian government has now allowed Antamina to demobilise the majority of the 2,400 people on site over the coming days and Antamina has suspended operations to do so.
“The site will go into care and maintenance, with a skeleton staff performing essential tasks, including disinfecting the site, to enable the operation to restart when it is deemed appropriate,” BHP stated.
“The current expectation is this could take up to two weeks, however this may change.”
BHP said that strict controls will be put in place during the demobilisation so as to safeguard the health of the local communities and workers.
