PERTH (miningweekly.com) – Takeover target Oz Minerals has reported a strong fourth quarter of production, with the company recording its highest group quarterly copper production on record.

Total copper production in the three months to December reached 36 307 t, up from the 30 012 t produced in the previous quarter, while gold production reached 54 856 oz, down slightly from the 56 334 oz produced in the previous quarter.

For the full year, Oz Minerals produced 124 065 t of copper, which was in line with the guidance of between 120 000 t and 135 000 t, with the company also producing 211 147 oz of gold, in line with the guidance of between 203 000 oz and 220 000 oz.

C1 cash costs for the December quarter reached 130.5c/lb, up slightly from the 129.5c/lb in the third quarter, with full-year C1 costs reaching 130c/lb, in line with the guidance of between 120c/lb and 135c/lb.

“We were pleased with how the team reset and recalibrated performance to end the year on a strong note after a challenging first half impacted by adverse weather, Covid-19 absenteeism, supply chain disruption and inflationary pressure. The December quarter of 36 307 t of copper is the highest group copper production on record,” said Oz Minerals MD and CEO Andrew Cole.

“We also realised a milestone in our growth strategy with the West Musgrave copper/nickel project in Western Australia approved in September 2022 and now in construction. The expansions at both Prominent Hill and Carrapateena are well underway notwithstanding some schedule impact, largely due to Covid-19 resourcing reducing expected decline development metres, which will see the Prominent Hill Wirra shaft now ramp up to full production towards the end of 2025 rather than during the first half of 2025 as initially planned.

“We added a potential new project to our growth pipeline in the third quarter, securing an option to acquire the Kalkaroo copper project in South Australia pending the outcome of a high level study and drilling campaign which began during the final quarter.

“We also exercised the earn-in option from Vale on the Santa Lúcia copper project, a potential second satellite mine for our Carajás East hub in Brazil. A prefeasibility study is nearing completion and discussions are well progressed with the Brazil National Economic Development Bank (BNDES) regarding the acquisition of its 50% interest in the project.”

During the December quarter, mining major BHP also increased its proposed offer price for Oz Minerals to A$28.25 a share, valuing the takeover target at A$9.6-billion. The two companies in December entered into a scheme implementation deed and the Oz Minerals directors unanimously recommended that shareholders accept the offer, pending an independent expert concluding that it was in the best interest of shareholders.

The scheme booklet, which contains the expert’s report, will be sent to shareholders in March, and Oz Mineral shareholders are expected to vote on the transaction in early April.

Looking ahead at 2023, Cole said that the company’s focus would be on safely delivering its operation and growth targets, continuing to invest in decarbonisation, and continuing its exploration activities.

“We have also provided 2023 guidance which will see group production broadly in line with 2022 with improving production at Carrapateena and the Carajás East being offset with lower production at Prominent Hill due to the processing of lower grade stockpiles compared to 2022.

“As we continue to invest in our strong growth pipeline we will see a higher level of growth capital in 2023. Group all-in sustaining costs (AISC) are expected to increase compared to 2022 primarily driven by the full year effect of cost inflation, a stronger Australian dollar assumption and higher electricity cost assumptions at our Australian assets which have recently come off longer-term contracts and are now operating under market rates and subject to potential electricity price volatility.”

The miner has set a production target of between 120 000 t and 143 000 t of copper for 2023, and between 191 000 oz and 213 000 oz of gold, at a C1 cost of between 133c/lb and 153c/lb, and an AISC of between 187c/lb and 207c/lb.