THIRD QUARTER REPORT 14 OCTOBER 2014

Transcription

1 THIRD QUARTER REPORT 14 OCTOBER 2014

2 DISCLAIMER This presentation has been prepared by OZ Minerals Limited ( OZ Minerals ) and consists of written materials/slides for a presentation concerning OZ Minerals. By reviewing/attending this presentation, you agree to be bound by the following conditions: No representation or warranty, express or implied, is made as to the fairness, accuracy, or completeness of the information, contained in the presentation, or of the views, opinions and conclusions contained in this material. To the maximum extent permitted by law, OZ Minerals and its related bodies corporate and affiliates, and their respective directors, officers, employees, agents and advisers disclaim any liability (including, without limitation any liability arising from fault or negligence) for any loss or damage arising from any use of this material or its contents, including any error or omission therefrom, or otherwise arising in connection with it. Some statements in this presentation are forward-looking statements within the meaning of the US securities laws. Such statements include, but are not limited to, statements with regard to capacity, future production and grades, projections for sales growth, estimated revenues and reserves, targets for cost savings, the construction cost of new projects, projected capital expenditures, the timing of new projects, future cash flow and debt levels, the outlook for minerals and metals prices, the outlook for economic recovery and trends in the trading environment and may be (but are not necessarily) identified by the use of phrases such as will, expect, anticipate, believe and envisage. By their nature, forwardlooking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside OZ Minerals control. Actual results and developments may differ materially from those expressed or implied in such statements because of a number of factors, including levels of demand and market prices, the ability to produce and transport products profitably, the impact of foreign currency exchange rates on market prices and operating costs, operational problems, political uncertainty and economic conditions in relevant areas of the world, the actions of competitors and activities by governmental authorities, such as changes in taxation or regulation. Given these risks and uncertainties, undue reliance should not be placed on forward-looking statements which speak only as at the date of the presentation. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, OZ Minerals does not undertake any obligation to publicly release any updates or revisions to any forward looking statements contained in this presentation, whether as a result of any change in OZ Minerals expectations in relation to them, or any change in events, conditions or circumstances on which any such statement is based. Certain statistical and other information included in this presentation is sourced from publicly available third party sources and has not been independently verified. All figures are expressed in Australian dollars unless stated otherwise. This presentation should be read in conjunction with the Quarterly Report released today. OZ Minerals 2

3 THREE KEY MILESTONES ACHIEVED IN THE QUARTER 1. Prominent Hill production successfully returned to the 100,000 tonne per year copper production run-rate Open pit mining rate ahead of revised schedule. Record plant quarterly throughput. Firmly on track to achieve production guidance. Gold production expected to be at upper end of guidance. Low C1 costs of US60.5 cents/lb. Costs now expected to be at lower end of guidance. 2. First production achieved from Malu Underground on schedule First ore from stoping achieved in early October Malu Underground independent ventilation system installed and operating. Underground operations being integrated. 3. Carrapateena Pre-Feasibility Study completed, successfully demonstrating viability Technically and financially viable with low operating costs and long life. Well located in a low risk jurisdiction with good access to infrastructure. Opportunities such as synergies with Prominent Hill and automation can provide further improved results. Due diligence by interested parties underway. OZ Minerals 3

4 SAFETY OZ MINERALS LOST TIME AND TOTAL RECORDABLE INJURY FREQUENCY RATE 12 MONTH MOVING AVERAGE* TRI Frequency Rate LTI Frequency Rate 2 0 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 0 *per million hours worked OZ Minerals TRIFR OZ Minerals LTIFR Slight increase in injury rates focus firmly on learning from high potential incidents. OZ Minerals 4

5 PROMINENT HILL PRODUCTION SUCCESSFULLY RETURNED TO THE 100,000 TONNE PER YEAR COPPER PRODUCTION RUN-RATE

6 PROMINENT HILL OPEN PIT MINING AHEAD OF SCHEDULE MALU OPEN PIT SEPTEMBER Larger working areas and better fleet management control has driven greater material movement. One bench ahead in Stage 3, one bench ahead in Stage 4, relative to July 2014 advice. OZ Minerals 6

7 PROMINENT HILL Q3 PRODUCTION STATISTICS STRONG PERFORMANCE CONTINUES PROMINENT HILL PRODUCTION STATISTICS JUN 14 QTR SEP 14 QTR Mined Malu copper-gold ore (tonnes) 2,398,069 2,222,443 Malu gold-only ore (tonnes) 1,731,447 1,821,155 Waste (tonnes) 17,901,470 16,400,448 Strong quarterly performance with fewer production excavators in the open pit. Ankata ore (tonnes) 307, ,124 Mined Grade Malu copper-gold ore Cu grade (%) Malu copper-gold ore Au grade (g/t) Malu gold-only ore Cu grade (%) Malu gold-only ore Au grade (g/t) Ankata ore Cu grade (%) Ankata ore Au grade (g/t) Ore Milled (tonnes) (tonnes) 2,234,649 2,755,848 Increase in Malu open pit grade, as forecast. Highest ever quarterly throughput. Milled Grade Copper (%) Copper (%) Gold (g/t) Gold (g/t) Recovery Copper (%) Copper (%) Copper Cons. Produced Contained Metal In Cons. Gold (%) Gold (%) (tonnes) Copper (tonnes) (tonnes) Copper (tonnes) 41,790 49,375 22,181 26,249 Gold (oz) Gold (oz) 30,736 47,376 Total Cons. Sold* (DM tonnes) (DM tonnes) 43,737 38,883 Good recoveries maintained. Copper production above 100kt per annum run rate due to strong ore production and increased milled tonnes. *excludes sales of third party concentrates OZ Minerals 7

8 PROMINENT HILL CONTINUING IMPROVEMENT IN OPEN PIT ORE & WASTE MINING BY QUARTER DECLINING WASTE MINING REQUIREMENTS MINING RATES (BCM/hr) CONTINUING IMPROVEMENT Mt 25 Waste tonnes Ore tonnes BCM/hr 1, , , , ,050 - Q1 Q2 Q3 Q4 Q1 Q2 Q3 1,000 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep Month Average - Rolling Planned reduction in waste mining volumes. As previously announced, ore production higher as Stage 3 accesses higher volumes of higher quality ore. Optimising work areas, improved scheduling has allowed excavator mining rates to improve. September quarter strip ratio 4:1 compared to September quarter 2013 strip ratio of 12:1. OZ Minerals 8

9 PROMINENT HILL RECORD THROUGHPUT, INCREASED PRODUCTION ORE MILLED PER QUARTER RECORD THROUGHPUT COPPER PRODUCTION PER QUARTER ABOVE 100,000tpa RUN-RATE 2.5Mt 25,000 tonnes Q1 Q2 Q3 Q4 Q1 Q2 Q Q1 Q2 Q3 Q4 Q1 Q2 Q Highest ever quarterly throughput by the processing plant. Engineering improvements, reduction in planned shutdowns proving effective. Copper production returned to 100,000 tonne per annum run-rate. Higher grade feed available from mining and higher throughput. Building ore stockpile has allowed flexibility in processing. OZ Minerals 9

10 PROMINENT HILL LOW C1 COSTS DUE TO HIGHER GOLD PRODUCTION AND LOWER EXPENDITURE UNIT COST C1 Q VS Q (US c/lb) USD gold average prices in line with Q2. A$/US$ rate was flat % increase in payable gold production, due to higher grades and higher milled tonnes. Increased ore milled reduced the inventory credit, offset by lower open pit movement. Reduction in processing costs due to revised later shutdown scheduling and reduction in Ankata costs due to higher levels of development work. Strong pit performance creates higher ROM stocks, allowing higher grade tonnes to be milled (1.1) (38.3) 29.7 (21.9) (0.7) (17.0) 60.5 Q2 Actual 2014 Gold price Payable gold volume Volume (Cost Driver) Costs FX Payable copper volume Q3 Actual 2014 OZ Minerals 10

11 COPPER MARKET A$ COPPER PRICE STRENGTH A$ A$ COPPER PRICE RESILIENCE A$ copper price remaining healthy. All 2014 concentrate production, including additional production advised at the end of Q2, now allocated under sales contracts. Concentrates inventory at year end expected to be lower than 1 January. 30/07 30/08 30/09 US$/lb A$/lb Data source: Bloomberg OZ Minerals 11

12 OPEN PIT COSTS Open pit unit costs of $4.98 per tonne mined in the third quarter. Strong result due to improved mining rates, continuing refinement of the despatch system and shorter haul sequencing full year open pit unit mining costs expected to be below $5.30 per tonne mined. Mine planning process underway, including analysis of stockpile management and demobilisation schedule, including review of cost base. Unit cost and expense drivers <$5.30/t Open pit movement to reduce by ~75% by 2017, driving lower gross expenditure 15% of 2014 expenditure increasing to 30% of annual expenditure to 2017 Costs mostly driven by factors other than open pit material movement Some examples of cost types Some example of drivers Contractor admin charge Dewatering Grade control Stockpile reclaim/re-handle Support personnel Ore mined Work areas Water management Mine life personnel planning Some examples of cost types Drill and blast Loading Hauling Road maintenance 85% of 2014 expenditure decreasing to 70% of annual expenditure to 2017 Costs mostly driven by total open pit material movement 2014 Full year OZ Minerals 12

13 FIRST PRODUCTION ACHIEVED FROM MALU UNDERGROUND ON SCHEDULE

14 PROMINENT HILL FIRST PRODUCTION ACHIEVED FROM MALU UNDERGROUND Malu Underground infrastructure and stopes planned for 2014 Significant milestone for the Prominent Hill operation. Decline development commenced in First production from stoping in early October (Adam stope). OZ Minerals 14

15 PROMINENT HILL MALU UNDERGROUND INDEPENDENT PRIMARY VENTILATION ESTABLISHED OZ Minerals 15

16 CARRAPATEENA PRE-FEASIBILITY STUDY COMPLETED, SUCCESSFULLY DEMONSTRATING VIABILITY

17 CARRAPATEENA PROJECT HIGHLIGHTS* TECHNICALLY FEASIBLE, LONG LIFE, VERY LOW OPERATING COSTS, VERY WELL LOCATED Technical features Pre-Feasibility Study completed to a very high standard. Block caving technically feasible. Production of a high quality copper-gold concentrate with uranium below typical penalty levels and no arsenic. Average annual production rate of 114,000 tonnes of copper, 117,000 ounces of gold (at assumed steady state). Long mine-life of 24 years based only on Reserves. Financial features 1 Projected net cash flow of $8.508 billion (including capital expenditure). Net present value of $1.146 billion post tax (at 8 percent real discount rate). Internal rate of return of 13 percent. Low C1 unit costs averaging US$0.49 per payable pound of copper. Project capital cost of $2.985 billion. 1 All figures in Australian dollars unless otherwise stated. Potential upside Extensions to block cave footprints and addition of Lift Three. Exploitation of Khamsin and other regional exploration targets. Potential for mining fleet automation. Use of regional ports. Optimisation of processing with further metallurgical characterisation. Synergies with Prominent Hill. *A management summary of the Pre-Feasibility was released to the market on 18 August 2014 and is available to view at OZ Minerals 17

18 CARRAPATEENA LOW CASH COSTS AND A LONG MINE LIFE 450,000 Very low cash costs, globally relevant scale and a long mine life* 400, ,000 Las Bambas Cobre Panama Phase I Annual CuEq Production 300, , , ,000 Carrapateena Toromocho Phase I Salobo I & II Oyu Tolgoi Phase I Sierra Gorda Phase I Constancia Ministro Hales Phase I Caserones Sentinel 100,000 50,000 Mount Milligan Bozshakol Red Chris Aktogay Antucoya C1 Cash Cost (US$/lb Cu) Years of Mine Life Based on Current Reserves * Major recently developed or in-construction greenfield projects Source: Company reports, OZ Minerals OZ Minerals 18

19 CARRAPATEENA: FREMANTLE DOCTOR Q3 SIGNIFICANT INTERSECTIONS (PLAN VIEW) N 1 km 737,000 me 740,000 me FDR007 FDR009 FDR008 FDR010 CAR037 Section mE Main Copper Mineralised Zone at Carrapateena Residual Gravity Section mN FDR005W1 6,546,000 mn 6,543,000 mn Holes for which results were received during the quarter and significant intersections from DD14FDR005W1 and DD14FDR010: Hole Number From (metres) Interval (metres) Copper (%) Gold (g/t) *DD14FDR005W **Including **Including *DD14FDR *Including **Including **Including **Including **Including New zone of higher grade mineralisation intersected All drill hole assay intervals are down hole length, true width not known *Intervals calculated using a 0.1% Cu cut-off grade with unlimited internal dilution. **Intervals calculated using a 0.7% Cu cut-off grade up to/including 4m internal dilution. OZ Minerals 19

20 SUMMARY Strong quarter of production at Prominent Hill with return to 100,000 tonne per year copper production run-rate. First production achieved at Malu Underground. High quality Pre-Feasibility Study at Carrapateena successfully demonstrates viability. OZ Minerals 20

21 APPENDICES

22 CARRAPATEENA: FREMANTLE DOCTOR Q3 DD14FDR010 (SECTION VIEW) Section mN is clipped with a window of +/-100m. DD13FDR005 was previously released in 2013 ASX Q2. FD002 was drilled in 2007 by Teck Cominco Australia. *Intervals calculated using a 0.1% Cu cut-off grade with unlimited internal dilution. **Intervals calculated using a 0.7% Cu cut-off grade up to/including 4m internal dilution. OZ Minerals 22

23 CARRAPATEENA: FREMANTLE DOCTOR Q3 DD14FDR005W1 (SECTION VIEW) Section mE is clipped with a window of +/-100m. DD12FDR003 and DD12FDR004 was previously released in 2012 ASX Q4. DD13FDR005 was previously released in 2013 ASX Q2. DD14FDR006 was previously released in 2014 ASX Q2. FD002 was drilled in 2007 by Teck Cominco Australia. *Intervals calculated using a 0.1% Cu cut-off grade with unlimited internal dilution. **Intervals calculated using a 0.7% Cu cut-off grade up to/including 4m internal dilution. OZ Minerals 23

24 JAMAICA BELLAS GATE PROJECT, CONNORS PROSPECT, Q3 DRILLING RESULTS (PLAN VIEW) N 270,700 me 271,000 me CON CON ,999,400 mn Three holes drilled at Connors prospect to date. Results from CON received during the quarter: Hole Number From (metres) Interval (metres) Copper (%) Gold (g/t) CuEq (%) *^CON CON Including *^CON Including ,999,200 mn *CON Including Including Surface Geology Legend Alluvium Connors Porphyry Complex Ginger Ridge Stock Browns Hall Formation 100 m *^Results shown were previously released in the 2014 ASX Q2. *Intervals calculated using unlimited dilution. Note: Copper equivalents are calculated using a US$3.00/lb. copper and a US$1200 per ounce gold price assuming 100% recovery of both metals. Intersections are drilled lengths only. Too little information is available to estimate actual true widths. OZ Minerals 24

25 COMPETENT PERSON S STATEMENT The information in this report that relates to Exploration Results in respect to the Fremantle Doctor and Connors Prospects is based on and fairly represents information and supporting documentation compiled by Mr Anthony Houston BSc, a Competent Person who is a member of the Australian Institute of Geoscientists. Mr Houston is a full-time employee of OZ Minerals Limited. Mr Houston is a shareholder of OZ Minerals and is entitled to participate in the OZ Minerals Long Term Incentive Plan. Mr Houston has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Houston consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Please refer to accompanying Quarterly report for JORC 2012 Table 1 information.