Shares soar again as good news keeps coming for OZ

Q: What does "indicated" mean for mineral resources and why does it matter to ASX investors?

Indicated is an official reporting category under the code used by ASX-listed companies. It means the resource estimate is more certain than material classified as inferred. For investors, indicated resources typically carry higher confidence about quantity and grade than inferred estimates.

THERE was no apparent reason for OZ Minerals shares to rise by more than 5 per cent on Friday, but there was a damn good reason for them to be up by almost 3 per cent on Monday.

By InvestSMART · 22 Jan 2013

By InvestSMART ·
22 Jan 2013

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THERE was no apparent reason for OZ Minerals shares to rise by more than 5 per cent on Friday, but there was a damn good reason for them to be up by almost 3 per cent on Monday.

The Melbourne-based miner revealed encouraging news about its copper and gold operations in South Australia on Monday, which now appear to be more prospective than first thought.

The Carrapateena deposit - which ranks as OZ's main growth project - now boasts an "indicated" 202 million tonnes of ore with at least 0.7 per cent copper.

The term "indicated" is an official standard under the code by which ASX-listed companies must report the prospectivity of their mineral deposits.

"Indicated" resources are more certain than those categorised as "inferred", and OZ said if both categories were combined, the amount of known copper and gold at Carrapateena is now 43 per cent higher than when it bought the asset just under two years ago.

There was further good news to be found just 10 kilometres north-west of Carrapateena, where OZ has found another deposit named "Khamsin" that is prospective for copper and gold and will be drilled extensively this year.

The growth assets are crucial to OZ given that its flagship asset, Prominent Hill, appears to be declining in grades and output. A drilling campaign is under way to try and extend the life of the mine.

OZ Minerals shares closed 20¢ higher at $7.50. When added to Friday's unexplained rise of 36¢, the stock has risen more than 7 per cent in the past two trading days.

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Frequently Asked Questions about this Article…

Why did OZ Minerals shares jump more than 7% over two trading days?

OZ Minerals shares rose more than 7% after an unexplained jump on Friday and then further gains on Monday. The Monday rise followed encouraging news about the company’s South Australian copper and gold operations, which boosted investor sentiment. The stock closed 20¢ higher at $7.50 on Monday, adding to Friday’s 36¢ rise.

What new information did OZ Minerals announce about the Carrapateena deposit?

OZ Minerals revealed that the Carrapateena deposit now has an "indicated" 202 million tonnes of ore with at least 0.7% copper. The company also said that, when indicated and inferred categories are combined, the known copper and gold at Carrapateena is about 43% higher than when OZ bought the asset just under two years ago.

What does "indicated" mean for mineral resources and why does it matter to ASX investors?

"Indicated" is an official reporting category under the code used by ASX-listed companies. It means the resource estimate is more certain than material classified as "inferred." For investors, indicated resources typically carry higher confidence about quantity and grade than inferred estimates.

What is the Khamsin discovery and why is it important for OZ Minerals?

Khamsin is a newly identified deposit about 10 kilometres north‑west of Carrapateena that is prospective for copper and gold. OZ plans to drill Khamsin extensively this year, making it a potential near‑term growth asset that could add to the company’s resource base.

How do Carrapateena and Khamsin affect OZ Minerals’ growth outlook?

Carrapateena’s upgraded indicated resource and the nearby Khamsin prospect strengthen OZ’s pipeline of growth assets. Those projects are particularly important because the company’s flagship Prominent Hill operation appears to be declining in grades and output.

What is OZ Minerals doing about declining grades at Prominent Hill?

The article reports that Prominent Hill appears to be declining in grades and output, and OZ Minerals has a drilling campaign under way aimed at trying to extend the life of that mine.

Will OZ Minerals drill more at Carrapateena and Khamsin this year?

The article specifies that Khamsin will be drilled extensively this year. It also notes ongoing drilling activity related to Prominent Hill to try to extend that mine’s life. The company’s focus on these programs indicates active exploration and resource definition.

What should everyday investors watch for next from OZ Minerals?

Investors should watch for drill results and further resource updates from Carrapateena and Khamsin, plus any progress reports on the Prominent Hill drilling campaign. Those updates are likely to influence the company’s resource profile and investor sentiment.