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Oz Minerals drills down on $600 million Prominent Hill expansion

Business

SA miner Oz Minerals has approved a $600 million shaft expansion at Prominent Hill, which is expected to increase copper production by 23 per cent a year and extend the mine’s life until at least 2036.

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Yesterday’s final investment decision came as the Adelaide-based company reported a $269 million net profit after tax for the six months to June 30, driven by higher copper volumes and stronger prices.

Prominent Hill mine began operation in 2009 as an open pit and is now an underground mine producing 4.5 million tonnes per annum and moving to between 4.5 and 5 million tonnes per annum from 2022 via a trucking operation.

Upon completion of the new Wira shaft installation in 2024, the underground production rate will increase to 6 million tonnes per annum from 2025.

The start of the shaft operation is expected around the same time the stockpiled ore from the original open pit is fully depleted.

The average annual copper production is expected to be around 54,000 tonnes and 108,000 ounces of gold post-2025, about 23 per cent more than it expects in the current trucking operation.

Prominent Hill is located 650 km north-north-west of Adelaide, approximately 100 km south-east of Coober Pedy and 150 km north-west of BHP’s Olympic Dam mine.

OZ Minerals Chief Executive Officer Andrew Cole said Prominent Hill was a quality orebody and remained open at depth.

“The reliable performance of the operation and its consistent Resource to Reserve conversion rate were all influential in the decision,” he said.

“We are thrilled to see a long and productive future for Prominent Hill with the Wira shaft mine expansion enabling access to areas previously thought uneconomic and opening up potential new prospects.”

In January, Oz Minerals approved a block cave expansion at its Carrapateena mine, which is also in South Australia’s north.

Early works are expected to begin this year with the potential to almost triple annual ore production to 12 million tonnes from current levels.

An investment decision on Oz Minerals’ West Musgrave copper-nickel project in central Australia is expected next year.

The company’s first-half profit was up 237 per cent on last year and helped generate strong operating cashflows of $457 million.

Net revenue of $986.1 million was higher than the comparative period, primarily due to higher copper volumes and price, with copper sales 14,000 tonnes higher and the net copper price 61 per cent higher.

Oz Minerals will pay a fully franked interim dividend of 8 cents per share and a special fully franked dividend of 8 cents per share.

“A three-fold increase in our financial performance for the first half of the year has been driven by a strong operational performance and higher copper production, supported by favourable copper pricing,” Cole said.

“During the first half, Prominent Hill has continued to sustain annualised rates above 4Mtpa with work continuing at the bottom of the current Life-of Mine level to establish level infrastructure for the commencement of the bottom-up mining sequence.

“Simultaneous bottom-up and top-down mining will enable an increase to mining rates from 2022, to between 4Mtpa and 5Mtpa ahead of the shaft mine expansion which will enable mining rates of 6Mtpa from 2025.

“Production at Carrapateena has continued to increase during the half-year as expected.”

The Oz Minerals share price was steady yesterday at $22.10 following the results announcement.

Its strong growth in the past 18 months since production began at Carrapateena has seen its market capitalisation more than double to $7.35 billion, making it the state’s second-largest listed company behind Santos.

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