PERTH (miningweekly.com) – Copper/gold miner Oz Minerals has reported a near 50% increase in underlying net profits after tax for the 2020 financial year, while net revenues increased by 235%.

“2020 saw the Oz Minerals team rise to the challenges and deliver a strong operating and financial performance, continue to grow the company, create value for our stakeholders and advance our adaptive, innovative and collaborative culture,” said MD and CEO Andrew Cole on Thursday.

He noted that the company delivered its sixth consecutive year of meeting or exceeding copper production guidance, allowing continued investment in growth activities and delivery of an increased net profit after tax of A$213-million, compared with the A$164-million in 2019, on net revenue of A$1.3-million, up from the A$1.1-billion in 2019.

The miner noted that the increase in the net profit after tax was driven by higher gold volumes during the full year, accompanied by higher gold prices. Copper sales in turn were lower, following the depletion of higher-grade copper ore stockpiles and the prioritisation of processing high-grade gold stockpiles at Prominent Hill, however this was partially offset by the first year of production at Carrapateena.

Underlying earnings before interest, taxes, depreciation and amortisation grew to A$606-million from the A$462-million reported in 2019, and the group’s operating margin increased to 45%.

“Operating cash flows were again strong at A$550-million and we ended 2020 with a net cash balance of A$32-million and significant liquidity available, positioning us well to move into our next phase of growth.

“With a strong operating cash position and the board’s confidence in the company’s operational performance and outlook, it has declared a final fully franked dividend of 17c per share in line with our policy of prioritising a sustainable ordinary dividend. Total fully franked dividends for 2020 are 25c per share,” Cole said.

During the 12 months under review, the ramp-up phase at Carrapateena was completed, six months ahead of initial expectations.

On the successful ramp-up of the sub level cave, along with learnings gained to date from cave management, Oz Minerals last month approved the block cave expansion.

The expansion creates the potential for a world class multi-generational mining province considering its scale, production, mine life, low cost base and jurisdiction.

The block cave expansion would unlock Carrapateena’s potential to be a multi-generational, lowest quartile cash cost producing province, and 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 prefeasibility study (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.

“Prominent Hill again met its copper production guidance while also meeting its increased gold production targets reinforcing its position as a low-cost reliable operation. 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,” said Cole.

“The PFS update for the West Musgrave copper/nickel project released in December 2020 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 and powered by 70% to 80% renewable energy. We also acquired our project joint venture partner, Cassini Resources, which provides us with flexibility regarding future development and funding options.

“Our Carajás Hub strategy started to take shape with Pedra Branca ore being trucked to the Carajás East processing hub. In the Gurupi province, we made progress, though not as much as we would have liked, towards removing the injunction on the CentroGold project.

“2021 will be a year where Oz Minerals will move into our next phase of growth with major growth catalysts at all of our assets,” said Cole on Thursday.

“The focus will be on safe operational delivery, on starting early works on the Carrapateena block cave following board approval, advancing the project studies at Prominent Hill, Carrapateena and West Musgrave, and developing out the Carajás Hub strategy in Brazil. We’ll also be continuing our exploration activities where possible.

“We have a range of greenfield and brownfield options in the mature mining regions of Australia and Brazil and a strong balance sheet providing financial flexibility for growth opportunities.”