OZ Minerals has provided an update on its Prominent Hill Expansion Study which it says shows installation of a vertical hoisting shaft to replace truck haulage is technically and economically feasible. The study update is based on a conservative interim case containing only a third of the total Prominent Hill Inferred Resource of 59 Mt outside the current life of mine plan. Prominent Hill is a major copper/gold/silver mine in South Australia.

OZ Minerals will now invest A$47 million to progress the study. The largest portion of the investment will be directed towards further infill drilling to potentially convert Inferred Resources to Reserves to inform a final investment decision expected in mid-2021. Over the past decade, Prominent Hill has seen a positive conversion of Inferred Mineral Resources to Indicated Mineral Resources (or better) with a conversion rate of greater than 1:1 on a contained metal basis.

The study update confirms the installation of a 1,360 m, 7.5 m diameter vertical shaft at Prominent Hill is technically and economically feasible with capital investment consistent across the interim and strengthened cases. The robustness of the investment into the shaft was tested by examining the feasibility of mining the existing Ore Reserves with a production target based on approximately 6 Mt/y from 2025 comprising less than 30% Inferred Mineral Resource. The main components are as follows:

• Ore passes with truck loading chutes on trucking horizon
• Primary underground crushing and tramp removal system
• Four rope friction hoist winder and hoisting system, with slew loading conveyor
• Surface overland conveyor to existing processing plant

The interim case shows that converting to a vertical shaft would lower the operational risks of mining at depth and be NPV and cashflow positive over the current truck haulage mining operation. The economics thus far support continued investment in the expansion study to undertake further infill drilling to increase mine life and inform a final investment decision.

The study update shows a shaft haulage expansion would require capital cost of approximately A$450 million (not expected to materially increase if there is conversion of Inferred Resources to Reserves to expand the scale of the study) to be spent over four years from 2021 and potential for:

• improved safety and productivity as mining conditions become deeper and hotter enabling access to more of the total Inferred Mineral Resource
• lower site operating costs by between A$10 and A$15 per tonne
• seamless conversion to vertical shaft haulage from 2025
• potential to extend mine life upon further conversion of Mineral Resources to Reserves consolidating Prominent Hill as a low-cost, long-life open stoping mine
• improved greenhouse gas emissions intensity by progressively shifting to an electrified shaft and underground fleet
• the existing processing plant to accommodate the new throughput rates without major modification
• access to exploration beyond the Resource limits to provide further growth potential

Due to the proposed transition to an electrified shaft as the primary method of vertical haulage replacing diesel-fuelled trucks, it has been shown that the emissions intensity of each tonne of material processed will likely decrease. A battery-powered underground mining fleet and low power processing technologies are also being investigated as part of the study, along with renewable power alternatives for auxiliary infrastructure.

OZ Minerals Managing Director and Chief Executive Officer, Andrew Cole, said:“The positive findings of the Prominent Hill Expansion Study on a relatively small case increases our confidence in Prominent Hill’s longevity and ongoing performance. While examining only a portion of the Mineral Resource, the study showed significant cash flow uplift, improved safety, and lower mining costs and emissions intensity. It provides a strong foundation from which to consider the potential of the remaining two thirds of the Inferred Resource as the study and infill drilling progresses to inform an investment decision mid-2021. We understand the orebody and the mining methods to be used. We have consistent historical Resource to Reserve conversion rates. Underground mining rates are now averaging circa 4 Mt/y and we expect to achieve rates between 4–5 Mt/y from 2022 when we are able to mine simultaneously from the bottom of the mine plan and from the current mining levels. The mine has consistently operated in the lowest quartile of the cost curve for many years. We look forward to the results of the study and further infill drilling in mid-2021.”

The shaft design concept comprises a 1,360 m deep, concrete lined shaft with a nominal diameter of 7.5 m. Construction of the shaft is at this stage assumed to be a conventional blind sink. The sink rate with this type of method is around 2 metres per day suggesting a sinking period of approximately two years. The location of the shaft collar is being finalised as a compromise between distance from the underground mine workings at depth and the mined out open pit to ensure stability of the shaft over the long term. A shaft geotechnical hole is currently being drilled to 1,500 m to confirm the suitability of the preferred shaft location.

Geotechnical drilling, rock strength and stress measurements and numerical modelling have been carried out to support risk management of the transition to mining at greater depths, while maintaining the current primary and secondary stope mining sequence approach. Orepasses are designed to feed a trucking horizon, with material then trucked from the base of the ore passes to the underground crushing and shaft infrastructure.

This design allows for an increase in the efficiency of mining activities, enabling an increase in stope turnover rate to support a mining rate above the current mining plan. The installation of these dedicated facilities will allow mineralised material that is currently trucked to surface to be directed towards the shaft for improved efficiency and cost profile, enabling a reduced cost base for the operation.

Infrastructure such as the main access decline and additional ventilation is common to both the trucking operation and shaft expansion. Progressing these common items early presents an opportunity to further debottleneck the existing operation and accelerate the potential shaft expansion. These activities commenced during 2020 with the acceleration of the current mining decline.