PERTH (miningweekly.com) – Copper/gold miner Oz Minerals on Thursday said that it was on track to meet its full year production guidance, however, the miner told shareholders that challenging conditions in Brazil, relating to the escalating Covid-19 pandemic in the region, could impact the development of the Pedra Branca operation, which could result in the Carajas east hub not meeting its annual guidance.

Oz Minerals has reported copper production of 26 842 t for the first quarter ended March, compared with the 28 939 t produced in the previous quarter, while gold production declined from 66 895 oz to 55 150 oz.

The Prominent Hill mine produced 15 165 t of copper during the quarter and 34 809 oz of gold, while Carrapateena contributed 9 799 t of copper and 18 872 oz of gold.

The Carajas East province, in Brazil, delivered 1 878 t of copper and 1 469 oz of gold during the quarter under review.

“The first quarter saw a solid operational performance with full year group production guidance on track. Higher copper production is expected in subsequent quarters as grade at Carrapateena increases in line with its mine plan,” said Oz minerals MD and CEO Andrew Cole.

All-in sustaining costs increased from 62.7c/lb to 136.5c/lb, as C1 costs increased from 6.4c/lb to 63.3c/lb.

Oz Minerals told shareholders that the cost increases compared with the prior quarter were due to lower by-product credits and a stronger Australian dollar, with site processing costs at the Carrapateena operation were also higher due to planned maintenance on the processing plant.

“While cost performance during the quarter has been well controlled, the strengthening of the Australian dollar and weaker gold price is expected to negatively impact comparative unit costs over the course of the year and as such we have modified 2021 cost guidance. Counter to this, the strong copper price environment continues to support robust operating cashflows,” Cole said.

He noted that Prominent Hill continued to reliably deliver with sustained annualised rates above four-million tonnes a year, and that the accelerated decline development had now reached the bottom of the current life-of-mine level ahead of schedule and lateral development was now underway to establish level infrastructure for the commencement of the bottom-up mining sequence.

“The bottom up and top down mining will enable an increase in mining rates from 2022, to between four-million tonnes a year and five-million tonnes a year. Opening up the deeper levels also facilitates access for the potential expansion using a shaft haulage system. Expansion-focused resources drilling is continuing to show resource and grade continuity.

“Carrapateena transitioned its underground mining contract to Byrnecut during the quarter. The transition has been successful, however, the period leading up to the transition and the availability of the mining fleet post transition due to a maintenance backlog has had a short-term impact on ore tonnes and lateral development during the quarter.

“Higher copper production is expected in subsequent quarters with annual production remaining in line with guidance for the full year. Processing records were achieved during the quarter as we continue with optimisation at the site,” Cole said.

Oz Minerals approved an acceleration of the Western Access Road at Carrapateena with A$23-million of capital previously planned for 2022 brought forward to 2021. The acceleration will assist with an improvement in site access and concentrate logistics management as well as continuity of community partnership opportunities.

Block cave study activities are continuing and the block cave expansion declines are on track to begin in the fourth quarter of 2021.

Meanwhile, Cole said that the impact of the Covid-19 pandemic had escalated in Brazil with infection rates increasing across the country and operating conditions becoming more challenging for the company in the Carajás.

“During 2020 the team in Brazil managed to maintain operational plans through the disruptive environment. With conditions still deteriorating we expect development progress at Pedra Branca to be impacted which may result in Carajás East Hub production not meeting annual guidance of 10 000 t to 15 000 t of copper, however this is not expected to impact group 2021 guidance.

“We continued to advance our growth pipeline projects demonstrating the quality of the organic growth options available to Oz Minerals, with drilling programs at Prominent Hill, West Musgrave and Santa Lucia all progressing to support key milestones and decision points later this year.”

An investment of A$12-million was also approved by the board during the March quarter to better understand the West Musgrave province strategy potential, with Cole saying an investment decision on the current Nebo-Babel deposit was expected in 2022, with an integrated drilling programme planned to start in the third quarter at the Succoth copper deposit.