2019 second quarter report · 2019-07-22 · q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 2017 2017 2017 2017 2018...
TRANSCRIPT
Presentation
2019 Second Quarter Report
2 3 J U L Y 2 0 1 9
Disclaimer
P A G E 2 /
Forward Looking Statements
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 its 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 there from, or otherwise arising in connection with it.
Some statements in this presentation are forward-looking statements. 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, forward-looking 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, 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.
Compliance Statements
P A G E 3 /
CentroGold Production Targets Cautionary Statement
The Production Targets for the CentroGold asset are based on:
/ Probable Ore Reserve 85%
/ Inferred Mineral Resource 15%
The modifying factors used in the estimation of the Ore Reserve were also applied to the Mineral Resources in the generation of the production target.
There is a low level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration work will result in the
determination of Indicated Mineral Resources or that the production targets will be realised.
The Ore Reserve and Mineral Resource estimates underpinning the production targets were prepared by a Competent Person in accordance with the JORC Code
2012.
The material assumptions used in the estimation of the production targets and associated financial information can be found in the
OZ Minerals announcements titled “Gurupi Province potential strengthened on CentroGold Pre-Feasibility Study” and “CentroGold Project Combined ‘Blanket’
and ‘Contact’ Mineral Resource as at 06 May 2019 and Ore Reserve as at 24 June 2019 Statement and Explanatory Notes”, released on 11 July 2019 and available
at: www.ozminerals.com/media/asx/
A Modern Mining Company Strategy
P A G E 4 /
• Driving inclusion and diversity, resulting in superior
performance
• Working safely, unlocking innovation, embracing
change and consistently delivering
• Our people are our ambassadorsHo
w w
e w
ork
• Global copper – Copper as driver of value;
strategic exposure to base and precious metals
• Capital discipline – Spending on things we
need that represent best value and make a
difference
• Devolved and agile – Embracing a devolved
model to unlock discretionary effort and value;
assets that easily bolt on or off
• Lean and innovative – Delivering bottom half
cost curve and superior operating performance;
lean principles to drive innovative solutions
• Customer focus – Leveraging global asset base
to develop partnerships with customers
Wh
at
we d
o
O V E R V I E W
Reflecting the next phase of value creation growth
Company Snapshot
O V E R V I E W
P A G E 5 /
Operating Mine Mine in construction Exploration Study phase
Australia Brazil
Exploration Cash
Broker consensus of
OZL valuation
Asset Timeline*
P A G E 6 /
O V E R V I E W
* Indicative timeline assumes required study hurdles and proposed timeframes achieved.
** See Cassini Resources’ ASX Release entitled “Maiden Succoth Resource Estimate” dated 7 December 2015 and available at: www.cassiniresources.com.au/investor-relations/asx-announcements
*** Refer ASX Announcement “Maiden Pantera MRE pushes Avanco’s Carajás Resource Base Beyond 1 Mt of Contained Copper” released on 19 March 2018, for Competent Person’s Consent, material assumptions, and
technical parameters underpinning the Pantera MRE
Multiple projects progressing through build and study phases
The MROR information on this timeline is extracted from the company’s previously published MROR statements and are available at: www.ozminerals.com/operations/resources-reserves/ . OZ Minerals confirms that it is not
aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or 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. OZ Minerals 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. All Mineral Resource figures are estimates.
PROMINENT HILL Copper Mineral Resource: 130Mt @ 1.1% Cu, 0.6 g/t Au I Gold Mineral Resource: 20Mt @ 0.1% Cu, 1.2g/t Au
CARRAPATEENA SLC Mineral Resource: 46Mt @ 1.4% Cu, 0.7 g/t Au I BC Mineral Resource: 541Mt @ 0.6% Cu, 0.3g/t Au
SLC Ore Reserve: 79Mt @ 1.8% Cu, 0.7g/t Au
SUB LEVEL CAVE TO BLOCK CAVE TRANSITION
CARAJÁS PROCESSING HUB
TRANSITIONING TO PEDRA BRANCA ORE
ANTAS OPEN PIT
Mineral Resource: 2.6Mt @ 1.2% Cu, 0.4 g/t Au
PEDRA BRANCA UNDERGROUND
Mineral Resource: 19Mt @ 1.6% Cu, 0.4 g/t Au
CENTROGOLD Mineral Resource: 28Mt @ 1.9 g/t Au (excludes Chega Tudo deposit)
Ore Reserve: 20Mt @ 1.7 g/t Au
WEST MUSGRAVE (70% OZ MINERALS)
Succoth Mineral Resource: 156Mt @ 0.6% Cu **
PANTERA
Mineral Resource: 20.8Mt @ 1.7% Cu, 0.2 g/t Au***
EARLY WORKS
EARLY WORKS
ANTAS ORE
2019 2020 2021 2024
Ore Reserve: 69Mt @ 1.0% Cu, 0.6 g/t Au
2022 2023
RAM P UP PRODUCTIONCONCEPT /
DRILLING
SCOPING
STUDY
PRE-
FEASIBILITY
STUDY
FEASIBILITY
STUDYCONSTRUCTION
Nebo- Babel Mineral Resource: 238Mt @ 0.35% Ni, 0.38% Cu
EXPANSION STUDY
EXPANSION STUDY
Summary
P A G E 7 /
CARRAPATEENA AND PROMINENT HILL ON TRACK
⁄ Prominent Hill Haulage Feasibility Study and gold ore
processing trial updates
⁄ West Musgrave Pre-Feasibility Study update
⁄ Drilling: Jericho, Succoth, One Tree Hill, Antas Near Mine /
Regional, Canaa West, Gurupi, CentroGold, Mt Skipper,
Nullarbor, Pedra Branca extension, Mt Woods
UPCOMING ACTIVITY
ITEM Q1 Q2
Contained Copper produced (t) 27,442 28,525
Contained Gold produced (oz) 34,648 27,072
All-In Sustaining Cost US c/lb 104 120
C1 cost US c/lb 61 79
Favourable to annual guidance Unfavourable to annual guidance
CONTAINED COPPER AND GOLD PRODUCED
O V E R V I E W
⁄ Carrapateena on schedule for first concentrate in Q4;
~46,000 tonnes of development ore stockpiled
⁄ Prominent Hill on track for guidance; Explorer Challenge
drill targets identified
⁄ West Musgrave studies progressing; 10Mtpa confirmed as
optimised processing rate
⁄ Brazil operational update released; low risk, modest capital
hub strategy to be adopted
⁄ Eloise JV restructure implemented; new earn-in agreements
also signed in Carrapateena province and Sweden
⁄ Cash balance at $187 million following $177 million
investment into Carrapateena; growth capital to further
reduce cash balance by year end
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019
(t/oz)
Copper Gold
Cash Generation
P A G E 8 /
WORKING CAPITAL MOVEMENTS - QUARTER CASH MOVEMENTS*
⁄ Cash balance of $187 million at 30 June
⁄ H1 2019 revenue circa $420 million; concentrate
shipments deferred into Q3 to align with
customer requirements
⁄ Trade receivables decrease of $29 million and
concentrate inventory increase of $39 million due
to shipment timing
⁄ Net ore inventory reduction of $43 million as
open pit stockpile processing continues
⁄ Carrapateena project cash investment of $177
million ($156 million of capital expenditure)
UPCOMING ACTIVITY
G R O U P F I N A N C I A L S
(A$M) Cash Utilisation: Q2 2019
⁄ Growth capital expenditure to further reduce
cash balance by year end
⁄ Ore inventory balance to continue depleting
with processing of Prominent Hill open pit ore
stockpiles to mid-2023
* Unaudited ** Includes non-cash depreciation and NRV adjustment
-$200 $0 $200 $400 $600 $800
(Millions)
Jun-19* Mar-19*
-$29M
+$39M
+$7M
-$155M
-$43M
-$26M
Trade receivables
Concentrate
Ore inventory**
Working capital
Cash balance
Trade payables
Q on Q
Movement
Prominent Hill UNDERGROUND ORE HAULED AND GRADE OPERATIONAL DELIVERY
EXPLORATION POTENTIAL
P R O M I N E N T H I L L P R O V I N C E
⁄ Copper and gold production on track for annual guidance
⁄ Underground mine produced 838kt of ore at 1.58% copper;
lower grades due to planned stope sequence which are
expected to improve in H2
⁄ Underground haulage run rates of ~3.7Mtpa achieved during
May; focus on reducing equipment interaction and
maintaining one-way trucking loops to sustain higher volumes
⁄ Potential short closure requirement at the end of Q3 flagged
by Department of Defence for Woomera activities not
expected to impact guidance
STOCKPILES AND MILL THROUGHPUT
P A G E 9 /
0
0.5
1
1.5
2
2.5
0
100
200
300
400
500
600
700
800
900
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019
(Cu %)(kt)
UG Ore Hauled (LHS) UG Mined Grade (RHS)
0
0.5
1
1.5
2
2.5
3
0
5
10
15
20
25
30
35
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2017 2017 2017 2017 2018 2018 2018 2018 2019 2019
(Mt)(Mt)
Ore Stockpile (LHS) Mill Throughput (RHS)
PROJECTS & STUDIES
⁄ Phase one Underground Expansion Study diamond drilling
completed with ~6km achieved during quarter; results to be
finalised but considered sufficient to support phase two
campaign
⁄ Haulage Feasibility Study on track for completion in Q3
⁄ Gold ore processing trial analysis nearing completion;
preliminary results show improved recoveries with
throughput in line with expectations
⁄ Explorer Challenge competition identifies new Mount Woods
drill targets; drilling expected to commence early Q4
⁄ Competition techniques and methodologies in consideration
for other projects
Prominent Hill Cost Performance
P A G E 1 0 /
C1 COST ANALYSIS
COST PERFORMANCE
UPCOMING ACTIVITY
ITEM Q1 Q2
All-In Sustaining Cost US c/lb 91 108
C1 costs US c/lb 49 67
Favourable to annual guidance Unfavourable to annual guidance
P R O M I N E N T H I L L P R O V I N C E
(US c/lb)
⁄ Q2 All-In Sustaining and C1 costs higher in line with
annual guidance
⁄ Higher costs driven primarily by lower gold production
(lower by-product credits) following completion of the
gold ore processing trial in Q1
⁄ Mining costs higher as a result of increasing
proportion of underground ore processed
⁄ Processing costs in line with prior quarter with
scheduled shutdowns completed to plan in both Q1
and Q2
⁄ TCRC and transport costs lower primarily due to
customer mix and a higher concentrate grade
⁄ Prominent Hill costs remain on track for 2019
annual guidance:
⁄ All-In Sustaining Costs of US 110-120c/lb
⁄ C1 costs of US 65c-75c/lb
Customer mix
and higher
concentrate
grade
Lower gold
production
vs. Q1
Increased
proportion of
UG ore
processed
Carrapateena
P A G E 1 1 /
QUARTERLY DEVELOPMENT METRES
C A R R A P A T E E N A P R O V I N C E
⁄ Carrapateena on schedule for first concentrate in Q4; ~46,000
tonnes of development ore stockpiled
⁄ Total decline development on track at 15,127 metres (4,254 metres
to face of Tjati decline); vertical depth below surface now at 630
metres
⁄ Raiseboring for primary ventilation continued; ventilation circuit to
first production level established
⁄ Over 4km of high voltage cable installed underground with early
civil works completed on the materials handling system
⁄ Minerals processing plant and non-process infrastructure
construction and procurement ~80% complete
⁄ Tailings Storage Facility construction over 90% complete
MINERALS PROCESSING PLANT
0
500
1000
1500
2000
2500
3000
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019
(Metr
es)
OPERATIONAL DELIVERY
EXPLORATION POTENTIAL
PROJECTS & STUDIES
⁄ 250 kW hybrid energy solution facility to be trialled as part of the
Energy and Mining Collaboration to develop renewable solutions
for mining sites and demand management opportunities
⁄ Expansion team capability strengthened with recruitment of
experienced candidates across mining, geotechnical and
processing, adding domestic and international caving experience
⁄ New earn-in agreement entered with Investigator Resources
Limited at the Maslins prospect, located approximately 50km
south of the Carrapateena project (see appendix)
Carajás
P A G E 1 2 /
C A R A J A S P R O V I N C E
⁄ New Pedra Branca base case sees a potential capacity of circa
1-1.2Mtpa underground mine:
⁄ Decline development decision expected Q3
⁄ Further studies associated with the new base case, including
transport options, will be completed before a final
investment decision is considered
OPERATIONS, TENEMENTS AND KNOWN DEPOSITS
⁄ Foothold in the Carajás extends over 1,800 km2 (excluding
Pantera), providing long term exploration opportunities in a
high-quality region to support province strategy
⁄ Drilling focussed on prospects in the vicinity of the Antas mine,
with a 6,500m exploration program
⁄ Drilling commenced on the Clovis target; to be followed by
drilling on the Paulinho, Capivara and Aguas Boa N prospects
EXPLORATION POTENTIAL
PROJECTS & STUDIES
OPERATIONAL DELIVERY
⁄ Low risk, modest capital hub strategy to be adopted with
processing infrastructure serving multiple small to mid-scale
mines
⁄ Antas pit closure planned for 2021
⁄ Antas processing plant positioned to continue beyond 2021 as
first Carajás hub, taking ore trucked from Pedra Branca
Gurupi
P A G E 1 3 /
G U R U P I P R O V I N C E
⁄ Province potential strengthened on CentroGold Pre-Feasibility
Study1 which demonstrated a minimum 10-year open pit
operation for low capital investment with bottom half operating
costs:
⁄ Average annual gold production (life of mine) of
100koz – 120koz with 190koz – 210koz in each of the first
two years of production2
⁄ All-In Sustaining costs of ~US$ 640/ oz
⁄ Pre-production capital cost of ~US$ 155 million
⁄ Project Net Present Value of ~US$ 200 million
⁄ CentroGold expected to become Gurupi processing hub
⁄ Current work focused on permitting and relocation activities;
Feasibility Study and regional exploration to commence
following injunction removal
GURUPI PROJECTS AND TENEMENTS
2 These production targets must be read in conjunction with the production target cautionary statement on slide 3
EXPLORATION POTENTIAL
PROJECTS & STUDIES
⁄ Significant potential upside with Jiboia tenement purchase
consolidating Gurupi greenstone belt, bringing province to
2,300km2 along 85 km of strike length
⁄ Drilling completed at the Sequeiro target and commenced at the
Pica Pau prospect; assay results awaited
1 See OZ Minerals announcement titled “Gurupi Province potential strengthened on CentroGold Pre-Feasibility Study”, released on 11 July 2019 and available at: www.ozminerals.com/media/asx/
⁄ Completion of mining Hill of Value study and confirmation of
10Mtpa as the optimised processing rate
⁄ Confirmation of Bulk Separation flotation flowsheet (Ni and Cu
floated together into a single cleaned concentrate then separated
into two products) as preferred over a Sequential flowsheet
⁄ Continued development of key opportunities in mine schedule
optimisation, process flowsheet, process equipment selection,
logistics and power
⁄ Ongoing de-risking of water supply including Nebo pit dewatering
and subterranean fauna studies
⁄ Continuation of infill drilling with a view to increasing Indicated
resources sufficient to underpin a substantial Ore Reserve on
completion of the PFS
⁄ Successful Western Australian Government Hub, introducing the
project to a large number of government departments and
workshopping focus areas for project and community success
West Musgrave
M U S G R A V E P R O V I N C E
P A G E 2 4 /
WESTERN AUSTRALIAN GOVERNMENT HUB
DIAMOND DRILLING AT ONE TREE HILL
P A G E 1 4 /
EXPLORATION POTENTIAL
PROJECTS & STUDIES
⁄ Strong drill results at One Tree Hill prospect with multiple high
grade copper intersections in drill hole CZD00991
1 Assay results can be found at: www.cassiniresources.com.au/investor-relations/asx-announcements
Other Project Updates – Jericho and Painirova
P A G E 1 5 /
PAINIROVA, SWEDEN
⁄ Second earn-in agreement entered with private explorers Mineral
Prospektering i Sverige to explore for iron oxide copper-gold (IOCG)
and shear-hosted copper deposits on the Painirova project in the
Norrbotten region of northern Sweden
⁄ OZ Minerals committed to spending US$500,000 on exploration after
which further budget approval can be sought to continue
⁄ Project located between the Mertainen iron oxide apatite deposit and
the active Leveäniemi mine at Svappavaara, in Sweden’s most prolific
mining belt (see appendix)
E X P L O R A T I O N A N D G R O W T H
Painirova Prospect
Magnetite Chlorite Chalcopyrite Breccia
⁄ OZ Minerals attained a 70% beneficial interest in the Eloise Joint
Venture (containing the Jericho deposit) after reaching investment
of $10 million over 3 years
⁄ New additional JV specifically for Jericho excised from the Eloise
JV area; Minotaur loan-carry arrangement lifts OZ Minerals
beneficial ownership of Jericho to 80%
⁄ Jericho drilling re-commenced with total of 56 holes drilled since
April for ~14,400m; aiming to increase confidence in central
section of the deposit
⁄ Strategic Alliance over the Cloncurry district agreed with Minotaur
Resources
JERICHO / CLONCURRY DISTRICTJERICHO JV AREA WITH DRILL HOLE LOCATIONS
Operations, projects and a growing pipeline of opportunities
Growth Pipeline
P A G E 1 6 /
E X P L O R A T I O N A N D G R O W T H
FS: Feasibility Study
PFS: Pre-Feasibility Study
SS: Scoping Study
STUDIES DEVELOPMENT OPERATIONS
ONE TREE HILL
YAPPSU
Resource
estimateNo Resource
estimate
NEBO-BABEL OP
PFS
KHAMSIN
THE SADDLE
SS
PUNT HILLCARRA
REGIONAL
CENTROGOLD OP
PFS COMPLETE
PANTERAPEDRA BRANCA
UG FS
CARRAPATEENA
SLC
ANTAS OP
PROMINENT HILL
UG + STOCKPILESMT WOODS
Reserve
estimate
MASLINSFREMANTLE
DOCTOR
SS
CARRAPATEENA
BC PFS
HAULAGE STUDY FS
Other
Study
UNDERGROUND
EXPANSION STUDY
SUCCOTH
OAXACA
PARAISO
PAINIROVA
LANNAVARRA
YARRIE
GULF
THREE WAYS
LAWN HILL
JERICHO
NULLARBOR
COOMPANA
MOUNT SKIPPER
PR
OM
INEN
T
HIL
L P
RO
VIN
CE
CA
RR
AP
AT
EEN
A
PR
OV
INC
EC
AR
AJA
S
PR
OV
INC
E
GU
RU
PI
PR
OV
INC
E
MU
SG
RA
VE
PR
OV
INC
E
OT
HER
REG
ION
S
SEQUEIRO PICA PAU JIBOIA
ESTRELLA SUL
CLOVIS
PAULINHO
MARQUES SUL
CANAA WEST
CAPIVARA
AGUAS BOA N
EXPLORATION
2019 Key Milestones
P A G E 1 7 /
L O O K I N G F O R W A R D
✓ Milestone completed
Q1 Q2 Q3 Q4
Haulage Feasibility Study
Updated Mineral Resource and Ore Reserve Statement
Province expansion Scoping Study ✓
First commercial concentrate production
Updated Mineral Resource and Ore Reserve Statement
Antas Mineral Resource and Ore Reserve update + 2019 guidance ✓
Pedra Branca Mineral Resource update ✓
Pedra Branca early works decision
CentroGold Pre-Feasibility Study ✓
CentroGold Mineral Resource update
Mineral Resource update for Nebo-Babel ✓
70% earn-in to project ✓
Pre-Feasibility Study update
Carajás Province
Gurupi Province
Business Area Milestone2019
Prominent Hill Province
Carrapateena Province
Musgrave Province
2019 Guidance
P A G E 1 8 /
GUIDANCE2019
PROMINENT HILL CARRAPATEENA ANTAS TOTAL
Copper Production (tonnes) 95,000-105,000 2,000-4,000 6,000-6,500 103,000-115,500
Gold Production (ounces) 115,000-125,000 3,000-6,000 4,200-4,600 122,200-135,600
Underground Ore Movement (Mt) 3.7-4.0
Underground Sustaining Capital Expenditure (A$M) 50-60 50-60
Site Sustaining Capital Expenditure (A$M) 12-15 4-6 10-10.5 26-31.5
Growth Capital Expenditure (incl. mine development) (A$M) 35-45 540-5703,4 575-615
AISC (US c/lb)2 110-120 185-195 330-360 125-135
C1 Costs (US c/lb)2 65-751 135-145 240-280 77-88
Exploration (A$M) 30-35
Project studies and drilling commitments to next stage gate (A$M) 75-805
1 US dollar denominated C1 costs for Prominent Hill will benefit by US1.5c per US1c reduction in the AUD/USD exchange rate.
2 AUD/USD of 0.73 has been used in converting A$ costs to US$ for C1 and AISC guidance.
3 Additional commissioning expenditure of A$40-A$45 million in 2019 will be offset on sale of concentrate from commissioning ore in Q1 2020. Guidance does not include
copper produced from ore mined during mine construction.
4 Carrapateena growth capital expenditure includes pre-production capital (A$465-A$485 million), mine development (A$30-A$35 million) and underground infrastructure
development (A$45-A$50 million).
5 Project studies and drilling costs of A$75-A$80 million reflects anticipated expenditure on Board approved studies to their next milestone. Should the Board approve a
project to proceed to a further milestone, additional funds will be incurred and guidance will be updated as required.
O V E R V I E W
Appendix
P A G E 1 9 /
Maslins and Painirova earn-in project locations
MASLINS LOCATION PAINIROVA AND LANNAVAARA LOCATIONS