OZ Minerals takes long-sighted view on $430m Brazil deal
SA copper-gold miner OZ Minerals is taking a longer term view on the value of its $430 million purchase of Avanco in 2018 after a closer assessment of the assets it bought.
SA copper-gold miner OZ Minerals expects to set up a low-cost copper and gold hub in Brazil, following an assessment of the assets that came with its $430 million purchase of Avanco Resources last year.
While the review backed up the company’s decision to buy into what it sees as a promising copper province, OZ said the future of the operational Antas mine “was limited”, flagging its closure by 2021.
OZ Minerals owns the operating Prominent Hill copper-gold mine in SA and is currently developing the $916 million Carapateena mine in the state’s far north, which is expected to produce first copper this year.
OZ’s deal gained it an entry into what it defines as the Carajás copper province covering the Antas mine and Pedra Branca and Pantera development projects.
“We did not purchase Avanco for the small Antas operating mine,” managing director Andrew Cole told investors.
“However it has provided us with a strong entry point into Brazil in terms of mining and process expertise.
“Antas is the foothold into the Carajas (province) we sought as part of the acquisition,” he said.
Mr Cole expects the processing facility, workforce and established presence with regulators to help with quicker value realisation, especially on a new mine at Pedra Branca.
“We are currently working on a new Pedra Branca base case, which sees a potential case of circa 1-2 million tonnes per annum underground mine with ore processing taking place at the Antas Carajas processing hub.”
OZ is expected to make a decision on development of Pedra Branca in the third quarter of 2019.
The company also separately released a pre-feasibility study on the CenroGold project in the Gurupi province. The study builds a case for a potential 10-year mine producing 100,000 to 120,000 ounces of gold over its life, with a upfront cost of about $US155 million ($222.6 million).
“Importantly, CentroGold also has the potential to become a Gurupi processing hub servicing nearby deposits such as Chega Tudo, eight kilometres to the west,” Mr Cole said.
“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.
“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.”