PERTH (miningweekly.com) – A prefeasibility study (PFS) on a block cave expansion of the Carrapateena copper/gold project, in South Australia, has unlocked the potential of the province, ASX-listed Oz Minerals said on Tuesday.

The PFS is based on the conversion of the lower portion of the current sub-level cave into a series of block caves, which would significantly increase the value of the project, as well as the reserve and mine life of the Carrapateena operation.

The block cave expansion would unlock Carrapateena’s potential to be a multi-generational, lowest quartile cash cost producing province, Oz Minerals told shareholders.

“The PFS analysed the whole Carrapateena province and determined that replacing the lower half of the current sub-level cave with a block cave and expanding the expected annual throughput rate from between 4.7-million and 5-million tonnes a year, currently planned from 2023, to 12-million tonnes a year, has the potential to create significantly more value than the sub-level cave alone,” said Oz Minerals CEO Andrew Cole.

“The block cave would leverage existing underground infrastructure, supported by expanded surface processing capability.”

Cole noted that a block cave conversion in the lower portion of the Carrapateena resource had the potential to nearly double average annual production to around 110 000 t to 120 000 t of copper and between 110 000 oz and 120 000 oz of gold a year from 2026, with life-of-mine all-in sustaining costs of around $0.75/lb to $0.85/lb.

Block cave 1 is expected to become operational by 2026, while block cave 2 will become operational by 2038.

The PFS estimated that a capital investment of between A$1.2-billion and A$1.3-billion would be required for the two block caves, with the capital investment weighted towards 2025 to 2027 for surface infrastructure to increase the production rate.

The block cave 1 and 2 expansion is estimated to result in the net present value of the project increasing from A$600-million to A$770-million at a final investment decision in 2023, with an internal rate of return of 19%, post tax.

“An incremental, three-phased approach to capital investment in the project provides optionality at various stages including a decision on whether to proceed to Stage 1 decline development in 2022 and then, at a later date, a decision as to whether to proceed with the block cave itself,” said Cole.

“How best to expand the process plant can be considered later again, based on available technology and the plant capacity at the time.

“We are in the enviable position of being able to apply the ongoing learnings from the sub-level cave operation and increased orebody knowledge to de-risk and optimise any potential block cave expansion.”

Cole said that the PFS also provided a high level view of how the block cave could be constructed without impeding the operating sub-level cave and without rework of current construction plans.

“The potential for the block cave to progressively unlock the province more broadly via a controlled and incremental approach is particularly attractive as it manages risk and capital expenditure while enhancing value upside for our stakeholders.”

 A life-of-province scoping study has shown a potential mining life of several decades post block cave 2, and considered future potential of resource extensions, satellite deposits, and exploration targets.

Oz Minerals told shareholders that in order to meet optimal timeframes for a block cave transition, the block cave expansion will now transition towards a feasibility study level.

The Stage 1 feasibility study is expected to be completed by late 2021, with less critical follow-up work to be completed at a later date.

Expenditure for the Stage 1 study is expected to reach around A$7-million.