Shares in OZ Minerals jumped sharply yesterday in the wake of another rise in gold and copper prices on world markets and a good June quarter and half year production and sales update that saw full-year guidance surprisingly lifted.
The South Australian based copper and gold miner’s shares jumped 4.2% to $13.53 on a day when COVID-19 fears again overcame investors’ confidence and sent the ASX down more than 1%.
In the June report, OZ Minerals revealed strong performance including ramp-up of production and cost reductions at the new Carrapateena mine and the older but still expanding Prominent Hill mine – both in South Australia.
The company lifted guidance for the year to 88,000–105,000 tonnes of copper, up from 83,000–100,000 tonnes. This has come as copper prices continue rising (topping $2.97 a pound on Tuesday) and now seem on the way to $US3 a pound on Comex and are up 6% year to date and 32% in the past three months
OZ Minerals’ copper production at Carrapateena jumped from 2,495 tonnes in the first quarter of this year to 7,170 tonnes in the June quarter as production ramped up. That will go on until the end of this year.
Gold production guidance was also lifted by around 10% from 207,000–234,000 ounces to 227,000–249,000 ounces on the back of a solid performance at both Carrapateena and Prominent Hill.
This comes as gold has risen strongly in 2020 – up more than 22% with the Comex front-month price in new York remaining above $US1800 an ounce for most of the past month.
OZ Minerals delivered higher gold output at the Carrapateena and Prominent Hill mines in the June quarter, totaling 14,423 ounces and 52,725 tonnes against 5,041 ounces and 49,049 tonnes in the previous quarter, respectively.
OZ Minerals’ cost performance improved (as higher ore throughput at both mines helping reduce costs) and its 2020 guidance now reduced.
“The ramp-up at Carrapateena has continued to exceed expectations with increases to both copper and gold production and lower AISC (all-in sustaining cost) and C1 costs now expected for 2020,” OZ Minerals managing director and chief executive Andrew Cole said yesterday
“This strong performance has provided the confidence to release ~$45 million of the ~$150 million deferred expenditure announced in March that will benefit production beyond 2020.
“… The Carrapateena block cave expansion pre-feasibility study demonstrated conversion of the lower portion of the current sub-level cave to a series of block caves significantly increases value, ore reserves and mine life, enabling a multi-generational, lowest quartile cash cost producing province.”
Stage one of the block cave expansion feasibility study is underway, with completion expected late next year, Cole said with studies to unlock Prominent Hill’s underground potential by future expansion continued to advance towards an announcement later this year.
The company says it has not identified any positive COVID-19 cases at either the Prominent Hill or Carrapateena mine, but those affected in Brazil are in single digits and recovering at home.
