09/12/2020 - 15:00

OZ ups West Musgrave potential

09/12/2020 - 15:00

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Adelaide’s OZ Minerals has upgraded the value of its recently acquired West Musgrave project in WA by $200 million, while also lifting the mine’s planned nickel and copper production.

OZ ups West Musgrave potential
West Musgrave is expected to generate about $4.5 billion in cashflow. Photo: Supplied

Adelaide’s OZ Minerals has upgraded the value of its recently acquired West Musgrave project in WA by $200 million, while also lifting the mine’s planned nickel and copper production.

A pre-feasibility study update for the Nebo and Babel deposits has confirmed an increase in West Musgrave’s ore reserves, from 220 million tonnes to 253mt, and a 15 per cent rise in production.

OZ is planning to deliver about 32,000 tonnes of copper per annum and 26,000tpa nickel over a 22-year period.

The PFS has also confirmed a 25 per cent rise in the project’s net present value to about $1 billion, at an internal rate of return of 20 per cent.

Meanwhile, plant throughput has increased from 10mtpa to 12mtpa, which in turn has reduced operating costs to $32/t.

The mine is expected to generate about $4.5 billion in cashflow during its 26-year mine life, OZ says.

The company gained the project when it acquired Perth-based Cassini Resources earlier this year for $76 million. Part of that deal involved Cassini demerging two of its other WA projects to become a new company, Caspin Resources, which recently listed on the ASX.

Caspin could also receive a payment of up to $20 million from OZ.

Today, OZ said it would invest $67 million to progress the PFS for West Musgrave, with a final investment decision expected in 2022.

The next stage of the study will include advancing regulatory approvals, infill drilling and engineering to boost orebody, capital and operating cost certainty.

OZ managing director Andrew Cole said the PFS update represented nine years of strategic and technical review.

“The value uplift to West Musgrave has further strengthened OZ Minerals’ strong pipeline of organic growth opportunities,” he said.

“With 100 per cent ownership of the project, we are now in a position to consider opportunities in the context of our pipeline and its timing and funding requirements, with the objective of maximising shareholder value.”

OZ said renewable energy would also be a focus in the next stage of the PFS. 

Current modelling is based on 70-80 per cent renewables through a combination of wind, solar and battery storage. 

OZ said it was working towards developing a roadmap to 100 per cent renewable generation.

Its shares closed down 0.4 per cent to trade at $18.87.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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