SECOND QUARTER REPORT 15 JULY 2014

Transcription

1 SECOND QUARTER REPORT 15 JULY 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 INFORMATION RELATING TO THE REPORTING OF RESOURCES AND RESERVES MINERAL RESOURCES AND ORE RESERVES Malu Underground The information in this presentation that relates to Prominent Hill Malu Underground Mineral Resource and Ore Reserve as at 31 December 2013 (on page 12 ) is extracted from the report entitled Mineral Resource and Ore Reserve Statements for the Malu Underground Project at Prominent Hill as at 31 December 2013 created on 30 June 2014 and is available to view on reserves.html. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources and Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Persons findings are presented have not been materially modified from the original market announcement. Khamsin The information in this presentation that relates to the Khamsin Mineral Resource as at 23 March 2014 (on page 14) is extracted from the report entitled Khamsin Mineral Resources Statement as at 23 March 2014 which was released to the market on 26 May 2014 and is available to view on The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Mineral Resources, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person s findings are presented have not been materially modified from the original market announcement. OZ Minerals 3

4 HIGHLIGHTS Significantly better than expected copper production of 22,181t with gold production of 30,736oz on strong performance in the Malu Open Pit. Guidance increased to 85,000t to 90,000t copper. Run-rate of 100,000tpa of copper expected to be achieved in the second half. Lower C1 unit costs of US109.7c/lb. C1 unit costs now expected to be lower at US$1.10/lb US$1.20/lb for the full year. As foreshadowed, cash balance lower at 30 June at $155 million due to accelerated mining in the Malu Open Pit and value held in working capital. Updated Mineral Resource and initial Ore Reserve estimates released for Malu Underground on 30 June. Carrapateena pre-feasibility study close to completion and nearing Board review. Initial Mineral Resource estimate announced for Khamsin deposit on 26 May. Significant copper and gold mineralisation intersected in first drill results from Bellas Gate exploration project in Jamaica including 260metres at 0.44% Cu, 0.19g/t gold from 39 metres. OZ Minerals 4

5 SAFETY OZ Minerals Lost Time and Total Recordable Injury Frequency Rate 12 Month Moving Average* TRI Frequency Rate LTI Frequency Rate Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 0 *per million hours worked OZ Minerals TRIFR OZ Minerals LTIFR Improvement in total recordable injury frequency rate over the quarter. OZ Minerals 5

6 PROMINENT HILL Q2 PRODUCTION STATISTICS Prominent Hill Production Statistics Mar 14 Qtr Jun 14 Qtr Mined (Tonnes) Malu copper-gold ore 1,810,569 2,398,069 Malu gold-only ore 819,933 1,731,447 Ankata ore 286, ,562 Waste 19,618,560 17,901,470 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 2,281,891 2,234,649 Milled Grade Copper (%) Gold (g/t) Recovery Copper (%) Gold (%) Copper Conc. Produced Tonnes 37,493 41,790 Contained Metal In Conc. Copper (Tonnes) 18,182 22,181 Gold (Ounces) 33,792 30,736 Total Conc. Sold (DM Tonnes) 31,171 43,737* * Excludes additional third party concentrate sales. Strong waste mining in the first half has accelerated access to ore body in Q2. Increase in copper grade mined from Malu Open Pit in line with expectations. Ore tonnes milled in line with prior quarter, less gold ore in blend results in higher copper milled grades. Excellent copper recoveries for the quarter Higher copper tonnes and grade results in increased total copper production. OZ Minerals 6

7 PROMINENT HILL OPEN PIT MINING AHEAD OF SCHEDULE MALU OPEN PIT FACE POSITIONS END Q Better progress than anticipated in December guidance. MALU OPEN PIT JULY 2014 Productivity improvements have driven higher mining rates. ON SCHEDULE IN-PIT SERVICE AREA 2 BENCHES + DROP-IN AHEAD 2 BENCHES AHEAD OZ Minerals 7 OZ Minerals 7

8 PROMINENT HILL REVISED STRIP RATIOS 90 OPEN PIT MOVEMENT AND STRIP RATIO 60 SR: (6-7) 6-7 current expected strip ratio (6-7) - former strip ratio Mt (3-4) (3-4) Waste Ore (2-3) ( ) (0-1) Productivity improvements have allowed a revised mine plan which will yield significant LOM cost savings by mining more material at a lower unit cost in and less material at a higher unit cost in OZ Minerals 8

9 PROMINENT HILL OPEN PIT UNIT COSTS 8.0 OPEN PIT TONNES MINED AND UNIT COSTS Cost per tonne Mt Q1 Q2 Q3 Q4 Q1 Q Tonnes moved Cost per tonne ($/t) Optimisation of the open pit mining fleet to three 996 excavators from June 2014 will result in more efficient material movement with lower overall costs, although lower future tonnages will result in average unit cost under $ 5.80/t for the year. OZ Minerals 9

10 PROMINENT HILL Q2 C1 COSTS UNIT COST C1 Q VS. Q (US c/lb) Decrease in gold and silver pricing. Lower gold production due to more copper ore in mill feed. Increase in ROM stockpile value with more ore mined than milled. Lower open pit unit costs offset by Ankata unit cost reflecting higher dev. metres. 4% increase in exchange rate. 22% increase in payable copper (9.1) (22.0) Q1 Actual 2014 Gold and Silver Price Volume (By Product) Volume (Cost Driver) Costs FX Volume (Payable Metal) Q2 Actual 2014 Lower C1 unit costs driven primarily by higher copper production and increased ore stockpiles offset by lower gold production. OZ Minerals 10

11 PROMINENT HILL CASH POSITION AND WORKING CAPITAL A$m Dec'13 Jun'14* Change Trade Receivables Concentrate (at cost) Trade Payables (134) (96) 38 Ore inventory Working Capital Cash balance (209) Net working capital and cash (68) Total working capital (pre dividend) (38) Cash balance lower due to: Accelerated mining progress. Payment of final 2013 dividend. Value held as working capital Increase in receivables. Build up of ore on ROM. Build up of concentrate in stocks. Lower payables in June. Second half expectations: Higher mining spend due to accelerated mining volumes (at lower unit costs = LOM savings). Further build of ore stocks. Possible higher receivables due to higher shipment sales late in the year. * Numbers remain unaudited and subject to change. OZ Minerals 11

12 PROMINENT HILL: MALU UNDERGROUND RESOURCE AND RESERVE ANNOUNCED AND ON TRACK FOR FIRST PRODUCTION IN Q MALU UNDERGROUND LIFE OF MINE PLAN SHOWING DEVELOPMENT BEFORE AND AFTER FULL PRODUCTION RATES ARE REACHED. VIEWED FROM THE NORTH. LEGEND PROMINENT HILL LONG SECTION OZ Minerals 12 Ore Reserve Estimate - 11Mt at 1.5% copper, 0.6g/t gold, (1.8% copper equivalent 1 ) 2 Mineral Resource Estimate - 75Mt at 1.2% copper, 0.6g/t gold, (1.5% copper equivalent 1 ), at a 0.9%CuEq cut-off. 2 Black: existing development. Blue: capital development prior to full production status, around Q Purple: Capital development beyond full production status, from around Q to the end of mine life (NB this capital development cost is included in the overall $57/t average mining cost.) Red: Operating development beyond full production status, from around Q to the end of mine life (NB this operational development is included in the overall $57/t average mining cost.) Solid brown: Stopes to be mined prior to full production status, around Q Transparent brown: Stopes to be mined beyond full production from around Q to the end of the mine life. 1 The CuEq% was calculated with the following formula: Cu Eq% = Cu% + ((Au grade * Au price oz AUD * Au mill recovery)/( * Cu price lb AUD * Cu mill recovery * g/t))% (Cu price USD$3.20/lb, Au price USD$1225/oz, XR AUD=USD/0.82, Cu recovery 89.3% and Au recovery 76.4%). 2 Refer to Malu Underground disclaimer on p 3

13 PROMINENT HILL REVISED 2014 GUIDANCE Copper production guidance increased to 85,000t - 90,000t (previously 75,000t-80,000t) due to: Production of 40,363t copper and 64,528oz of gold year to date. Productivity gains in Malu Open Pit accelerating access to increased amounts of copper ore. Positive production variance to factored Malu Open Pit mine plan (+2,500t in H1). Gold production guidance maintained at 130,000oz -140,000oz. C1 cost guidance reduced to US$1.10-US$1.20 per payable pound of copper produced, due to higher copper production and lower open pit unit costs.* Open pit unit costs to average below $5.80 per tonne for 2014, with continual focus on productivity and costs. Cash flow in second half impacted by higher copper production and sales, offset by higher material movement expenditure and potentially higher working capital than originally expected. * Assumes 0.90 A$/US$ exchange rate and US$1,275 oz gold price. OZ Minerals 13

14 CARRAPATEENA: KHAMSIN INITIAL INFERRED MINERAL RESOURCE ESTIMATE ANNOUNCED IN MAY 2014 INITIAL MINERAL RESOURCE ESTIMATE AT KHAMSIN AS AT 23 MARCH 2014 * Class Tonnes (Mt) Cu (%) Au (g/t) Ag (g/t) U (ppm) Density (t/m 3 ) Cu (Mt) Au (Moz) Ag (Moz) Inferred Note: Based on 30 holes (including eight wedged holes) drilled since the discovery in Inferred Mineral Resource Geological Domains Bornite Dominant Zone Section mN Looking North Khamsin Breccia Complex * Refer to p 3 for Khamsin Mineral Resource estimate disclaimer. OZ Minerals 14

15 CARRAPATEENA: FREMANTLE DOCTOR Q2 SIGNIFICANT INTERSECTIONS (PLAN VIEW) N 737,000 me 740,000 me Residual Gravity Holes drilled during the quarter and significant intersections from DD12FDR004: 1 km FDR006 FDR004 Main Copper Mineralised Zone at Carrapateena 6,546,000 mn 6,543,000 mn Hole Number From (metres) Interval (metres) Copper (%) Gold (g/t) *^DD12FDR *DD12FDR **Including **Including **Including **Including **Including *^DD12FDR004 - Results shown were previously released in the 2012 ASX Q4. *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 15

16 GLOBAL EXPLORATION: JAMAICA LONG MINING HISTORY Commonwealth country. Stable democracy, British Common Law. Large scale bauxite mining for 60 years. Corporate tax rate 25%. 5% Net Profit Royalty on base and precious metals. Good infrastructure deep water container port in Kingston, bulk handling port 20km from project, ready access to power, established roads. Three holes were drilled at Connors prospect on the Bellas Gate project during the quarter and significant intersections from CON and CON (assays from 0m 150m) are: Hole Number From (metres) Interval (metres) Copper (%) Gold (g/t) CuEq (%) *CON *Including *Including *CON *Including *Intervals calculated using unlimited internal 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 16

17 SUMMARY Prominent Hill well on track to returning to annual run rate of 100,000tpa of copper. Productivity improvements over last year continuing to yield significant benefits in the open pit. Underground mining performing in line with expectations with Malu Underground on track for first production in Q Copper production guidance increased for the year, gold production guidance maintained, C1 cost guidance reduced. Carrapateena Pre-Feasibility Study nearing completion. OZ Minerals 17

18 APPENDICIES

19 PROMINENT HILL Q PLAN Q ACTUAL END Q ACTUAL COPPER ORE MINED 7% INFERRED 3% INFERRED OZ Minerals 19

20 CARRAPATEENA : KHAMSIN Q2 DRILLING RESULTS (PLAN VIEW) N 729,000 me 731,000 me Residual Gravity Holes drilled during the quarter and significant intersections from DD14KMS011W2, DD14KMS026 and DD14KMS026W1: KMS026 KMS026W1 KMS011W2 KMS025W1 KMS027W1 KMS028 6,549,000 mn 6,547,000 mn Hole Number From (metres) Interval (metres) Copper (%) Gold (g/t) *DD14KMS011W **Including **Including **Including *DD14KMS **Including **Including **Including **Including **Including *DD14KMS026W **Including **Including **Including km *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 20

21 CARRAPATEENA: KHAMSIN Q2 SIGNIFICANT INTERSECTIONS (SECTION VIEW) Depth to basement approximately 550m 1.35% Cu, 0.04 g/t Au, from 909.0m 2.76% Cu, 0.24 g/t Au, from m 0.59% Cu, 0.13 g/t Au, from 855.0m DD14KMS027W1 1.14% Cu, 0.22 g/t Au, from 842.8m DD14KMS011W2 2.13% Cu, 0.81 g/t Au, from 905.0m 1.66% Cu, 0.53 g/t Au, from 907.0m Geological Domains 1.29% Cu, 0.44 g/t Au, from 959.0m DD14KMS028 Bornite Dominant Zone Khamsin Breccia Complex Looking North 0.56% Cu, 0.15 g/t Au, from 657.0m DD14KMS026 DD14KMS026W1 0.57% Cu, 0.18 g/t Au, from 749.2m DD14KMS025W1 Note: Section is clipped with a window of +/-600m. *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 21

22 GLOBAL EXPLORATION: JAMAICA BELLAS GATE PROJECT, CONNORS PROSPECT, Q2 DRILLING RESULTS PLAN VIEW N 270,800 me 271,000 me CON CON CON ,999,400 mn 1,999,200 mn BELLAS GATE PROJECT OZ Minerals earning up to 80% through a staged earn-in. Targeting porphyry copper-gold style targets. Three holes were drilled at Connors prospect during the quarter and significant intersections from CON and CON (assays from 0m 150m) are: Hole Number From (metres) Interval (metres) Copper (%) Gold (g/t) CuEq (%) *CON *Including *Including m Surface Geology Legend Alluvium Connors Porphyry Complex Ginger Ridge Stock Browns Hall Formation *CON *Including *Intervals calculated using unlimited internal 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 22

23 GLOBAL EXPLORATION: JAMAICA CONNORS PROSPECT: Q2 SIGNIFICANT INTERSECTIONS (SECTION VIEW) CON CON % CuEq, from 11.0m 0.55% CuEq, from 39.0m 0.66% CuEq, from 11.0m 0.79% CuEq, from 91.0m 0.62% CuEq, from 75.0m Looking West *Intervals calculated using unlimited internal 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 23

24 COMPETENT PERSON S STATEMENT The information in this report that relates to Exploration Results in respect to the Khamsin, 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 and who 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 Performance Rights 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 presentation for JORC 2012 Table 1 information.