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Oz Minerals' Options
Oz Minerals, the result of the merger between Oxiana and Zinifex, continues to have a difficult time in the first months his new life.
This has been hit by the slump in financial markets, falling commodity prices, especially for the metals key, lead, zinc and copper, and demand is falling so slow leading economies, including China.
It is the second largest company in the world of mining Zinc and now it will cut production at the mine in its third-largest zinc by 40% in 2009 due to continued falling prices. Zinc prices have fallen 27% so far this year (until yesterday).
It is the highest court for a mining plan had been revealed by a miner in Australia and globally important.
But it will concentrate more on copper, where the situation of supply and demand is much more favorable, although prices sank with the product sell.
It's a big business call-ups, which earlier this week affirmed its prominent Hill metal mines in South Australia would enter into operation next month as planned.
The company denied market rumors that a billion dollar Prominent Hill Start-up was delayed due to falling prices and demand.
In some respects, both decisions are requested by the new management confidence.
The market took it as a vote of confidence: in yesterday's terrible sell, Oz Minerals shares held steady at $ 1.38, for most of the day, before rising 5 cents to $ 1.43.
This price is nothing to cheer, but it is interesting that on a day when the broader market slumped the better part of 3% and more, Oz Minerals shares were a kind of signature comparison.
Much of the selling is concentrated in stocks and commodity shares were 'only'. After all, have been selected for a lot of sales since the recession began in mid-July.
But dramatic increase in gold on Wednesday night (up to $ US88 per ounce), an increase of $ US6 oil, breaking the weak trend earlier this week, and some small increases for zinc and other metals, go to actions resources are not too hard one day. Gold rose to $ US40 more and more yesterday to finish around $ 897 an ounce.
Oz Minerals said today in a statement to the ASX that it was cutting zinc production at its Golden Grove complex mining in Western Australia and increase copper production.
CEO Andrew Michelmore said in the statement that "current prices are applicable no economic incentive for us to continue to mine zinc at historical levels production. As a result zinc production next year will decline by about 50,000 tonnes of concentrate.
"In the current prices copper and zinc, our decision to mine copper over zinc preference levels will result in slightly higher revenue and profit margins much higher, as copper is a higher margin product for us than zinc,''said Mr. Michelmore.
Movement of Oz comes as other miners have cut the production of lead and zinc.
Perilya has cut deeply into its operations match Hill in NSW, one-time merger partner, CBH has slashed production and employment in its Endeavor mine in Cobar east of Broken Hill, Teck Cominco Ltd. and Xstrata closed its Lennard Shelf zinc mine in Washington in July, left AIM Resources of work on your project in Burkina Faso also Intec in July and closed its Hellyer zinc mine earlier this month.
There have been cuts nickel output as well as several mines in Western Australia.
Oz Minerals says now that the zinc concentrate production from Golden Grove will run at 80,000 to 85,000 tonnes, after the cuts.
Copper production will increase by about 14,000 tonnes to between 35,000 and 40,000 tonnes.
No news on changes in other two mining operations: Century in Queensland and Rosebery in Tasmania.
Century produced a record 521,471 tonnes in the year to June. Mine is a very low cost. Rosebery still running.
Earlier this week OZ Minerals has confirmed that its Prominent Hill copper-gold project in South Australia will commence commissioning next month.
"This follows the successful start-up time of the Avebury nickel project company in Tasmania. The concentrate from Avebury was first sent to customers In August 2008, "the company told the ASX.
"We are aware of market rumors that there will be delays at Hill Top. There no basis for these rumors, which I think could be the creation of a false market in Oz Minerals' shares, "Mr Michelmore said.
He said the facts were as follows:
• By the end of last year, reported that Oxiana Prominent Hill was commissioned in the fourth quarter of 2008;
• Top Hill will start implementation in October 2008, when the crushing circuit will be operational "
"The company has previously indicated that the expected production of Top Hill 2009 is between 110,000 to 120,000 tonnes of copper concentrate and 80,000 to 85,000 ounces of gold and changes in this guide have been made, "said executive director of the ASX.
"We have previously announced an expected total capital cost of $ 1.08 million euros for the Prominent Hill project.
"Although the final cost will not be known with absolute accuracy until the project is complete, the Company expected to be materially different from this indication, "he added.
Mr Michelmore said: "Prominent Hill to make a substantial contribution at OZ Minerals' production profile, more than double annual copper production of the Company. We expect copper to generate more than 50% of Minerals OZ 'revenue in 2009, compared with approximately 36% of the combined pro forma revenues Oxiana and Zinifex in the first half of 2008. "
Like so many other companies, Oz Minerals' stories are being buried by the panic in financial markets.
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