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THIRD QUARTER REPORT
14 OCTOBER 2014
DISCLAIMER
This presentation has been prepared by OZ Minerals Limited (“OZ Minerals”) and consists of written materials/slides for a presentation concerning
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No representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information, contained in the
presentation, or of the views, opinions and conclusions contained in this material. To the maximum extent permitted by law,
OZ Minerals and its related bodies corporate and affiliates, and their respective directors, officers, employees, agents and advisers disclaim any
liability (including, without limitation any liability arising from fault or negligence) for any loss or damage arising from any use of this material or
its contents, including any error or omission therefrom, or otherwise arising in connection with it.
Some statements in this presentation are forward-looking statements within the meaning of the US securities laws. Such statements include, but
are not limited to, statements with regard to capacity, future production and grades, projections for sales growth, estimated revenues and
reserves, targets for cost savings, the construction cost of new projects, projected capital expenditures, the timing of new projects, future cash flow
and debt levels, the outlook for minerals and metals prices, the outlook for economic recovery and trends in the trading environment and may be
(but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe” and “envisage”. By their nature, forwardlooking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may
be outside OZ Minerals’ control. Actual results and developments may differ materially from those expressed or implied in such statements
because of a number of factors, including levels of demand and market prices, the ability to produce and transport products profitably, the impact
of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in
relevant areas of the world, the actions of competitors and activities by governmental authorities, such as changes in taxation or regulation.
Given these risks and uncertainties, undue reliance should not be placed on forward-looking statements which speak only as at the date of the
presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, OZ Minerals does not
undertake any obligation to publicly release any updates or revisions to any forward looking statements contained in this presentation, whether as
a result of any change in OZ Minerals’ expectations in relation to them, or any change in events, conditions or circumstances on which any such
statement is based.
Certain statistical and other information included in this presentation is sourced from publicly available third party sources and has not been
independently verified.
All figures are expressed in Australian dollars unless stated otherwise.
This presentation should be read in conjunction with the Quarterly Report released today.
OZ Minerals | 2
THREE KEY MILESTONES ACHIEVED IN
THE QUARTER
1.
2.
3.
Prominent Hill production successfully returned to the 100,000 tonne per year
copper production ’run-rate’
•
Open pit mining rate ahead of revised schedule.
•
Record plant quarterly throughput.
•
Firmly on track to achieve production guidance. Gold production expected to be at
upper end of guidance.
•
Low C1 costs of US60.5 cents/lb. Costs now expected to be at lower end of guidance.
First production achieved from Malu Underground on schedule
•
First ore from stoping achieved in early October 2014.
•
Malu Underground independent ventilation system installed and operating.
•
Underground operations being integrated.
Carrapateena Pre-Feasibility Study completed, successfully demonstrating viability
•
Technically and financially viable with low operating costs and long life.
•
Well located in a low risk jurisdiction with good access to infrastructure.
•
Opportunities such as synergies with Prominent Hill and automation can provide
further improved results.
•
Due diligence by interested parties underway.
OZ Minerals | 3
SAFETY
OZ MINERALS LOST TIME AND TOTAL RECORDABLE INJURY FREQUENCY RATE 12 MONTH MOVING AVERAGE*
10
TRI Frequency Rate
6
4
4
2
0
0
Sep-13
Oct-13
Nov-13
*per million hours worked
•
Dec-13
Jan-14
Feb-14
Mar-14
OZ Minerals TRIFR
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
OZ Minerals LTIFR
Slight increase in injury rates – focus firmly on learning from high potential incidents.
OZ Minerals | 4
LTI Frequency Rate
8
8
PROMINENT HILL PRODUCTION SUCCESSFULLY
RETURNED TO THE 100,000 TONNE PER YEAR
COPPER PRODUCTION ’RUN-RATE’
PROMINENT HILL
OPEN PIT MINING AHEAD OF SCHEDULE
MALU OPEN PIT SEPTEMBER 2014.
Larger working areas and better fleet management control has driven greater material movement.
One bench ahead in Stage 3, one bench ahead in Stage 4, relative to July 2014 advice.
OZ Minerals | 6
PROMINENT HILL
Q3 PRODUCTION STATISTICS – STRONG PERFORMANCE
CONTINUES
PROMINENT HILL PRODUCTION STATISTICS
Mined
JUN 14 QTR
SEP 14 QTR
Malu copper-gold ore
(tonnes)
2,398,069
2,222,443
Malu gold-only ore
(tonnes)
1,731,447
1,821,155
Waste
(tonnes)
17,901,470
16,400,448
Ankata ore
(tonnes)
307,562
322,124
Malu copper-gold ore
Cu grade (%)
0.99
1.08
Malu copper-gold ore
Au grade (g/t)
0.54
0.44
Malu gold-only ore
Cu grade (%)
0.13
0.11
Malu gold-only ore
Au grade (g/t)
1.01
0.78
Ankata ore
Cu grade (%)
1.88
2.24
Ankata ore
Au grade (g/t)
0.46
0.45
Ore Milled
(tonnes)
(tonnes)
2,234,649
2,755,848
Milled Grade
Copper (%)
Copper (%)
1.10
1.06
Gold (g/t)
Gold (g/t)
0.56
0.68
Copper (%)
Copper (%)
90.5
90.0
Gold (%)
Gold (%)
76.7
78.4
Copper Cons.
Produced
(tonnes)
(tonnes)
41,790
49,375
Contained Metal
In Cons.
Copper (tonnes)
Copper
(tonnes)
22,181
26,249
Gold (oz)
Gold (oz)
30,736
47,376
(DM tonnes)
(DM tonnes)
43,737
38,883
Mined Grade
Recovery
Total Cons. Sold*
OZ Minerals | 7
Strong quarterly performance
with fewer production
excavators in the open pit.
Increase in Malu open pit
grade, as forecast.
Highest ever quarterly
throughput.
Good recoveries maintained.
Copper production above
100kt per annum run rate due
to strong ore production and
increased milled tonnes.
*excludes sales of third party concentrates
PROMINENT HILL
CONTINUING IMPROVEMENT IN OPEN PIT
ORE & WASTE MINING BY QUARTER
DECLINING WASTE MINING REQUIREMENTS
MINING RATES (BCM/hr)
CONTINUING IMPROVEMENT
Mt
Waste tonnes
BCM/hr
25
Ore tonnes
1,250
20
1,200
15
1,150
10
1,100
5
1,050
Q1
Q2
Q3
2013
Q4
Q1
Q2
Q3
2014
1,000
Jan-14
Feb-14 Mar-14
Apr-14 May-14
Jun-14
Jul-14
Aug-14 Sep-14
3-Month Average - Rolling
•
Planned reduction in waste mining volumes.
•
As previously announced, ore production higher as Stage 3 accesses higher volumes of higher quality ore.
•
Optimising work areas, improved scheduling has allowed excavator mining rates to improve.
•
September quarter strip ratio 4:1 compared to September quarter 2013 strip ratio of 12:1.
OZ Minerals | 8
PROMINENT HILL
RECORD THROUGHPUT, INCREASED PRODUCTION
ORE MILLED PER QUARTER
RECORD THROUGHPUT
COPPER PRODUCTION PER QUARTER
ABOVE 100,000tpa RUN-RATE
25,000 tonnes
2.5Mt
Q1
Q2
Q3
2013
•
Q4
Q1
Q2
2014
Q3
Q1
Q2
Q3
2013
Q4
Q1
Q2
2014
Highest ever quarterly throughput by the processing plant.
− Engineering improvements, reduction in planned shutdowns proving effective.
•
Copper production returned to 100,000 tonne per annum run-rate.
− Higher grade feed available from mining and higher throughput.
− Building ore stockpile has allowed flexibility in processing.
OZ Minerals | 9
Q3
PROMINENT HILL
LOW C1 COSTS DUE TO HIGHER GOLD PRODUCTION AND LOWER
EXPENDITURE
UNIT COST C1 – Q3 2014 VS Q2 2014
(US c/lb)
120
USD gold
average
prices in
line with
Q2.
100
80
A$/US$ rate
was flat.
54% increase
in payable
gold
production,
due to
higher
grades and
higher milled
tonnes.
60
40
20
Increased
ore milled
reduced the
inventory
credit, offset
by lower
open pit
movement.
Reduction in
processing
costs due to
revised later
shutdown
scheduling
and reduction
in Ankata costs
due to higher
levels of
development
work.
Strong pit
performance
creates higher
ROM stocks,
allowing
higher grade
tonnes to be
milled.
0
109.7
(1.1)
(38.3)
29.7
(21.9)
(0.7)
(17.0)
60.5
Q2 Actual 2014
Gold price
Payable gold
volume
Volume
(Cost Driver)
Costs
FX
Payable copper
volume
Q3 Actual 2014
OZ Minerals | 10
COPPER MARKET
A$ COPPER PRICE STRENGTH
A$ COPPER PRICE RESILIENCE
• A$ copper price remaining
healthy.
A$
3.7
• All 2014 concentrate
production, including
additional production
advised at the end of Q2,
now allocated under sales
contracts.
3.5
3.3
3.1
• Concentrates inventory at
year end expected to be
lower than 1 January.
2.9
US$/lb
Data source: Bloomberg
OZ Minerals | 11
30/09
30/08
30/07
2.7
A$/lb
OPEN PIT COSTS
•
Open pit unit costs of $4.98 per tonne mined in the third quarter. Strong result due to
improved mining rates, continuing refinement of the despatch system and shorter haul
sequencing.
•
2014 full year open pit unit mining costs expected to be below $5.30 per tonne mined.
•
Mine planning process underway, including analysis of stockpile management and
demobilisation schedule, including review of cost base.
Unit cost and expense drivers
Open pit movement to reduce by ~75% by 2017, driving lower gross expenditure
15% of 2014 expenditure increasing to 30% of annual expenditure to 2017
<$5.30/t
Costs mostly driven by factors other than open pit material movement
Some examples of cost types
•
•
•
•
•
Contractor admin charge
Dewatering
Grade control
Stockpile reclaim/re-handle
Support personnel
Some example of drivers
•
•
•
•
Ore mined
Work areas
Water management
Mine life personnel planning
85% of 2014 expenditure decreasing to 70% of annual expenditure to 2017
Costs mostly driven by total open pit material movement
Some examples of cost types
•
•
•
•
2014 Full year
OZ Minerals | 12
Drill and blast
Loading
Hauling
Road maintenance
FIRST PRODUCTION ACHIEVED FROM
MALU UNDERGROUND ON SCHEDULE
PROMINENT HILL
FIRST PRODUCTION ACHIEVED FROM MALU UNDERGROUND
Malu Underground infrastructure and stopes planned for 2014
• Significant milestone for the Prominent Hill operation.
• Decline development commenced in 2013.
• First production from stoping in early October (Adam stope).
OZ Minerals | 14
PROMINENT HILL
MALU UNDERGROUND INDEPENDENT PRIMARY VENTILATION
ESTABLISHED
OZ Minerals | 15
CARRAPATEENA PRE-FEASIBILITY STUDY
COMPLETED, SUCCESSFULLY
DEMONSTRATING VIABILITY
CARRAPATEENA – PROJECT HIGHLIGHTS*
TECHNICALLY FEASIBLE, LONG LIFE, VERY LOW OPERATING
COSTS, VERY WELL LOCATED
Technical features
Financial features1
Potential upside
• Pre-Feasibility Study
completed to a very high
standard.
• Projected net cash flow of
$8.508 billion (including
capital expenditure).
• Extensions to block cave
footprints and addition of
Lift Three.
• Block caving technically
feasible.
• Net present value of
$1.146 billion post tax
(at 8 percent real
discount rate).
• Exploitation of Khamsin
and other regional
exploration targets.
• Production of a high quality
copper-gold concentrate
with uranium below typical
penalty levels and no arsenic.
• Average annual production
rate of 114,000 tonnes of
copper, 117,000 ounces of
gold (at assumed steady
state).
• Long mine-life of 24 years
based only on Reserves.
OZ Minerals | 17
• Internal rate of return of
13 percent.
• Low C1 unit costs
averaging US$0.49 per
payable pound of copper.
• Project capital cost of
$2.985 billion.
All figures in Australian dollars unless
otherwise stated.
1
• Potential for mining fleet
automation.
• Use of regional ports.
• Optimisation of processing
with further metallurgical
characterisation.
• Synergies with Prominent
Hill.
*A management summary of the Pre-Feasibility was
released to the market on 18 August 2014 and is
available to view at www.ozminerals.com/investorinformation/asx-releases.html
CARRAPATEENA
LOW CASH COSTS AND A LONG MINE LIFE
Very low cash costs, globally relevant scale and a long mine life*
450,000
400,000
Cobre Panama
Phase I
Las Bambas
Annual CuEq Production
350,000
300,000
Oyu Tolgoi
Phase I
250,000
Toromocho
Phase I
200,000
150,000
Sierra Gorda
Phase I
Salobo I & II
Carrapateena
Constancia
100,000
Mount
Milligan
50,000
Sentinel
Ministro Hales
Phase I
Caserones
Bozshakol
Aktogay
Antucoya
Red Chris
0
0.00
0.50
1.00
1.50
2.00
2.50
C1 Cash Cost (US$/lb Cu)
Years of Mine Life Based on Current Reserves
* Major recently developed or in-construction greenfield projects
OZ Minerals | 18
Source: Company reports, OZ Minerals
CARRAPATEENA: FREMANTLE DOCTOR
Q3 SIGNIFICANT INTERSECTIONS (PLAN VIEW)
737,000 mE
N
FDR010
Holes for which results were received during
the quarter and significant intersections from
DD14FDR005W1 and DD14FDR010:
Residual Gravity
Section 6545700mN
6,546,000 mN
Section 739515mE
740,000 mE
FDR007
FDR009
FDR008
FDR005W1
CAR037
OZ Minerals | 19
6,543,000 mN
1 km
Main Copper
Mineralised Zone at
Carrapateena
Hole Number
From
(metres)
Interval
(metres)
Copper
(%)
Gold
(g/t)
*DD14FDR005W1
975.0
1188.0
0.40
0.21
**Including
1390.5
44.5
1.95
1.30
**Including
1443.0
51.0
1.83
1.20
*DD14FDR010
1024.0
656.0
0.45
0.36
*Including
1232.0
201.0
0.87
0.89
**Including
1232.0
15.0
1.17
0.49
**Including
1258.0
40.0
1.41
2.07
**Including
1331.9
30.1
1.17
1.19
**Including
1377.0
13.0
1.35
1.18
• New zone of higher grade
mineralisation intersected
All drill hole assay intervals are down hole length, true width not known
*Intervals calculated using a 0.1% Cu cut-off grade with unlimited internal dilution.
**Intervals calculated using a 0.7% Cu cut-off grade up to/including 4m internal dilution.
SUMMARY
•
Strong quarter of production at Prominent Hill with return to
100,000 tonne per year copper production run-rate.
•
First production achieved at Malu Underground.
•
High quality Pre-Feasibility Study at Carrapateena successfully
demonstrates viability.
OZ Minerals | 20
APPENDICES
CARRAPATEENA: FREMANTLE DOCTOR
Q3 DD14FDR010 (SECTION VIEW)
Section 6545700mN is clipped with a window of +/-100m.
DD13FDR005 was previously released in 2013 ASX Q2.
FD002 was drilled in 2007 by Teck Cominco Australia.
*Intervals calculated using a 0.1% Cu cut-off grade with unlimited internal dilution.
**Intervals calculated using a 0.7% Cu cut-off grade up to/including 4m internal dilution.
OZ Minerals | 22
CARRAPATEENA: FREMANTLE DOCTOR
Q3 DD14FDR005W1 (SECTION VIEW)
Section 739515mE is clipped with a window of +/-100m.
DD12FDR003 and DD12FDR004 was previously released in 2012 ASX Q4.
DD13FDR005 was previously released in 2013 ASX Q2.
DD14FDR006 was previously released in 2014 ASX Q2.
FD002 was drilled in 2007 by Teck Cominco Australia.
*Intervals calculated using a 0.1% Cu cut-off grade with unlimited internal dilution.
**Intervals calculated using a 0.7% Cu cut-off grade up to/including 4m internal dilution.
OZ Minerals | 23
JAMAICA
BELLAS GATE PROJECT, CONNORS PROSPECT,
Q3 DRILLING RESULTS (PLAN VIEW)
270,700 mE
271,000 mE
Three holes drilled at Connors prospect to date.
Results from CON14-003 received during the
quarter:
N
CON14-001
1,999,400 mN
CON14-003
CON14-002
Hole Number
1,999,200 mN
From
(metres)
Interval
(metres)
Copper
(%)
Gold
(g/t)
CuEq
(%)
*^CON14-001
39.0
260.0
0.44
0.19
0.55
Including
91.0
107.0
0.59
0.34
0.79
*^CON14-002
11.0
112.0
0.48
0.33
0.66
Including
11.0
59.0
0.55
0.49
0.83
*CON14-003
34.0
297.0
0.40
0.24
0.54
Including
86.0
55.0
0.67
0.59
1.01
Including
279.0
27.0
0.85
0.32
1.04
Surface Geology Legend
Alluvium
Connors Porphyry Complex
Ginger Ridge Stock
Browns Hall Formation
OZ Minerals | 24
100 m
*^Results shown were previously released in the 2014 ASX Q2.
*Intervals calculated using unlimited dilution.
Note: Copper equivalents are calculated using a US$3.00/lb. copper and a
US$1200 per ounce gold price assuming 100% recovery of both metals.
Intersections are drilled lengths only. Too little information is available to
estimate actual true widths.
COMPETENT PERSON’S STATEMENT
The information in this report that relates to Exploration Results in respect to
the Fremantle Doctor and Connors Prospects is based on and fairly represents
information and supporting documentation compiled by Mr Anthony
Houston BSc, a Competent Person who is a member of the Australian
Institute of Geoscientists. Mr Houston is a full-time employee of
OZ Minerals Limited. Mr Houston is a shareholder of OZ Minerals and is
entitled to participate in the OZ Minerals Long Term Incentive Plan. Mr
Houston has sufficient experience relevant to the style of mineralisation and
type of deposit under consideration and to the activity being undertaken to
qualify as a Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral Resources
and Ore Reserves’. Mr Houston consents to the inclusion in the report of the
matters based on his information in the form and context in which it appears.
Please refer to accompanying Quarterly report for JORC
2012 Table 1 information.
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