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THIRD QUARTER REPORT 14 OCTOBER 2014
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
THREE KEY MILESTONES ACHIEVED IN THE QUARTER 1.
2.
3.
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.
First production achieved from Malu Underground on schedule •
First ore from stoping achieved in early October 2014.
•
Malu Underground independent ventilation system installed and operating.
•
Underground operations being integrated.
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
SAFETY OZ MINERALS LOST TIME AND TOTAL RECORDABLE INJURY FREQUENCY RATE 12 MONTH MOVING AVERAGE*
10
TRI Frequency Rate
6
4
4
2
0
0 Sep-13
Oct-13
Nov-13
*per million hours worked
•
Dec-13
Jan-14
Feb-14
Mar-14
OZ Minerals TRIFR
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
OZ Minerals LTIFR
Slight increase in injury rates – focus firmly on learning from high potential incidents.
OZ Minerals | 4
LTI Frequency Rate
8
8
PROMINENT HILL PRODUCTION SUCCESSFULLY RETURNED TO THE 100,000 TONNE PER YEAR COPPER PRODUCTION ’RUN-RATE’
PROMINENT HILL OPEN PIT MINING AHEAD OF SCHEDULE MALU OPEN PIT SEPTEMBER 2014. 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
PROMINENT HILL
Q3 PRODUCTION STATISTICS – STRONG PERFORMANCE CONTINUES PROMINENT HILL PRODUCTION STATISTICS Mined
JUN 14 QTR
SEP 14 QTR
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
Ankata ore
(tonnes)
307,562
322,124
Malu copper-gold ore
Cu grade (%)
0.99
1.08
Malu copper-gold ore
Au grade (g/t)
0.54
0.44
Malu gold-only ore
Cu grade (%)
0.13
0.11
Malu gold-only ore
Au grade (g/t)
1.01
0.78
Ankata ore
Cu grade (%)
1.88
2.24
Ankata ore
Au grade (g/t)
0.46
0.45
Ore Milled
(tonnes)
(tonnes)
2,234,649
2,755,848
Milled Grade
Copper (%)
Copper (%)
1.10
1.06
Gold (g/t)
Gold (g/t)
0.56
0.68
Copper (%)
Copper (%)
90.5
90.0
Gold (%)
Gold (%)
76.7
78.4
Copper Cons. Produced
(tonnes)
(tonnes)
41,790
49,375
Contained Metal In Cons.
Copper (tonnes)
Copper (tonnes)
22,181
26,249
Gold (oz)
Gold (oz)
30,736
47,376
(DM tonnes)
(DM tonnes)
43,737
38,883
Mined Grade
Recovery
Total Cons. Sold* OZ Minerals | 7
Strong quarterly performance with fewer production excavators in the open pit. Increase in Malu open pit grade, as forecast.
Highest ever quarterly throughput.
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
PROMINENT HILL
CONTINUING IMPROVEMENT IN OPEN PIT ORE & WASTE MINING BY QUARTER DECLINING WASTE MINING REQUIREMENTS
MINING RATES (BCM/hr) CONTINUING IMPROVEMENT
Mt
Waste tonnes
BCM/hr
25
Ore tonnes
1,250
20
1,200
15
1,150
10
1,100
5
1,050
Q1
Q2
Q3 2013
Q4
Q1
Q2
Q3
2014
1,000 Jan-14
Feb-14 Mar-14
Apr-14 May-14
Jun-14
Jul-14
Aug-14 Sep-14
3-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
PROMINENT HILL
RECORD THROUGHPUT, INCREASED PRODUCTION ORE MILLED PER QUARTER RECORD THROUGHPUT
COPPER PRODUCTION PER QUARTER ABOVE 100,000tpa RUN-RATE 25,000 tonnes
2.5Mt
Q1
Q2
Q3 2013
•
Q4
Q1
Q2 2014
Q3
Q1
Q2
Q3 2013
Q4
Q1
Q2 2014
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
Q3
PROMINENT HILL
LOW C1 COSTS DUE TO HIGHER GOLD PRODUCTION AND LOWER EXPENDITURE UNIT COST C1 – Q3 2014 VS Q2 2014 (US c/lb) 120
USD gold average prices in line with Q2.
100
80
A$/US$ rate was flat.
54% increase in payable gold production, due to higher grades and higher milled tonnes.
60
40
20
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.
0 109.7
(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
COPPER MARKET
A$ COPPER PRICE STRENGTH A$ COPPER PRICE RESILIENCE
• A$ copper price remaining healthy.
A$ 3.7
• All 2014 concentrate production, including additional production advised at the end of Q2, now allocated under sales contracts.
3.5
3.3
3.1
• Concentrates inventory at year end expected to be lower than 1 January.
2.9
US$/lb
Data source: Bloomberg OZ Minerals | 11
30/09
30/08
30/07
2.7
A$/lb
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.
•
2014 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
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
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
THREE KEY MILESTONES ACHIEVED IN THE QUARTER 1.
2.
3.
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.
First production achieved from Malu Underground on schedule •
First ore from stoping achieved in early October 2014.
•
Malu Underground independent ventilation system installed and operating.
•
Underground operations being integrated.
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
SAFETY OZ MINERALS LOST TIME AND TOTAL RECORDABLE INJURY FREQUENCY RATE 12 MONTH MOVING AVERAGE*
10
TRI Frequency Rate
6
4
4
2
0
0 Sep-13
Oct-13
Nov-13
*per million hours worked
•
Dec-13
Jan-14
Feb-14
Mar-14
OZ Minerals TRIFR
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
OZ Minerals LTIFR
Slight increase in injury rates – focus firmly on learning from high potential incidents.
OZ Minerals | 4
LTI Frequency Rate
8
8
PROMINENT HILL PRODUCTION SUCCESSFULLY RETURNED TO THE 100,000 TONNE PER YEAR COPPER PRODUCTION ’RUN-RATE’
PROMINENT HILL OPEN PIT MINING AHEAD OF SCHEDULE MALU OPEN PIT SEPTEMBER 2014. 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
PROMINENT HILL
Q3 PRODUCTION STATISTICS – STRONG PERFORMANCE CONTINUES PROMINENT HILL PRODUCTION STATISTICS Mined
JUN 14 QTR
SEP 14 QTR
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
Ankata ore
(tonnes)
307,562
322,124
Malu copper-gold ore
Cu grade (%)
0.99
1.08
Malu copper-gold ore
Au grade (g/t)
0.54
0.44
Malu gold-only ore
Cu grade (%)
0.13
0.11
Malu gold-only ore
Au grade (g/t)
1.01
0.78
Ankata ore
Cu grade (%)
1.88
2.24
Ankata ore
Au grade (g/t)
0.46
0.45
Ore Milled
(tonnes)
(tonnes)
2,234,649
2,755,848
Milled Grade
Copper (%)
Copper (%)
1.10
1.06
Gold (g/t)
Gold (g/t)
0.56
0.68
Copper (%)
Copper (%)
90.5
90.0
Gold (%)
Gold (%)
76.7
78.4
Copper Cons. Produced
(tonnes)
(tonnes)
41,790
49,375
Contained Metal In Cons.
Copper (tonnes)
Copper (tonnes)
22,181
26,249
Gold (oz)
Gold (oz)
30,736
47,376
(DM tonnes)
(DM tonnes)
43,737
38,883
Mined Grade
Recovery
Total Cons. Sold* OZ Minerals | 7
Strong quarterly performance with fewer production excavators in the open pit. Increase in Malu open pit grade, as forecast.
Highest ever quarterly throughput.
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
PROMINENT HILL
CONTINUING IMPROVEMENT IN OPEN PIT ORE & WASTE MINING BY QUARTER DECLINING WASTE MINING REQUIREMENTS
MINING RATES (BCM/hr) CONTINUING IMPROVEMENT
Mt
Waste tonnes
BCM/hr
25
Ore tonnes
1,250
20
1,200
15
1,150
10
1,100
5
1,050
Q1
Q2
Q3 2013
Q4
Q1
Q2
Q3
2014
1,000 Jan-14
Feb-14 Mar-14
Apr-14 May-14
Jun-14
Jul-14
Aug-14 Sep-14
3-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
PROMINENT HILL
RECORD THROUGHPUT, INCREASED PRODUCTION ORE MILLED PER QUARTER RECORD THROUGHPUT
COPPER PRODUCTION PER QUARTER ABOVE 100,000tpa RUN-RATE 25,000 tonnes
2.5Mt
Q1
Q2
Q3 2013
•
Q4
Q1
Q2 2014
Q3
Q1
Q2
Q3 2013
Q4
Q1
Q2 2014
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
Q3
PROMINENT HILL
LOW C1 COSTS DUE TO HIGHER GOLD PRODUCTION AND LOWER EXPENDITURE UNIT COST C1 – Q3 2014 VS Q2 2014 (US c/lb) 120
USD gold average prices in line with Q2.
100
80
A$/US$ rate was flat.
54% increase in payable gold production, due to higher grades and higher milled tonnes.
60
40
20
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.
0 109.7
(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
COPPER MARKET
A$ COPPER PRICE STRENGTH A$ COPPER PRICE RESILIENCE
• A$ copper price remaining healthy.
A$ 3.7
• All 2014 concentrate production, including additional production advised at the end of Q2, now allocated under sales contracts.
3.5
3.3
3.1
• Concentrates inventory at year end expected to be lower than 1 January.
2.9
US$/lb
Data source: Bloomberg OZ Minerals | 11
30/09
30/08
30/07
2.7
A$/lb
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.
•
2014 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
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
