New Century Resources is expecting to cut down production costs at the Century zinc operation in Queensland while bolstering its planned production expansion.
The company has reduced its zinc concentrate benchmark treatment charge (TC), which is used to form zinc concentrate smelting contract pricing.
Around 30 per cent of New Century’s direct production costs were derived from TCs in 2020.
The 2021 annual zinc concentrate benchmark TC is now set at $US159 ($207.63) per tonne, compared with US$299.75 per tonne in 2020.
This marks a 47 per cent reduction in TC costs, with New Century expecting a $US0.14 decline in costs per pound of zinc produced.
New Century stated approximately 85 per cent of its zinc concentrate shipments were expected to be linked to the decreased benchmark TC.
The positive economic effects from the TC reduction will improve New Century’s production rate, according to the company.
“This in turn delivers a material operational cashflow increase for the company, given its existing globally significant production rate (December 2020 quarter: 59,400,000 payable pounds production) and plans for production expansion in 2021,” New Century stated.
New Century will be back paid for any zinc concentrate that has been shipped in 2021 as the benchmark TC is retrospectively applied from January 1.
The company also reported that the continuing zinc market tightness was driving strong price fundamentals.
The current zinc price is $US1.29 per pound/US$2850 per tonne, according to New Century.
New Century operates the Century zinc mine in Queensland, which restarted commercial production in July last year after being mothballed in 2016.