OZ Minerals has started construction of its Pedra Branca underground copper-gold mine in the Carajás, Brazil.
The company is launching construction of the underground mine after its board approved developed of a one million tonne a year copper-gold mine.
OZ Minerals plans to increase the scale of the Pedra Branca site from a small open cut mine to a large underground operation, following last year’s acquisition of previous owner Avanco Resources.
The company will ramp up an annual production Pedra Branca to around 18,000 tonnes of copper and 11,000 ounces of gold.
Decline construction will commence next month and first development ore is targeted for mid-2020. OZ Minerals will contract a Brazilian development operator before transitioning to an owner-operator model.
The project will create around 100 jobs during construction, and 450 people in steady state operations throughout an eight-year mine life.
According to OZ Minerals Brazil chief executive Carlos Gonzalez, the Pedra Branca announcement advances the company’s Carajás Hub strategy.
OZ Minerals will deliver pre-concentrated ore from Pedra Branca for processing at its Antas Hub.
“The elements of our Carajás Hub strategy are now taking shape with a potential pathway to sustained concentrate production at Antas fed by a series of small mines coming on stream over the next decade or more, and the potential for enhanced production through supplying ore separate to Vale,” Gonzalez said.
Pedra Branca requires a pre-production investment of around $US35 million ($51.7 million) from OZ Minerals.
The company will sell its concentrate from Pedra Branca to Vale, boosting the mine’s net present value from around $US55 million ($81.25 million) to $US75 million.
OZ Minerals has also struck agreements with Vale to use the latter’s in-country transport infrastructure and processing facilities.
Chief commercial officer Mark Irwin said the agreements with Vale enabled it to create certainty with concentrate sales at market prices and provided additional future ore processing options.
“Importantly, the Vale relationship simplifies and helps de-risk our Brazilian presence and will potentially give rise to further opportunities in the future,” Irwin said.
OZ Minerals has established earn-in agreements with Vale, which allows it to purchase two additional exploration projects, Santa Lucia and Pantera.
“Subject to approved permitting we intend to undertake further drilling at both Pantera and Santa Lucia in the first half of 2020, targeting a mineral resource on each, and if successful, proceeding to scoping studies during 2020,” Gonzalez said.
“Pantera is 110 kilometres from Pedra Branca, so it presents a potential second OZ Minerals-owned Carajás processing hub.”