Troubled OZ Minerals has just released its Mineral Resources and Ore Reserves Statement as at June 30, 2008. Executive Group Manager – Exploration, Tony Manini, said “the statement shows significant year-on-year increases in OZ Minerals’ Group Mineral Resources with gold up 19%, copper up 22.1% and zinc up slightly 2.3%. Silver and lead decreased slightly by 2.7% and 3.4% respectively while nickel fell significantly (78%) due to the exclusion of the Wiluna nickel laterite resource.”
OZ Minerals’ group mineral resources (contained metal) as at June 30 are estimated to contain 19.0 Moz of gold, 396.7 Moz of silver, 5.9 Mt of copper, 18.2 Mt of zinc, 2.6 Mt of lead and 0.2 Mt of nickel. Group ore reserves (contained metal) were 4.24 Moz gold, 90.59 Moz silver, 1.91 Mt copper, 5.13 Mt, 0.6 Mt lead and 0.04 Mt nickel.
This represents a year-on-year reserve increase of 0.03 Mt for copper (2%) and decreases of 0.02 Moz gold (1%), 12.84 Moz silver (12%), 18,500 t nickel (33%), 1.11 Mt zinc (18%) and 0.1 Mt lead (14%). Manini said “the strong lift in group copper and gold mineral resources has resulted primarily from the addition of several new discoveries at Prominent Hill and Sepon. However, these discoveries require extensive infill drilling to lift resource confidence before an initial ore reserve can be established. Likewise at Golden Grove and Rosebery, significant new discoveries made over the past two years require extensive infill drilling prior to establishing reserves. Pleasingly, drilling subsequent to this statement across our sites indicates potential for increases to ore reserves and mineral resources.”
On December 18, the Chairman of OZ Minerals, Barry Cusack, said “We appreciate fully the difficulties caused by the suspension of OZ Minerals’ shares, and the Company is working to address these issues. As explained in the release of December 4, the company is examining expressions of interest for a number of its assets, and Gryphon Partners is assisting in this process.
“OZ Minerals has resolved to expedite all avenues available to address its short term liquidity position, and as such will consider approaches in respect of the acquisition of interests (including controlling interests) in any of its assets, or approaches from parties wishing to acquire some or all of the company’s shares. We are also examining all options available for the issuance of new equity.”
The following day OZ Minerals announced that it will put the Avebury nickel mine on care and maintenance until further notice. With current nickel prices at around $4.40/lb CEO Andrew Michelmore said the Avebury operation was just not profitable. “In nine months we’ve seen the nickel price drop by 68% – an unprecedented fall in such a valuable commodity. This has severely tested the economics of many nickel projects worldwide, and Avebury is no exception. At these prices, it is simply more economical to keep this metal in the ground and resume production when prices improve.
The Avebury mine was commissioned in August and had produced 10,381 t of nickel concentrates to the announcement date. Underground ore that has already been drilled will now be blasted and transported to the surface for processing together with current surface stockpiles. The Avebury mine is located 10 km west of Zeehan on the West Coast of Tasmania and produces nickel sulphide concentrates. It currently has nickel reserves of 5.85 Mt and resources of 18.18 Mt.
A detailed breakdown of all the group reserve and resource estimates along with the methods and assumptions used are available on the website (www.ozminerals.com) in the Mineral Resource and Ore Reserve tables, together with the accompanying Explanatory notes.