Carrapateena ahead of schedule

OZ Minerals says development of the A$916 million Carrapateena is advancing ahead of expectations, as the company awarded the lucrative underground mining contract.

Kristie Batten

Development rates at Carrapateena surpassed expectations for the sixth consecutive month, reaching 5.5km in total.

"It's encouraging to see the rate of development of the decline gain momentum," OZ managing director and CEO Andrew Cole told investors on a teleconference.

Around 60% of the project capital costs have been spent or committed.

The company announced that Downer EDI had been awarded the $660 million Carrapateena underground mining services contract.

The contract starts on July 1 and runs for six and a half years.

Downer replaces Pybar Mining Services, which had been doing an "exceptional job", according to Cole.

Cole said the company was always going to conduct a review at this stage of development, and while it was a close call, the decision was "not a reflection on Pybar at all".

There will be a 10-week transition period during which the two contractors will work together.

Phase two construction at Carrapateena is due to begin in April.

Meanwhile, Prominent Hill produced 27,466 tonnes of copper and 30,873 ounces of gold, well within 2018 guidance of 100,000-110,000t of copper and 120,000-130,000oz of gold.

C1 cash costs were US97c per pound, above guidance of 75-85c/lb, and all-in sustaining costs were $1.36/lb.

The company said the final stockpiling of open pit ore, prior to the pit closure, impacted costs by 12c/lb.

OZ's cash balance grew to A$646 million after spending $65 million on Carrapateena, paying $42 million in dividends and accounting for $78 million in working capital movements.

OZ last week opened its $442 million takeover for Brazilian producer Avanco Resources.

Cole said the transaction was well-supported and would restock OZ's portfolio at every stage of the asset pipeline.

Shares in OZ rose by 0.8% to $8.92. The stock peaked at $9.83 at the end of February.