PERTH (miningweekly.com) – Copper miner Oz Minerals on Friday outlined its pathway to doubling production, while also revealing the financial results for a tough first half of 2021.

Oz Minerals reported that net revenue for the first half had dropped by 77.5%, compared with the first half of 2021, to A$908.6-million, while net profits after tax in the same period dropped by 159.4% to A$109.2-million.

Earnings before interest, taxes, depreciation and amortisation dropped by 202.9%, to A$358.3-million.

CEO Andrew Cole told shareholders that the company had faced a challenging first half, affected by sustained Covid absenteeism and one-off weather and equipment interruptions. Profit was also impacted by industry-wide inflationary pressure and weaker market conditions towards the end of the half-year period.

“We are now regaining operating momentum at both Prominent Hill and Carrapateena with improvement plans gaining traction supported by considerably lower absenteeism, resulting in fewer shift losses and improved equipment availability. Combined with an increased movement of the cave at Carrapateena, these green shoots have increased our confidence in a stronger second-half performance and we remain on track to meet our group annual production and cost guidance.

“The quality and high margin nature of our assets provided a healthy operating margin of 40% and robust operating cashflow during the half. We continue to invest in and advance our unique organic growth pipeline to take full advantage of the growing long-term demand for copper and nickel, driven by global electrification and accelerated decarbonisation.”

Oz Minerals on Thursday announced the approval of a further A$12-million to progress work at Prominent Hill to evaluate the potential to access the near-surface targets of Walawuru and Papa. The work will look to confirm that truck operations are technically and economically feasible to transport ore to surface and can supplement current trucking and future shaft operations.

Cole said that the largest portion of the investment will be directed towards opportunities to accelerate infill drilling, with development of additional platforms to potentially expand the resource and convert the existing inferred resources to reserves. The additional platforms will serve as part of the broader underground mine infrastructure should Walawuru be developed in the future.

"A near A$86-million cash benefit will be realised in the second half following regulatory assessment of our eligibility for a deduction under the temporary full expensing provisions announced in the 2021 Federal Budget.

“At Prominent Hill the Wira shaft mine expansion remains on budget and schedule, enabling mining rates of six-million tonnes a year from 2025 with work continuing to determine if the upgraded shaft capacity of 6.5-million tonnes a year can be fully utilised.

“Carrapateena’s materials handling system has continued to operate without interruption during the third quarter and, pleasingly, the cave is showing more sustained movement in recent months with an estimated 41 m in vertical growth in July, compared to 37 m over the entire second quarter. At the end of July the cave back was only 94 m from surface, with the first signs of surface subsidence providing growing confidence that the cave may break through to surface by the end of the year.

“At Carajás East, the Pedra Branca copper/gold mine ramped up to full production in June ahead of schedule and the transition of the Antas mine pit to a tailings storage facility was successfully completed. We accelerated Santa Lucia drilling with its prefeasibility study on track for delivery later this year,” Cole told shareholders.

Meanwhile, the West Musgrave feasibility study progressed, with the Western Australian government granting the third and final key regulatory approval required to allow construction of the project. Mining agreement discussions are nearing completion with the Ngaanyatjarra Council and an investment decision is on track for this final half of the year. In order to retain project schedule, additional funding of A$60-million has been approved through to the end of 2022.

“Despite challenges across the industry from Covid, inflation and supply chain interruptions, our culture and our strategy have provided agility and resilience whilst supporting our strategy of growth.

“Current conditions reinforce the value of the Oz Minerals strategy. Our portfolio of long-life, low-cost assets in low-risk jurisdictions and a pipeline of organic growth options provide confidence in delivering our operational and growth plans,” Cole said.

Speaking to investors on Friday, Cole noted that Oz Minerals' next growth phase offers options to more than double copper equivalent production from 140 000 t/y at present to over 340 000 t/y.

“We’ve spent the past seven years creating the company we have today with an abundance of choice and growth options, enabled by a track record of strong operational performance, project execution and prudent capital management. We have evolved from a single openpit mine to three operating assets in two countries with expansions underway, and we are now developing these assets at speed into multi-generational mining provinces,” he said.

“Over the years our strategy has evolved from copper focus to now, modern minerals. It is supported by a series of strategic aspirations. A number of our aspirations direct us towards minimising our environmental footprint and we have built, from the ground up, a decarbonisation roadmap towards achieving net zero Scope 1 and 2 operational emissions by 2030.

“Others among these strategic aspirations include partnering, collaborations and alliances, automation and flexibility, as they can accelerate development, reduce costs, manage risks and effect transformative change across the sector,” Cole said.