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Underground death, project delay dampens copper mining results

Business

Oz Minerals has played down strong copper and gold production at its South Australian mines in the September quarter in the wake of the death of a Prominent Hill worker last month.

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The listed company released its Q3 report to the ASX yesterday, which showed its strongest quarter of production for the calendar year so far coupled with a reduction in costs.

However, Oz Minerals CEO and managing director Andrew Cole said the positive quarter from a production and cost perspective had been overshadowed by the fatal injury to the Byrnecut underground employee at Prominent Hill in September.

Byrnecut is the underground mining contractor at Oz Minerals’ South Australian mines, Prominent Hill and Carrapateena.

“We are deeply saddened by this tragic event and we share our condolences with his family and friends,” Cole said in the statement to the ASX.

“We and Byrnecut are conducting our own investigation in parallel with investigations being conducted by authorities. Safety at the site and the wellbeing of all our workforce remains a priority.”

The Adelaide-based company’s copper production for the three months to September 30 reached 17,565 tonnes at Prominent Hill and 14,406 tonnes at Carrapateena, the highest quarterly result at both sites so far this year.

Gold production at Carrapateena reached a record 23,266 ounces at Carrapateena and 41,245 ounces at Prominent Hill.

Oz Minerals also operates a smaller copper-gold mine in Brazil’s Carajas East Province.

Cole said full-year group copper production was tracking in line with guidance.

“Prominent Hill copper and gold production remains strong with continued higher than expected gold grade in stockpiles resulting in a further increase to annual gold production guidance,” he said.

The commencement of production at Carrapateena in late 2019, surging gold prices during the coronavirus pandemic and sustained strong global demand for copper has helped the company almost triple its market capitalisation to $8.67 million in the past two years.

Meanwhile, copper production at BHP’s Olympic Dam mine near Roxby Dam in the state’s north decreased by 43 per cent to 30,000 tonnes in the September quarter as it ramped down ahead of a major smelter maintenance campaign.

The $500 million SMC21 project is expected to create 1500 jobs over the next few months and was scheduled to begin in August but was delayed by a month due to COVID-19 border restrictions.

It is now expected to be completed towards the end of the December 2021 quarter, followed by a ramp-up to full capacity by March 2022.

Guidance for the 2022 financial year remains unchanged at between 140 and 170 kt, which is a significant reduction from the 205,000 tonnes of copper produced at Olympic Dam in the 2020-21 financial year.

BHP this month also exercised its option to form an exploration joint venture with Red Tiger Resources for the Intercept Hill copper project, which borders its Oak Dam site in South Australia. BHP’s joint venture interest commences at 65 per cent with the option to earn a further 10 per cent over the next three years.

At Oak Dam, about 65km south of Olympic Dame, BHP began next stage resource definition drilling in May after announcing in November 2018 it had made a huge copper/gold discovery at Oak Dam West.

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