The cards are stacked against copper miners as poor weather conditions, labour shortages, high inflation and freefalling spot prices cripple any form of short-term optimism that remains.
Oz Minerals (ASX: OZL) produced 27,423 tonnes of copper in the June quarter, down -9.5% quarter-on-quarter and -16% compared to a year ago.
“The second quarter, as described in our production and cost guidance update in June, saw a continuation of COVID related workforce and supply challenges at our South Australian assets,” said CEO Andrew Cole.
“The quarter was also adversely impacted by further conveyor belt issues on the material handling system at Carrapateena (reduction of circa 4,300 tonnes of copper metal produced). The material handling system returned to operating at full capacity during the quarter and has continued to operate without issue,” added Cole.
Oz Minerals expects a much stronger operational performance in the second-half of the year.
C1 costs continued to face upward pressure due to production disruptions and industry-wide inflation of around 8% across all assets.
Group copper costs now sit at US$1.43/lb, up 21.2% compared to a year ago.
Copper prices have declined -27% in the last 12-months, down to US$3.34/lb.
Oz Minerals is pooling its capital into a block cave expansion at Carrapateena and mine shaft expansion at Prominent Hill. Both assets are copper focused, long life, low cost and located in South Australia.
Block cave works over 2022-25 is expected to cost $710m to enable a significant increase in mine life and production. Study work for the mine shaft expansion has advanced and Oz Minerals expects to provide an update in the September quarter 2022.
The capital commitments to Carrapateena and Prominent Hill places the greenfield West Musgrave in a very awkward place.
West Musgrave is due for a final investment decision in the second-half of 2022. The project is expected to cost at least $1.1bn, according to its pre-feasibility study from December 2020.
Oz Minerals had $82m cash at the end of the June quarter, in addition to a corporate debt facility limit of $700m.
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