COVID-19

OZ deferring $150M in growth spending

A COVID-19 business review has led OZ Minerals to defer $150 million in overall growth capital, exploration and study expenditure and refocus its 2020 capital expenditure on critical low-cost metal production and jobs preservation.

The focus at Carrapateena has shifted to stockpile building.

The focus at Carrapateena has shifted to stockpile building.

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At Carrapateena the plan has been biased towards level ore development and undercut ore production, the maintenance of metal recoveries and production.

The plant ramp-up achieved nameplate throughput rate for sustained periods within the first month since commissioning, ahead of schedule.

A five day continuous period operating the 12,000t per day nameplate was achieved in March, and subsequent to this, the plant milled 13,000t milled in 24 hours.

Metal recoveries have been averaging more than 90% for copper and 85% for gold.

While underground development is well progressed, after the COVID-19 business review, the mine has been resequenced to accelerate run-of-mine ore stockpile build in case things get worse.

The ore stockpile stands at about 305,000t.

The first containers of concentrate have been trucked to the port, awaiting further concentrate for a first bulk shipment to customers in the second quarter.

Carrapateena production is expected to progressively increase through the second half of the year to reach a 4.25 million tonnes per annum run rate by year-end.

Significant capital expenditure there has been deferred to 2021. That deferral is not expected to have any material impact on the project's ramp-up.

The Carrapateena expansion pre-feasibility study is still due for release mid-2020.

Should the project proceed to the feasibility study stage, low cost set-up activities will take place in 2020 with no impact on block cave timing.

Prominent Hill has continued high grade, low cost production and is operating to expectation with no significant disruptions to date.

No changes are expected to be made to existing production guidance.

Should the need arise to operate Prominent Hill mining activities on a substantially reduced workforce, there are about 18Mt of stockpiled ore available for processing, which can be largely managed from OZ's remote operations facilities in Adelaide.

With OZ putting a stop to some of its growth activities, the company plans to keep the employees impacted by those cessations and reassign them to business optimisation activities.

That way they are on hand to pick up those activities again when the opportunity arises.

OZ expects to get savings from both capital and operating costs along with a reduction in corporate administration costs. The ban on non-essential travel will no doubt help there.

With South Australia announcing border closures, OZ is preparing to work with its employees who are SA based.

Sites are operating with core front line operators and leadership teams.

No material change is being experienced in concentrate demand or shipping schedules for 2020.

Site supply chains have so far remained unaffected.

OZ Minerals CEO Andrew Cole said the cultural change the company had been working towards had paid off.

"Our cultural investment over the past five years is paying off and our teams have remained calm and continue to perform well," Cole said.

"The introduction of flexible work arrangements for much of our non-frontline workforce over the past 18 months has also allowed a relatively seamless transition to the current remote working environment.

"With more than 85% of our Australian sites' workforce based in South Australia, the recently announced South Australian border closures will have limited impact on the continued operation of Carrapateena and Prominent Hill, with all non-frontline functions already working remotely.

"We have planned for a range of scenarios including operating with a South Australian workforce only, extending rosters to enable isolation of sites through to ‘care and maintenance'.

"As we develop our action plans our overarching objectives are the health and safety of our people, job protection and liquidity."

Cole said so far the company had not experienced any significant disruptions at it sites.

"While the circumstances remain fluid, an extensive range of preventative and contingency measures have been actioned across the company to ensure our employees remain safe and our sites continue to operate," he said.

"We have also been working with our stakeholders to ensure they are safe, healthy and coping under these difficult conditions.

"The company triggered its crisis management plans in early February, which introduced a range of international and domestic travel and other restrictions.

"Our mines are operating with only core front-line personnel and leadership teams on site, with site partitioning and social distancing initiatives, revised rosters and remote working running smoothly.

"Our sites are also able to isolate, conduct initial testing and track interactions of our personnel in the event of symptoms of COVID-19 being presented, with several such tests already performed and proving negative."

On the stakeholder front OZ is setting up a $4 million stakeholder support fund.

 

 

 

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