Oz Minerals (OZL) sprang a surprise yesterday with the news it plans to expand its underground output capacity by 30%.
The company said in a statement that it will spend $12 million building a second ramp to the open cut at its Prominent Hill copper-gold mine in South Australia.
The miner said the new ramp will boost peak underground output to around 3.5 million to 4 million tonnes per annum.
The miner said development on the 1.4 kilometre decline, which links the existing underground development with the open pit, would begin immediately with work to be completed “in the next two years”.
“Prominent Hill’s underground mine is proving itself to be an excellent asset and we want to invest in its future,“ said Andrew Cole, Managing Director and CEO.
“By building a second decline, we will not only boost the underground’s capacity, we will significantly increase the efficiency of the whole operation and drive down future unit costs.
“Once the second decline is complete in the next two years, truck efficiencies in the underground will increase and we will see other major benefits in terms of ventilation and contingency planning,” said Mr Cole.
"This additional capacity will allow us to bring forward underground production during the years 2018-2022. This is in line with the company’s strategy of extracting maximum value from the operating asset.
"With this increased output we will expect to see reduced unit costs which will allow us to further reduce cut-off grades. In addition to building the second decline, we will spend approximately $4 million in 2016 to target resource to reserve conversion,” Mr Cole added.
He said it would also deliver “major benefits in terms of ventilation and contingency planning”. The company said addition to building the second decline, it would spend about $4m in 2016 to target resource to reserve conversion.
The company reported two weeks ago that it had achieved record copper production of 130,305 tonnes in the year to December.
Oz Minerals in the first half of calendar 2015 swung to a $51.8 million profit. It will report its full year performance next Wednesday.
The shares fell more than 2% yesterday to $3.71.
