PERTH (miningweekly.com) – Copper/gold miner Oz Minerals has approved the block cave expansion at its Carrapateena operation in South Australia, while reporting increased production for the December quarter.

MD Andrew Cole on Friday announced that the Oz Minerals board had approved progressing the Carrapateena block cave expansion, given the successful ramp-up of the sub-level cave.

The block cave decline early works are now scheduled to begin in the fourth quarter of this year.

“The block cave expansion is now integrated into the existing operations plan to take a whole of province development approach, which will simplify planning, minimise execution threats and maximise value creation opportunities,” Cole said.

“The Carrapateena block cave expansion prefeasibility study (PFS) released in June 2020 demonstrated the conversion of the lower portion of the current sub-level cave to a series of block caves. These findings have been reaffirmed over the past several months,” he added.

The PFS was 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 will unlock Carrapateena’s potential to be a multi-generational, lowest quartile cash cost producing province, and has 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.

“Carrapateena capital expenditure now reflects board approval to proceed with the block cave expansion, previously deferred capital resulting from Covid-19 contingency planning and the ongoing focus of debottlenecking and increasing the sub-level cave production rate to five-million tonnes a year,” said Cole.

“The integration and acceleration of the block cave expansion allows progressive de-risking of the Carrapateena Province in its sub-level cave ramp-up to 4.7-million tonnes to 5-million tonnes a year from 2023 and transition from sub-level cave to block cave, while preserving optionality at future major capital milestone decisions over the coming years. The accelerated programme could bring forward commencement of block cave production by circa six months.”

Meanwhile, Oz Minerals on Friday also reported that copper production for the three months to December reached 28 939 t, up from the 23 873 t delivered in the third quarter, with increased production reported at all of the Oz Minerals operations.

Gold production for the quarter remained stable at 66 895 oz, compared with the 66 746 oz delivered in the previous quarter.

For the full year, copper production reached 97 620 oz, while gold production was reported at 257 987 oz.

Cole pointed out that Oz Minerals had achieved its copper guidance for a sixth consecutive year, and had completed the ramp-up phase of the Carrapateena mine within 12 months, six months ahead of initial expectations.

The mine is expected to be cashflow positive in 2021.

“2020 saw Oz Minerals further advance our growth strategy by safely delivering our operational goals; ramping up our new Carrapateena mine; and advancing our growth pipeline with study updates completed on the Carrapateena expansion, Prominent Hill expansion and the West Musgrave copper nickel project,” said Cole.

“We also advanced our Oz way of working, called The OZWay, which provides a framework for how we think about things at Oz Minerals guided by our Purpose, going beyond what’s possible to make lives better. We continued to hardwire value creation for all stakeholders into our governance framework, reinforcing our strategy which is centred on value creation for our five stakeholder groups – employees, communities, governments, suppliers and shareholders.”

He added that the company also continued to advance its growth pipeline projects demonstrating the quality of the organic growth options available to Oz Minerals.

“Significant milestones were achieved at both Prominent Hill and West Musgrave with a further A$114-million investment approved by the board during the final quarter to progress the next study phases of both projects.

“The Prominent Hill expansion study demonstrated the potential to increase underground production and extend mine life by accessing deeper ore with a shaft haulage system. With sustainable annualised rates above four-million tonnes a year achieved during 2020, future decline development spend was brought forward to increase mining rates further from 2022, to between four-million and five-million tonnes a year.

“The accelerated decline development is progressing well and is on track to progress to the lowermost level at the end of first quarter of 2021 and will be followed by establishment of infrastructure to support the commencement of a bottom-up stoping sequence. Accelerating the decline development to the bottom of the known resource will enable us to mine simultaneously from the current and deeper levels and facilitate access for the potential shaft haulage system,” said Cole.

A final investment decision on the Prominent Hill expansion is expected by mid-2021.

“The West Musgrave PFS update outlined an increase in value with a 12-million-tonne-a-year mine, previously 10-million tonnes a year, while maintaining the same 26 year mine life. We also completed the acquisition of our project joint venture partner, Cassini Resources, providing us with flexibility regarding future development and funding options.”

Cole noted that a final investment decision on the West Musgrave project is planned for 2022.