OZ MINERALS expects its Carrapateena deposit in outback South Australia to be more prospective than first thought, and will spend $110 million getting to know it better.
The Melbourne-based company announced it would build a 625-metre decline tunnel at Carrapateena to aid exploration on site and potentially shape the eventual mining operation.
OZ Minerals bought Carrapateena about 15 months ago from Australian prospector Rudy Gomez, and chief executive Terry Burgess said the asset was continuing to justify the purchase.
"Without over-exaggerating the upside of Carrapateena, we are seeing extension beyond the resource we came out with previously," he said.
But the news was less positive at the company's existing mine, Prominent Hill, where costs blew out by 18 per cent over the past three months.
Mr Burgess said some of that blowout had been expected, given the company had brought a large number of trucks and digging machines on site to remove waste ore.
Mr Burgess said such high costs were not expected to persist once waste-stripping was completed.
"Once we've gone through this waste-stripping period by 2014, we will start getting rid of trucks and excavators and all that waste-stripping will be done, and we will be producing copper without much stripping required and the costs will go down," he said.
OZ has not ruled out more share buybacks to appease shareholders, who yesterday watched their stocks fall 10? to $7.43.