OZ Minerals Eyes Carrapateena Copper Project Expansion

Following the completion of a scoping study, OZ Minerals (ASX:OZL,OTC:OZMLF) believes it can double mine throughput and increase life-of-mine (LOM) average copper production at its Carrapateena asset.

The study explored the option of replacing the lower half of Carrapateena’s sub-level cave with a block cave from 2026, which found that the conversion would boost mine throughput from 4.25 million tonnes per annum (Mtpa) to 10 to 12 Mtpa. Additionally, LOM average copper production would grow from 65,000 tonnes per annum (tpa) to a range of 105,000 to 125,000 tpa.

“The Carrapateena block cave expansion work showed the conversion to a block cave to be the most value accretive next step for the Carrapateena resource and conceptually for the entire province, as it potentially enables a series of future add-on block caves, which themselves will now be the subject of a Carrapateena Life of Province Plan scoping study,” OZ Minerals CEO Andrew Cole said in a statement.

While Cole added that life-of-mine all-in sustaining costs would be reduced to US$0.90 to US$0.95 per pound, the expansion would be anything but inexpensive. The scoping study revealed the block cave expansion would see a pre-production capital of $1 to $1.3 billion; Carrapateena was already docketed to incur pre-production capital costs of $916 million.

However, the company maintains further value would be found from pursuing the expansion.

“The potential for the Carrapateena Block Cave Expansion to progressively unlock the Carrapateena Life of Province more broadly via a controlled, methodical and incremental approach is particularly attractive as it manages risk and capital expenditure whilst enhancing value for shareholders and other stakeholders,” Cole said.

Carrapateena, located in South Australia, is currently under construction with first sub-level cave production docketed for Q4 2019 followed by an 18-month ramp-up; the project is set to have a 20-year mine life.

Going forward, OZ intends to complete a prefeasibility study for the block cave expansion by mid-2020, along with pushing the life of province plan to scoping study status.

Copper was trading at US$6,421.33 as of 3:42 p.m. EST on Thursday (March 7).

Meanwhile, OZ Minerals’ share price took a small hit on Thursday when it dropped 0.58 percent on the ASX, closing the day of trading at AU$10.31 per stock.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.