Oxiana had good news for shareholders ahead of the AGM in Melbourne today that will no doubt be dominated by the planned merger with Zinifex.
That merger will make the company a $12 billion a year miner which is the second biggest zinc producer in the world, and a rising force in copper and gold, plus perhaps the best prospect in Australia: Prominent Hill in South Australia which is now due to start production by the end of the year.
Shareholders were told in the March quarterly production report yesterday that it increased copper output in Australia and Laos to record levels to take advantage of metal prices that are near all-time highs.
Copper in particular has flirted with all times highs hit two years ago and gold has touched record highs above $US1033 an ounce before retreating by just over $US100 an ounce in the quarter
The shares rose 16c yesterday to $3.33, with over 17 million shares traded.There were also several hints that it is on the look out for some nickel, with some mention of exploration interest in Indonesia.
The company said that copper production at Sepon in Laos, rose 24% to 17,132 tonnes in the quarter, from 13,827 tonnes a year earlier. But gold output from the mine fell 28% to 24,235 ounces.
"Sepon copper production was at record highs with 17,132t produced due to higher volumes mined and milled and improvements in the processing circuit. During the remainder of 2008 the mining fleet will be expanded to deliver increased tonnages to both the copper and gold plants. Copper production for the year is forecast to be in line with previous guidance of 60,000t to 65,000t.
"Detailed mine planning for the development of the Thengkham orebodies has commenced and first mining from Thengkham is expected in late 2009 for the first year of expanded copper production in 2010," The company told the ASX.
The company is building the A$1.1 billion Prominent Hill mine in South Australia to double copper production and increase gold output by a third.
Copper output from the Golden Grove mine in Western Australia rose 9% from a year earlier to a record 7,958 tons and gold output totalled 6,700 ounces.
"Record volumes of ore were mined from Gossan Hill during the quarter and a record tonnage processed through the plant. Production focus was on copper mineralised zones in the upper areas of the mine while a planned ventilation upgrade was completed. The resulting quarterly copper production was also a record with 7,958 tonnes produced.
"Production ramp up from the Scuddles underground mine continues but has been impacted by labour and equipment shortages. Production from Scuddles is due to increase in the coming quarter. A scheduled mill shutdown in the second quarter will allow additional components of the mill improvement project to be commissioned.
"This will enable annual milling of 1.75 Mt of ore and zinc and copper production forecasts to be achieved. In the first quarter of 2008, Oxiana had provisionally priced 8,750t of contained copper in concentrate at $8,175t and 28,150t of contained zinc metal at US$2,400t.
"Expansion studies investigating the feasibility of mining extensions to the underground mines and potential for open-pit mining to supplement ore production from underground are ongoing at Golden Grove. These studies aim to increase the mine life to beyond 2020," the company said in its statement.
"Resource drilling programs beneath the Xantho and Scuddles deposits were recently completed with substantial new Inferred Resources estimated.
"A total 295,000t of contained zinc and 183,000t of contained copper were added to the Resource inventory at Golden Grove with zinc Resources increasing by 25% to 1.49Mt and copper Resources increasing 32% to 748,000t.
"Both deposits remain open vertically and to the south where some of the best results still remain to be followed up. Promising results received from Xantho extensions post the Resource cutoff include 37m at 2.7% copper (from 1892m).
"The Prominent Hill project is 58% finished and within budget for a start up of production later this year. Start up has been put off until the fourth quarter because of delays in obtaining "key equipment". That’s a delay of six to eight weeks.
"Production for 2008 is now expected to be 10,000t copper and 6,000oz gold. Production for 2009 is expected to remain at 110,000t to 120,000t of copper and 75,000oz to 85,000oz of gold. Project costs remain in line with the current forecast of $1.08 billion.
"A scoping study into mining the Resources which sit immediately below the open-pit is nearing completion This study is expected to lead straight into a feasibility study on a 1–2 million tonne per annum sublevel open stoping (SLOS) underground mine below the open pit to a depth of 1,000 metres.
"This mine would produce higher grade copper and gold ore to supplement the eight million tonnes per annum produced from the open-pit. Plans currently have an access decline commencing in late 2008 or early 2009 to allow first production from the underground operations in late 2011. It is expected only minor upgrades will be required to the crushing circuit to accommodate the extra throughput and increased annual copper production."
