OZ Minerals spends up on SA deposit

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.

By InvestSMART · 26 Jul 2012

By InvestSMART ·
26 Jul 2012

Comments

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.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What is OZ Minerals investing in at the Carrapateena deposit?

OZ Minerals plans to spend about $110 million at the Carrapateena deposit in outback South Australia, including building a 625‑metre decline tunnel to improve on‑site exploration and help shape any future mining operation.

Why is OZ Minerals spending $110 million on Carrapateena exploration?

The company says Carrapateena looks more prospective than first thought, with signs of extensions beyond the initial resource. The $110 million program is intended to get to know the deposit better and test that upside.

How will the 625‑metre decline tunnel help Carrapateena exploration?

The decline tunnel is designed to provide underground access that will aid exploration work on site and potentially influence the design of the eventual mining operation by allowing more detailed drilling and assessment.

Where did OZ Minerals acquire the Carrapateena asset and when?

OZ Minerals bought the Carrapateena deposit about 15 months ago from Australian prospector Rudy Gomez, and CEO Terry Burgess says the asset continues to justify that purchase.

What cost pressures is OZ Minerals facing at its Prominent Hill mine?

Costs at the existing Prominent Hill mine rose by 18% over the past three months. Management says much of that increase is due to bringing extra trucks and digging machines to site for a period of heavy waste‑ore removal (waste‑stripping).

When does OZ Minerals expect costs at Prominent Hill to come down?

OZ Minerals expects the higher costs to be temporary. Management says once the current waste‑stripping period is completed — expected by 2014 — the company will remove excess trucks and excavators and costs should fall as stripping requirements ease.

Is OZ Minerals considering more share buybacks to support shareholders?

The company has not ruled out additional share buybacks as a way to appease shareholders, according to the report.

How did the market react to OZ Minerals' update on Carrapateena and Prominent Hill?

Shareholders reacted negatively in the short term: the stock fell about 10% to $7.43 yesterday after the company provided the update.