On 11 July, OZ Minerals provided an update on the Brazilian mining assets it acquired in the AUS$430 million (50/50 cash, scrip) purchase of Avanco Resources Ltd which was completed in 3Q18.
A key outcome of the nine month review and concurrent drilling programme is the planned implementation of a staged, low risk and capital conservative hub strategy creating a development profile commensurate with the relative size of the Brazilian assets within OZ Minerals’ wider portfolio. The strategy will see copper and gold processing facilities serving multiple small and mid-sized mines in each of the Carajás and Gurupi provinces.
“The Avanco acquisition gave OZ Minerals a strategic foothold in Brazil’s world-class Carajás copper province and the highly prospective Gurupi greenstone belt,” said OZ Minerals CEO, Andrew Cole.
“The review focused on increasing our understanding of each asset and how value could be optimised within our existing risk framework and in line with our devolved operating model where assets operate autonomously within a strong company-wide governance framework.
Carajás province
“Mining studies underpinned by the updated Mineral Resource estimation indicate the future of the small operating copper mine at Antas to be limited. The mine is expected to be marginally cash flow positive over the remainder of its life as costs progressively reduce from 2020 following completion of the open pit cutback.
“We did not purchase Avanco for the small Antas operating mine. However it has provided us with a strong entry point into Brazil in terms of mining and process expertise. While the mine will not deliver for an extended period in its own right, Antas’ quality processing facility, incumbent workforce and established presence with regulators can enable rapid value realisation through the Pedra Branca project. Antas is the foothold into the Carajás we sought as part of the acquisition. “The continued operation of Antas’ existing processing facilities will enable it to become the first Carajás province hub, processing ore trucked 70km from the potential Pedra Branca mine.
“We are currently working on a new Pedra Branca base case which sees a potential capacity of circa 1 – 1.2 million tpy underground mine with ore processing taking place at the Antas Carajás processing hub. A decision is expected in 3Q19 on starting development of the Pedra Branca decline. Further studies associated with the new base case, including transport options, will be completed before a final investment decision is considered. Depending on the positive and timely outcomes of further studies and various decision points, Pedra Branca run of mine ore trucking could begin mid-2021.
“Our foothold in the Carajás extends over 1800 km2 , excluding Pantera, giving us long term exploration opportunities in a high-quality region to support our province strategy and continued operation of Antas as a core processing hub. Gurupi province “The potential of Gurupi province has strengthened on completion of the CentroGold Pre-Feasibility Study (PFS) 2 showing it to be a 10 year, low cost, open pit operation. The PFS sees CentroGold average gold production of 100 000 – 120 000 oz per year, with 190 000 – 210 000 oz per year in the first two years, tapering as the mine matures. Construction costs are estimated to be around US$155 million for a project NPV of circa US$200 million.
“Importantly, CentroGold also has the potential to become a Gurupi processing hub servicing nearby deposits such as Chega Tudo, 8 km to the west.
“We have also recently acquired the Jiboia exploration tenements to the north of CentroGold from Kinross, expanding our presence in the Gurupi province. Our total land package is now 2300 km2 along 85 km of strike length. We now have an extensive footprint in a highly prospective region, with CentroGold comprising less than 3% of the land package.
Outlook
“Overall our confidence has grown in the value of the Brazil acquisition and the capacity of the assets to add value for relatively modest capital outlay. Over the past months we have also been engaging with high calibre Brazilian leaders from various sectors as we consider the formation of our in-country Advisory Board.
“The foundations are in place for a long-term sustainable position in each province in line with OZ Minerals’ province strategy. The processing hubs enable us to build and grow our presence, servicing current projects and the extensive exploration pipeline, by reducing capex, accelerating projects to production and maximising the value of existing infrastructure,” Cole said.
To read the full report:
https://www.ozminerals.com/uploads/media/01_OZL_Brazil_Operational_Update.pdf
