Carrapateena Pre-Feasibility Study successfully demonstrates viability
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18 AUGUST 2014
ASX Release
Carrapateena
Pre-Feasibility Study
successfully demonstrates
viability
This announcement should be read in conjunction with the attached Management Summary
of the Carrapateena Pre-Feasibility Study Report and the Ore Reserve Statement released
separately today. An accompanying presentation will also be released.
OZ Minerals is pleased to release the attached Management Summary of the
Pre-Feasibility Study report for the Carrapateena Project (100 percent owned by OZ
Minerals). The Pre-Feasibility Study demonstrates that the Carrapateena Project is both
technically and financially viable, with a risk and opportunity profile that is competitive
with or better than other global long life copper assets at a similar stage of development.
OZ Minerals’ CEO and Managing Director Terry Burgess said, “We are highly encouraged
by the results of this Pre-Feasibility Study which show that the Carrapateena Project is
viable when based on conservative assumptions, with potential for improved results from
a number of options. We have reviewed in detail numerous copper-gold projects around
the world over the past five years and there are very few like Carrapateena which offer the
potential of multi-decade production at low operating costs, with the demonstrated
potential for further discoveries nearby, located relatively close to all necessary
infrastructure and in one of the best and safest mining jurisdictions in the world. We
believe these features will be highly attractive to potential partners to join with
OZ Minerals in advancing the development of the Carrapateena Project.”
Mr Burgess also commented, “With the completion of the study we are pleased to have
been able to estimate an initial Ore Reserve for Carrapateena.” This Ore Reserve estimate is
the subject of a separate announcement today.
Project key points1:
• Net cash flow of $8.5 billion 2, including capital expenditure.
• A net present value at 8 percent discount rate of $1.15 billion and an internal rate
of return of 13 percent, both on a post tax basis.
• Total revenue over life of mine of $22.1 billion.
1
All amounts are projected as detailed in the attached Management Summary.
2
All figures in Australian dollars unless otherwise stated.
01
• Project capital cost of $2.985 billion.
• A low risk jurisdiction relative to other parts of the world with a stable and well
understood regulatory environment and encouraging state government.
• Orebody will cave with pre-conditioning, as confirmed by three independent
geotechnical consulting firms.
• Demonstrated ability to produce a high quality copper-gold concentrate averaging
30-35 percent copper over life of mine with uranium and fluorine below typical
penalty levels and no arsenic.
• High metal recoveries of 92 percent and 70 percent for copper and gold
respectively.
• Average annual production rate of 114,000 tonnes of copper and
117,000 ounces of gold at assumed steady state.
• Average C1 unit cost of production of US$0.49 per payable pound of copper
including by-product credits.3
• Mine life of 24 years, from a plant operating at a production rate of
12.4 million tonnes per annum.
• The site offers an ideal location for access, construction and operation, being
relatively flat, at low elevation and in a low rainfall environment.
• Good infrastructure when compared to other jurisdictions with close access to
power, water, roads, rail, ports and a skilled labour market.
• Supportive community and other stakeholders, with an approved Retention Lease
in place for development of an exploration decline.
A number of opportunities exist with the Carrapateena project where further study
and/or consideration under alternate assumptions could add significant value. These
will be further assessed during future stages of the project to determine their potential
and include:
• Extensions to the Block Cave Lift One and Lift Two footprints and the addition of
Lift Three to access large, contiguous lower grade mineralised areas adjacent to
and below the current proposed footprints. Exploiting these additional resources
could increase the metal recovered from the resource from 42 percent to around
66 percent.
• Exploitation of Khamsin, for which an initial Mineral Resource has been
4
announced , and other regional exploration targets including Saddle and Fremantle
Doctor which may provide upside by either enabling an expansion of the proposed
operation, or extending the mine life. OZ Minerals holds 3,624 square kilometres of
exploration tenements in the area around Carrapateena and northwest towards
Olympic Dam, which contain a number of identified targets.
• Potential for mining fleet automation, which is not assumed in the base case.
Experience at other block cave operations suggests mine fleet automation can
3
C1 Costs are the costs of mining, milling and production of copper concentrate, onsite administration and
general expenses, property and production royalties not related to revenues or profits, concentrate treatment
charges, and freight and marketing costs less the net value of the by-product credits.
4
See “Khamsin Mineral Resources Statement as at 23 March 2014” which was released to the market on 26 May
2014 and which is available to view at www.ozminerals.com/operations/resources--reserves.html.
02
substantially reduce the operating labour component once the block cave is in
steady operation.
• Use of ports closer to Carrapateena is not assumed in the base case which
proposed the use of Port Adelaide as the port of export. A number of ports are
substantially closer to Carrapateena and offer potential transport cost savings.
• Incremental increase in throughput or a reduction in equipment sizing may be
possible with further metallurgical characterisation during the Feasibility Study and
allow for optimisation of the process plant sizing as ore hardness variability is more
thoroughly quantified.
• Inclusion of tax benefits, which have been excluded from the project net present
value calculation, such as OZ Minerals’ carried forward fractional tax losses as well
as Research and Development tax offsets.
• Synergies with Prominent Hill operations by utilising the Prominent Hill
concentrator to improve project financials, either by railing ore from Carrapateena
to Prominent Hill or relocating the Prominent Hill concentrator to Carrapateena.
OZ Minerals opened a data room for the Carrapateena project to provide project-
related information under confidentiality agreements to parties which expressed
interest in participating in the project. With the release of this Management Summary
to the ASX today, the Pre-Feasibility Study full report will be available in the data room
to allow those parties’ due diligence processes to continue.
The Pre-Feasibility Study recommends that the project advance to the next stage of
development which would involve the execution of a Feasibility Study and the
development of the exploration decline. However, OZ Minerals has previously stated
that the sole development of the Carrapateena project is beyond its prudent financial
capacity. With the completion of the Pre-Feasibility Study, there is now a sound basis to
progress discussions with potential partners to continue to advance this exciting project
with the additional information now available from the release today.
For further information please contact:
Investors
Natalie Worley
T 61 3 9288 0345
M 61 0409210462
natalie.worley@ozminerals.com
Media
Rachel Eaves
T 61 3 9288 0252
M 61 419852045
rachel.eaves@ozminerals.com
03
Pre-Feasibility Study
Management Summary
CARRAPATEENA
Carrapateena Pre-Feasibility Study
Management Summary
15 August 2014
Issue Date: 15 August 2014 Page 1 of 50
Pre-Feasibility Study
Management Summary
CARRAPATEENA
Forward Looking Statements
This document includes certain forward looking statements. Forward looking statements are often
characterised by words such as “plan”, “expect”, “project”, “intend”, “believe”, “anticipate”, “estimate”
and other similar words, or statements that certain events or conditions “may”, “will” or could occur.
All statements other than statements of historical fact included in this document are forward looking
statements. Such statements and information in this document include, but are not limited to
statements regarding mining parameters (including processing rates, and processing plant feed),
concentrate production, estimates of capital costs and operating costs, internal rates of return, net
present values, availability and development of infrastructure, life of mine estimates, annual mining
and production estimates and targets and revenue related assumptions such as commodity prices and
exchange rates. These statements represent current expectations and internal projections of the
Company and are based on information currently available to it. There can be no assurance that these
statements will prove to be accurate and actual results and future events could differ materially from
those anticipated in the forward looking statements.
Compliance Statement
Mineral Resources
Carrapateena
The information in this report which relates to the Carrapateena Mineral Resource as at 31 October
2012 is extracted from the report entitled the Mineral Resource Explanatory Notes Carrapateena
Project as at 31 October 2012 (‘The MRENC as at 31 October 2012 ’), released to the market on 21
January 2013 and is available to view at www.ozminerals.com/operations/resources--reserves/reserves-
resources-previous-statements.html. The MRENC as at 31 October 2012 has subsequently been
updated as at 30 June 2013 and is named the Annual Carrapateena Mineral Resource Update and
Mineral Resource Explanatory Notes as at 30 June 2013 (‘The ACMRU as at 30 June 2013 ’),which was
released to the market on 28 November 2013 and is available to view on
www.ozminerals.com/operations/resources--reserves.html. The company confirms that it is not aware
of any new information or data that materially affects the information included in the ACMRU as at 30
June 2013 and, in the case of Mineral Resources that all material assumptions and technical
parameters underpinning the estimates in the ACMRU as at 30 June 2013 continue to apply and have
not materially changed. The company confirms the form and context in which the Competent Person’s
findings are presented have not been materially modified from the ACMRU as at 30 June 2013.
Khamsin
The information in this report which relates to the Khamsin Mineral Resource is extracted from the
report entitled ‘Initial 202 million tonnes at 0.6 percent Copper Resource for Khamsin and Khamsin
Mineral Resource Explanatory Note as at 23 March 2014’ released to the market on 26 May 2014, is
available at http://www.ozminerals.com/operations/resources--reserves.html. The Company confirms
that it is not aware of any new information or data that materially affects the information included in
the original market announcement and, in the case of estimates of Mineral Resources that all material
assumptions and technical parameters underpinning the estimates in the relevant market
announcement continue to apply and have not materially changed. The Company confirms that the
Issue Date: 15 August 2014 Page 2 of 50
Pre-Feasibility Study
Management Summary
CARRAPATEENA
form and context in which the Competent Person’s findings are presented have not been materially
modified from the original market announcement.
Currency: all dollars are expressed in Australian Dollars unless noted.
Issue Date: 15 August 2014 Page 3 of 50
Pre-Feasibility Study
Management Summary
CARRAPATEENA
TABLE OF CONTENTS
1.0 EXECUTIVE SUMMARY .................................................................................................................... 7
1.1 Project Key Points ........................................................................................................................... 7
1.2 Objectives of the Prefeasibility Study ............................................................................................. 8
1.3 Project Location .............................................................................................................................. 9
1.4 Project Features ............................................................................................................................ 11
1.5 Project Exclusions ......................................................................................................................... 12
1.6 Safety, Health, Environment and Community ............................................................................. 12
1.7 Environment ................................................................................................................................. 12
1.8 Geology and Mineral Resource .................................................................................................... 13
1.8.1 Regional Geology ......................................................................................................................... 13
1.8.2 Mineralisation ............................................................................................................................... 14
1.8.3 Mineral Resource Estimation ........................................................................................................ 14
1.8.4 Audit ............................................................................................................................................. 15
1.9 Mining ........................................................................................................................................... 15
1.9.1 Orebody Description..................................................................................................................... 15
1.9.2 Geotechnical Background............................................................................................................. 15
1.9.3 Mining Methods ............................................................................................................................ 17
1.9.4 Block Caving ................................................................................................................................. 17
1.10 Mineral Processing ....................................................................................................................... 24
1.10.1 Testwork ................................................................................................................................... 24
1.10.2 Process Plant ............................................................................................................................ 25
1.10.3 Tailings Storage Facility ........................................................................................................... 27
1.11 Infrastructure and Services ........................................................................................................... 27
1.11.1 Site Water Supply and Distribution ......................................................................................... 27
1.11.2 Site Power Supply and Distribution ......................................................................................... 28
1.11.3 Accommodation Village ........................................................................................................... 28
1.11.4 Operations, Administration, Workshops and Maintenance Facilities ..................................... 29
1.11.5 Waste Management Facilities .................................................................................................. 29
Issue Date: 15 August 2014 Page 4 of 50Pre-Feasibility Study
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1.11.6 Fuel, Gas and Oil Storage and Distribution ............................................................................. 29
1.11.7 Surface Fleet ............................................................................................................................. 29
1.12 Logistics ........................................................................................................................................ 30
1.12.1 Concentrate Transportation and Mine Access Road................................................................ 30
1.13 Human Resources ......................................................................................................................... 30
1.14 Technology and Information Systems .......................................................................................... 31
1.15 Ownership and Legal.................................................................................................................... 31
1.16 Project Approvals and Land Access .............................................................................................. 31
1.17 Project Execution .......................................................................................................................... 32
1.18 Operations .................................................................................................................................... 35
1.19 Capital Costs................................................................................................................................. 36
1.20 Operating Costs ............................................................................................................................ 36
1.21 Marketing...................................................................................................................................... 37
1.22 Financial Analysis ......................................................................................................................... 37
1.23 Funding ......................................................................................................................................... 38
1.24 Business Risk and Opportunity..................................................................................................... 38
1.24.1 Opportunities............................................................................................................................ 38
1.24.2 Risks .......................................................................................................................................... 40
1.25 Recommendations ........................................................................................................................ 42
1.25.1 Advancement of Studies ........................................................................................................... 42
1.25.2 Commencement of Early Works .............................................................................................. 43
1.26 Feasibility Study Work Plan.......................................................................................................... 43
1.27 Status of Study .............................................................................................................................. 44
1.27.1 Summary .................................................................................................................................. 44
1.27.2 Status and Quality of Study ..................................................................................................... 44
Issue Date: 15 August 2014 Page 5 of 50Pre-Feasibility Study
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LIST OF TABLES
Table 1-1: Project Features .................................................................................................................................................... 11
Table 1-2: Summary of the Mineral Resource Estimate for the Carrapateena Deposit at Various Cu Cut-
Off Grades as at 31 October 2012................................................................................................................. 14
Table 1-3: Carrapateena Mineable Inventory ................................................................................................................. 22
Table 1-4: Draw Rate (t/m2/day) .......................................................................................................................................... 22
Table 1-5: Key Process Design Criteria - Concentrator............................................................................................... 26
Table 1-6: Execution Schedule Milestones ...................................................................................................................... 34
Table 1-7: Estimate Summary Level 1 - Initial Project ................................................................................................. 36
Table 1-8: Operating Costs Component Summary (12.4Mtpa Production Average) ..................................... 37
Table 1-9: Economic Assumptions ...................................................................................................................................... 37
Table 1-10: Key Financial Metrics ........................................................................................................................................ 38
Table 1-11: Major Project Execution Risks ....................................................................................................................... 41
Table 1-12: Feasibility Phase – Key Tasks ......................................................................................................................... 43
Table 1-13: Study Class Appraisal ....................................................................................................................................... 45
LIST OF FIGURES
Figure 1-1: Project Location................................................................................................................................................... 10
Figure 1-2: Two Lifts Option - Cross Section Looking North (N = 6543345) .................................................... 18
Figure 1-3: Footprints – Two Lifts Option ........................................................................................................................ 19
Figure 1-4: Schematic plan views for herringbone and Teniente draw pattern layout.................................. 20
Figure 1-5: Production Schedule ......................................................................................................................................... 23
Figure 1-6: Overall Execution Schedule Features .......................................................................................................... 33
Figure 1-7: Capital Investment System ............................................................................................................................. 35
Issue Date: 15 August 2014 Page 6 of 50Pre-Feasibility Study
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1.0 EXECUTIVE SUMMARY
1.1 Project Key Points
The study has demonstrated that the Carrapateena Project is both technically and financially viable,
with a risk and opportunity profile that is competitive with or better than other global long life copper
assets at a similar stage of development. Key points for the project are:
• Net cash flow of $8.508 billion, including capital expenditure.
• A net present value at 8 percent discount rate of $1.146 billion and an internal rate of return of 13
percent, both on a post-tax basis.
• Total revenue over life of mine of $22.091 billion.
• Project capital cost of $2.985 billion including contingency ($335 million) and Feasibility Study.
• A low risk jurisdiction relative to other parts of the world with a stable and well understood
regulatory environment and encouraging state government.
• The orebody will cave with preconditioning, as confirmed by three independent specialist
geotechnical consulting firms.
• Demonstrated ability to produce a high quality copper-gold concentrate averaging 30-35 percent
copper over life of mine with uranium and fluorine below typical penalty levels and no arsenic.
• High metal recoveries of 92 percent and 70 percent for copper and gold respectively.
• Average annual production rate of 114,000 tonnes of copper and 117,000 ounces of gold at
assumed steady state.
• Average C1 unit cost of US$0.49 per payable pound of copper including by-product credits.
• Mine life of 24 years from a plant operating at a production rate of 12.4 million tonnes per annum.
• The Carrapateena site offers an ideal location for access, construction and operation, being
relatively flat, at low elevation and in a low rainfall environment.
• Good infrastructure when compared to other jurisdictions with close access to power, water, roads,
rail, ports and a skilled labour market.
• Supportive community and other stakeholders, with an approved Retention Lease in place for
development of an exploration decline.
A number of opportunities exist with the Carrapateena Project where further study of these areas
and/or consideration under alternate assumptions could add significant value. These will be further
assessed during future stages of the project to determine their potential and include:
• Extensions to Lift One and Lift Two footprints. There are large, contiguous lower grade mineralised
areas adjacent to both Lift One (120 million tonnes at 0.5 percent copper and 0.2 grams per tonne
of gold) and Lift Two (90 million tonnes at 0.5 percent copper and 0.2 grams per tonne of gold)
that at the time of the Pre-Feasibility Study were not considered to improve the project cash flow,
primarily as these resources are assumed to be exploited 30 years into the future and so cash flows
are heavily discounted.
Issue Date: 15 August 2014 Page 7 of 50Pre-Feasibility Study
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• Lift Three. There is also deeper mineralisation (110 million tonnes at 0.5 percent copper and 0.2
grams per tonne of gold) below Lift Two that was added to the Mineral Resource estimate in the
1
30 June 2013 Carrapateena Mineral Resource estimate update and was not considered for the
Pre-Feasibility Study. Options to include a larger proportion of the Resource would include
reducing the mine cut-off grade. Exploiting these additional resources could increase the resource
metal recovered from 42 percent to around 66 percent.
• Exploitation of Khamsin and other regional exploration targets. Exploitation of the Mineral
2
Resource estimate defined at Khamsin (202 million tonnes at 0.6 percent copper and 0.1 grams
per tonne of gold) and exploration targets including The Saddle and Fremantle Doctor provide
future upside by either enabling an expansion of the proposed operation, or extending the mine
life.
• Mining fleet automation. Experience at other block cave operations suggests mine fleet
automation can substantially reduce the operating labour component once the block cave is in
steady operation and cave performance is understood. The base case assumes no automation.
• Use of ports closer to Carrapateena. A number of ports are substantially closer to Carrapateena
than Port Adelaide that offer potential savings in rail transport costs of $0.10 per tonne per
kilometre. This option was considered during the Pre-Feasibility Study, however insufficient
information was available at the time to recommend this for the base case.
• Incremental increase in throughput or a reduction in equipment sizing. Further metallurgical
characterisation during the Feasibility Study may allow for optimisation of the process plant sizing
as ore hardness variability is more thoroughly quantified.
• Tax Benefits. OZ Minerals’ carried forward fractional tax losses as well as research and
development tax offsets have not been included in the project net present value.
• Synergies with Prominent Hill operations. It may be possible to utilise the Prominent Hill
concentrator and improve project financials either by railing ore from Carrapateena to Prominent
Hill or relocating the Prominent Hill concentrator to Carrapateena.
1.2 Objectives of the Pre-feasibility Study
The principal objectives of the Carrapateena Pre-Feasibility Study were to:
• Review previous Scoping Study work and identify areas of improvement in the option(s)
presented;
• Consider different mining, process, location and project configuration cases and recommend a
single preferred optimum case for further development via a Feasibility Study;
• Assess the likely technical and economic viability of the project;
• Outline the features of the recommended project;
• Determine if there may be any fatal flaws in the project;
1
See Carrapateena Mineral Resource compliance statement on page 2.
2
See Initial 202Mt at 0.6% Copper Resource for Khamsin and Khamsin Mineral Resource Explanatory Note as at 23 March 2014
compliance statement on page 2.
Issue Date: 15 August 2014 Page 8 of 50Pre-Feasibility Study
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• Determine the risk profile of the project related to the key business drivers;
• Determine the work plan, costs and schedule for the Feasibility Study and development activities
following completion of the Feasibility Study.
1.3 Project Location
In May 2011, OZ Minerals purchased the Carrapateena, copper-gold Project. This project comprised
four exploration licences covering approximately 1,070 square kilometres in central South Australia on
the eastern margin of the Gawler Craton. In April 2013, additional tenements were acquired from
Straits Resources as shown in Figure 1-1, bringing the total land holding to 3,624 square kilometres.
Carrapateena is a copper-gold deposit hosted in a brecciated granite complex, with both bornite and
chalcopyrite copper mineralisation present. The bornite is a distinct higher grade zone and contributes
approximately 25 percent to the final metal produced. The deposit is approximately 470 metres below
the surface.
The map below (Figure 1-1) shows the location of the Carrapateena project site at approximately 130
kilometres north from the regional centre of Port Augusta, approximately 100 kilometres south-east of
the BHP Billiton Olympic Dam Site, and approximately 250 kilometres south-east of the current OZ
Minerals copper-gold mine site at Prominent Hill, in South Australia. Carrapateena is located outside
the Woomera Prohibited Area (WPA) and as a result is therefore not subject to any additional access or
ownership conditions.
The turn-off to the site is 75 kilometres from Port Augusta along the Stuart Highway. The site is
currently accessed via a graded unsealed road, approximately 90 kilometres in distance from the Stuart
Highway turn-off.
Issue Date: 15 August 2014 Page 9 of 50Pre-Feasibility Study
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Figure 1-1: Project Location
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1.4 Project Features
The Pre-Feasibility Study has examined options relating to project infrastructure and execution
methodologies, and has identified the following key features which form the basis for the study
outputs. A summary of these features is given in Table 1-1 below.
Table 1-1: Project Features
Area Sub-Area Feature Remarks
Primary mining
Block cave - two Lifts Nominally 500 metres per Lift
method
12.4 million tonnes per
Production rate Both Lift One and Lift Two
annum (ROM Ore)
Mining Mine Life 24 years
Mined using a Tunnel Boring
Main access Decline (ramp)
Machine (TBM)
Mined using conventional drill
Production access Decline (ramp)
and blast method
Two jaw/gyratory crushers per
Mine Primary crushing Underground
Lift
Infrastructure
Ore handling Incline conveying
Copper and gold in
Product
concentrate
Average of 114,000
Contained in a clean copper
tonnes copper and
Production rate concentrate at 30-35 percent
117,000 ounces gold per
Process copper
year
SAG Mill, Ball Mill and
Comminution
Pebble Crushing
Roughing followed by Including fine grinding (IsaMill)
Flotation
three stage cleaning circuit
Valley fill tailings storage
Waste Tailings disposal
facility
High Voltage connection
Power Two connections
Regional to existing SA grid
Infrastructure Borefield located 55 kilometres
Water Borefield supply
northwest of the plant site
Loaded to containers on
Concentrate
Logistics site, road to rail head, rail
transport
to Port Adelaide.
Issue Date: 15 August 2014 Page 11 of 50Pre-Feasibility Study
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1.5 Project Exclusions
The Pre-Feasibility Study scope focussed on the development of a new greenfields facility on site at
Carrapateena. It may be possible to utilise Prominent Hill infrastructure, however it was considered that
initially Carrapateena should be assessed as a standalone operation. In the event that this outcome
was found to be favourable any alternatives that capitalise on other assets offers upside potential.
On this basis the following considerations have been excluded from the current Pre-Feasibility Study:
• Other adjacent resources (Khamsin, Fremantle Doctor and Saddle) have not been investigated for
inclusion into the Carrapateena Project in this study.
• Synergies with Prominent Hill Operations – With both the Carrapateena Project and Prominent
Hill Operations situated in South Australia they share common features. At this stage the study
has not considered any optimisation of infrastructure options combining the two facilities.
1.6 Safety, Health, Environment and Community
Management of OZ Minerals’ operations is governed by the OZ Minerals’ Integrated Management
System (OZIMS). This system provides a framework to manage risk and coordinate emergency
response, occupational health and hygiene, safety, environment and social responsibility management
activities. The OZIMS framework is consistent with OZ Minerals’ core values of ‘Respect, Integrity,
Action and Results’.
The OZIMS framework has been taken into account during the Pre-Feasibility Study and will be taken
into account for future phases of the project.
Plans which will be developed for the construction, operation and closure of the project include
Community Health and Safety Plans, Regulatory Environmental Management Plans and Operational
Environmental Management Plans.
1.7 Environment
The environmental baseline was commenced in 2007 under the previous owners program managed by
Teck Australia Pty Ltd (Teck) and further developed in 2012 by OZ Minerals, initially focussed within the
approved Retention Lease (RL127) boundary. Baseline data collection continued through 2013 with an
expanded boundary to take in the potential infrastructure corridors and to further develop a regional
groundwater model, inclusive of springs, surface water systems and ecosystem connections.
The Carrapateena Project is located in the Gawler Interim Biogeographic Regionalisation of Australia
(IBRA) Bioregion, which is characterised by semi-arid to arid, flat topped to broadly rounded hills of the
Gawler Range Volcanics and Proterozoic sediments. The northern boundary of the existing Retention
Lease 127 is bounded by the ephemeral salt lake, Lake Torrens.
The project is located on a low sandstone and quartzite plateau with an undulating surface of aeolian
sand or gibber. There are colluvial footslopes and creeks dominated by bluebush/saltbush and open
chenopod shrub lands.
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The climatic condition for the project area is described as an arid climate with high temperatures, very
low rainfall and high evaporation rates throughout most of the year. The mean monthly rainfall is
constant and typically ranges between 10 millimetres and 20 millimetres, and annual mean rainfall is
around 185 millimetres. Evaporation rates range between a minimum of around 90 millimetres to a
maximum of around 440 millimetres per month, exceeding rainfall in every month of the year.
Temperature ranges between 20 degrees Celsius to above 35 degrees Celsius during summer months
(November to March), and 5 degrees Celsius to 25 degrees Celsius throughout the winter months
(April to October). Average wind speeds for the area range between 3.0 metres per second and 4.3
metres per second, with a prevailing southerly wind direction.
Local drainage is dominated by Eliza Creek and associated tributaries, which are non-perennial streams
that only flow after rain events. The receiving water body is Lake Torrens. The surface water modelling
that was undertaken indicates that creeks in the project area do not contain broad flood plains but are
incised into the landscape. Flood waters remain in the defined creek lines for storm events up to one in
200 year flow events.
The seismic setting of the area is categorised using the peak ground acceleration from earthquakes
which have an annual exceedence probability of one in 500. The project area is located within an area
of relatively low likelihood of occurrence compared with the rest of Australia, with peak ground
acceleration in the range of 0.023 to 0.027 g based on the 2012 Australian Earthquake Hazard Map.
The earthquake hazards peak ground accelerations data is categorised into nine levels of likelihood of
occurrence, and the project area is within the third to least likely category.
The hydrogeological system of the area is dominated by hard rock lithologies of South Australia’s
Gawler Craton and bounded by Lake Torrens in the east. The hard rock aquifers are heterogeneous
and typically report saline to hypersaline water quality. Within the area there are three main aquifer
systems, the Tent Hill Aquifer, Pandurra Formation and Whyalla Sandstone (which has the
characteristics of an aquifer off lease where the fracture permeability has been found to be relatively
high). Groundwater discharge occurs through salt (playa) lakes with Lake Torrens acting as the
dominant regional evaporation sink for both surface water and groundwater.
The project as presented has been thoroughly assessed for ecological, industrial and social
environmental risks and determined to have a low risk profile.
1.8 Geology and Mineral Resource
1.8.1 Regional Geology
The Carrapateena Project is located within the Olympic Dam copper-gold province, a metallogenic belt
along the eastern margin of the Gawler Craton in South Australia, which hosts the Prominent Hill mine,
Olympic Dam mine and the Moonta-Wallaroo historic mining district. The Gawler Craton comprises
variably deformed and metamorphosed sedimentary, volcanic and plutonic rock spread from the Late
Archean to Mesoproterozoic, and it has been subdivided into a series of domains, the Carrapateena
deposit being part of the Olympic Domain. The age of the iron oxide copper gold (IOCG)
mineralisation in the Gawler Craton is uncertain although it is interpreted in the literature to be
associated with Mesoproterozoic magmatism of the Hiltaba Suite and the Gawler Range Volcanics.
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1.8.2 Mineralisation
The vast majority of copper and gold mineralisation within the deposit is hosted by hematite
dominated breccias with moderate mineralisation occurring within hematite altered granite breccias
(Eastern copper domain). Sulphides are the primary copper-bearing minerals in the Carrapateena
Breccia Complex (CBC). Copper and gold mineralisation is structurally and chemically controlled, with
subsequent alteration destroying mineralising structures. The most abundant sulphides are
Chalcopyrite > Pyrite > Bornite, and constitute the vast majority of the sulphides at Carrapateena. The
less common sulphides and their relative abundances are: Chalcocite ≈ Digenite ≈ Covellite >>
Sphalerite ≈ Galena.
Gold mineralisation at Carrapateena is almost exclusively hosted by hematite altered breccias. Gold
grains are usually very small (10 microns), and when seen in polished section, are often intimately
associated with copper sulphides. Gold grains are commonly a combination of gold and minor silver
(electrum).
1.8.3 Mineral Resource Estimation
a) Overview
The Pre-Feasibility Study mine design is based on the Mineral Resource estimate as at 31 October
3
2012 (release date of 21 January 2013) .
b) Mineral Resource estimate details
A summary of the Mineral Resource estimate used in the Pre-Feasibility Study is shown below in
Table 1-2.
Table 1-2: Summary of the Mineral Resource Estimate for the Carrapateena Deposit at Various
Cu Cut-Off Grades as at 31 October 20124
Cut-Off Grade Tonnes Cu Au U Ag
Classification
(Cu %) (Mt) (%) (g/t) (ppm) (g/t)
0.3 392 0.97 0.39 165 4.2
Indicated 0.5 282 1.20 0.48 197 5.2
0.7 202 1.43 0.56 227 6.2
0.3 368 0.58 0.21 120 2.3
Inferred 0.5 193 0.76 0.26 144 2.8
0.7 90 0.96 0.30 162 3.6
0.3 760 0.78 0.30 143 3.3
Total 0.5 475 1.02 0.39 175 4.2
0.7 292 1.29 0.48 207 5.4
It should be noted that post the analysis undertaken for the Pre-Feasibility Study a Mineral Resource
5
estimate update was released as at 30 June 2013 (release date 28 November 2013)
3
See Carrapateena Mineral Resource compliance statement on page 2.
4
See Carrapateena Mineral Resource compliance statement on page 2.
5
See Carrapateena Mineral Resource compliance statement on page 2
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In this update an additional seven drill holes (including five wedged holes) totalling 11,187 metres
were included in the data modelling, bringing the total number of holes and metres drilled and
intersecting mineralisation to 100 holes and 65,690 metres respectively.
Total Indicated and Inferred Resources (at a 0.3 percent copper cut-off) have increased from 760
million tonnes at 0.8 percent copper, 0.3 grams per tonne of gold for 5.9 million tonnes of contained
copper and 7.3 million ounces of contained gold to 800 million tonnes at 0.8 percent copper, 0.3
grams per tonne of gold for 6.3 million tonnes of copper and 8.4 million ounces of gold reflecting:
• An increase in tonnage of 5 percent;
• An increase in contained copper of 7 percent; and
• An increase in contained gold of 14 percent.
This increase is mainly attributable to the additional drilling information that has allowed geologists to
better understand and interpret the deeper parts of the deposit as well as extend the copper
mineralisation envelope. While the Mineral Resource estimate was expanded with this additional
information, the Indicated Resources considered in the Pre-Feasibility Study for the block cave mine
design were not materially changed. This additional data was not considered in the current Pre-
Feasibility Study but can only offer potential upside to the project in the future.
1.8.4 Audit
An external review of the data collection and sampling procedures was undertaken during an audit of
the Mineral Resource estimate. The consultant formed the view that the data collection procedures in
general were industry standard practice.
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The Carrapateena Mineral Resource estimate (as at 31 October 2012) was audited by an external
consultant during 2013 to assess whether it was suitable for use in the Pre-Feasibility Study. The audit
found that there were no fundamental flaws in the Mineral Resource estimate and, with minor caveats
regarding local grade estimation which may be relevant for the evaluation of selective mining options,
it is fit for purpose.
1.9 Mining
1.9.1 Orebody Description
Carrapateena is best described as a vertical mineralised pipe of hematite breccia and haematised
granite occurring within granitic basement. It is overlain by 470 metres of barren horizontally-bedded
sandstones, shales and quartzite. The Carrapateena orebody is a zone of moderate grade copper
mineralisation (one percent copper) in the south-west of the haematite breccia. It is about 300 metres
in diameter and extends more than 1,000 metres vertically. Economic gold and silver are present in the
orebody.
1.9.2 Geotechnical Background
Geotechnical data was gathered in two drilling campaigns undertaken by Teck and more recently by
OZ Minerals. Teck recovered 54,700 metres of core from a drilling campaign dominated by vertical
6
See Carrapateena Mineral Resource compliance statement on page 2.
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holes and point load tested basement rocks from five drill holes. Teck recorded orientated structure
from four holes. Basement core samples were tested for unconfined compressive strength, uniaxial
tensile strength and elastic modulus. The OZ Minerals program recovered 49,500 metres of diamond
core from inclined holes and cored a limited number of holes through the overburden.
Specimens from all domains including overburden were sent for the full suite of materials testing
including triaxial testing and testing of joint shear strength. Approximately 22,000 orientated structures
were measured from all holes. Twelve samples from various levels within the orebody were subjected
to acoustic emission stress testing. OZ Minerals drilled three water bores above the orebody in order
to test aquifers in the overburden. OZ Minerals also had 19 lines of seismic survey shot over the top of
the orebody in order to better define the various horizons and major structures traversing the mine
area.
The work described above was used to define the geological and geotechnical environment in which
the mine is to be built. Of note is the 270 metre thick Woomera Shale which is fissile, rapidly breaks
down to fines and contains clay. The mineralisation itself has only two interpreted faults anywhere near
it. It is massive showing broadly spaced joints, has intact rock strength ranging from about 120 to 150
megapascals and the block model of rock mass rating (Bienwiawski) shows typical values ranging from
70 to 80. This is equivalent to rock mass rating (Laubscher) of 63 to 72.
The orebody preconditioning that is planned for the project will lower the rock mass rating range by
approximately five. The acoustic emission stress measurements for the project indicate principal stress
at the undercut levels of 50 megapascals and 80 megapascals for Lift One and Lift Two respectively.
The principal stress is orientated west-south-west – east-north-east and is sub-horizontal.
A total of three international external consultants have carried out geotechnical assessments of the
Carrapateena orebody during the course of the Scoping Study and Pre-Feasibility Study.
Caving at Carrapateena is characterised by primary fragmentation showing 60 to 75 percent passing
two metres (ie coarse to very coarse). Two industry standard methodologies were used for assessing
the caveability at Carrapateena. The Laubscher methodology indicates that the cave will propagate
without any problem, however the Karzulovic and Flores methodology indicates that there may be
problems with vertical cave propagation due to the high aspect ratio of the cave. The latter result is
supported by numerical modelling. In order to ensure complete cave propagation, preconditioning
using hydrofracturing and confined blasting has been proposed and costed for the project. It has
been assumed that existing vertical drill holes can be used for preconditioning, thereby reducing the
cost. Preconditioning is routinely carried out across many other block caves globally.
As with all block caves, fines at Carrapateena are expected to migrate through the caved ore column
two to three times faster than the average migration rate and will result in dilution at the drawpoints.
There is a greater potential for rock bursts on the second lift and heavier dynamic support may be
required. All of these issues have been accounted for in the design, mine plan and cost estimates for
the project.
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1.9.3 Mining Methods
A key conclusion from the Scoping Study was that at the commencement of the Pre-Feasibility Study
further work was required to determine the most appropriate orebody extraction/mining
methodology. The Scoping Study considered the following mining concepts:-
• Block cave (BC);
• Sub level cave (SLC);
• Sub level open stoping (SLOS); and
• Hybrid options that were derived from the above.
The Scoping Study concluded that the dual lift block cave returned the highest net present value,
however it was acknowledged that there are inherent risks associated with block caving. On this basis
it was recommended that both block caving and sub-level open stoping should be carried into the
Pre-Feasibility Study. Sub-level open stoping was included in the Pre-Feasibility Study to ascertain
whether the additional technical detail undertaken during this phase could identify any further
financial upside from this option. The sub level open stoping option had been identified as the option
that returned the next highest overall net present value.
A study was undertaken to develop the conceptual mine design, schedule and cost estimation for the
sub level open stoping option using the updated resource model. The outcome from this study
confirmed that the conclusions reached during the Scoping Study were still valid, and the overall net
present value generated by this method was no better than that achieved by the Scoping Study
analysis. On this basis the sub level open stoping option was not considered further for the Pre-
Feasibility Study, with the remainder of the work focusing on the development of the mine design
using the dual block cave methodology as presented below.
1.9.4 Block Caving
a) General Comments
Block caving is a process where large blocks of ore are undercut, causing the ore to break or cave
under its own weight and stress. The block cave method is most suited to a massive style of
orebody in a semi-competent rock mass with a relatively coarse fill material.
It is important to note that a very competent rock mass, such as may be expected at Carrapateena,
can result in coarse to very coarse ore material and an increased requirement for secondary
breakage of ore in the drawpoints prior to extraction. These factors can be mitigated with a focus
on orebody preconditioning and mine design but remain as project risks. Mine operating costs
and the production plan include allowances for secondary breakage assuming coarse to very
coarse primary fragmentation.
b) Undercut Elevation Definition
Caving the orebody in one, two and three lifts was considered. One lift of 1,000 metres high is
well outside industry practice and was ruled out. A comparison of two and three cave lifts
revealed little economic difference between the options.
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The additional capital required to mine three lifts was balanced by early access to high grade ore.
Two lifts of approximately 500 metres high were selected because there would be a reduced
likelihood of interference between the lifts. Figure 1-2 and Figure 1-3 below show the cross
section and footprints of the two lifts.
Figure 1-2: Two Lifts Option - Cross Section Looking North (N = 6543345)
500 m
Level 4160
500 m
Level 3660
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Figure 1-3: Footprints – Two Lifts Option
LOWER 3660 UPPER 4160
Area: 106,500 m2 Area: 97,400 m2
Hydraulic radius: 57 m Hydraulic radius: 57 m
c) Undercut Extents
The lateral extents of the undercuts were determined by comparing drawpoint construction,
mining, processing and general and administration costs to the value of ore above each
drawpoint. A Net Smelter Return (NSR) cut off of $23 per tonne was used in this analysis.
Using Indicated Resources only (Inferred grades set to zero) all profitable drawpoints were
identified and taken into the next stage of the design process. Once the profitable drawpoints
were identified Inferred grades reporting to those drawpoints were reset.
d) Cave Layout Design
The first stage in mine design is the definition of the drawpoint layout for Lift One and Lift Two.
There are two drawpoint layouts in use in block caves around the world, the herringbone and
Teniente layouts. These are shown in Figure 1-4.
The Teniente layout was selected for the extraction level for its ease of construction and drive
orientation with respect to stress directions and its improved loading productivity. A drawbell
spacing of 32 metres x 17 metres was selected for Lift One and 34 metres x 17 metres for Lift Two.
The shape of the cave footprint was adjusted to take into account the drive orientations and
drawpoint spacings.
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Figure 1-4: Schematic plan views for herringbone and Teniente draw pattern layout
e) Undercutting Strategy
Post-undercutting with a high undercut was the selected method. The method allows for simpler
construction scheduling and a shorter production ramp-up. It does however increase the
likelihood of damage to the extraction level due to the effects of abutment stress. Preconditioning
will reduce the effects of stress. In addition development on the extraction level will be limited to
that needed for efficient undercutting until the abutment stress has passed.
f) Materials Transport
A fleet of 16 Load Haul Dump loaders (LHD’s) will deliver ore from drawpoints into two jaw-
gyratory crushers located on the periphery of the extraction level. The dimensions of the
footprints are such that loader travelling distance will not be excessive. Coarsely fragmented ore
will be easier to manage using this system.
A series of production simulations were carried out culminating in an estimated production rate
of 12.4 million tonnes per annum. The simulations took into account draw point hang up
frequency and secondary breakage requirements.
g) Access and Mine Design
The Scoping Study assumed shafts would be used for access and production. The lead time to
production was about seven years.
In the Pre-Feasibility Study initial mine access was assumed to be developed using a tunnel
boring machine. The tunnel boring machine was chosen for its development speed and because
the conveyor used for the tunnel boring machine was of sufficient capacity to handle the
development requirements of the block cave mine.
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A second decline will be developed by drill and blast. Drill and blast has been selected for the
second decline as multiple headings will be available to accelerate decline development. The
second decline will accommodate the production conveyor. The lead time to production has been
reduced to approximately five and a half years. A trade-off study showed there to be no material
economic difference between a shaft and conveyor for mine production.
Ventilation shafts will be developed as five metre diameter raise-bored holes. Teleremote
fibrecreting of overburden was assumed to control weathering of the strata.
h) Level Designs
There will be four main levels developed for each cave lift, undercut, extraction, intake ventilation
and exhaust ventilation along with ancillary development for pump stations, workshops, offices,
magazines and stores.
i) Subsidence
The subsidence crater at the end of mine life will be about two kilometres in diameter projected
upwards at 60 degrees from the Lift Two undercut. Mine development is designed to be outside
the zone of influence of the final subsidence.
j) Mineable Inventory
The mineable inventory is shown in Table 1-3.
It is noted that the selected cave footprint design that results in this inventory is based on a net
smelter return cut off of $23 per tonne. There are large, contiguous lower grade mineralised areas
adjacent to both Lift One (120 million tonnes at 0.5 percent copper and 0.2 grams per tonne gold)
and Lift Two (90 million tonnes at 0.5 percent copper and 0.2 grams per tonne gold) that at the
time of the Pre-Feasibility Study were not considered to improve the project cash flow, primarily
as these resources are as assumed to be exploited 30 years into the future and so cash flows are
heavily discounted.
There is also deeper mineralisation (110 million tonnes at 0.5 percent copper and 0.2 grams per
tonne gold) below Lift Two that was added to the Mineral Resource estimate in the 30 June 2013
7
update and so was not considered for the Pre-Feasibility Study.
During future stages of the project (most likely once Lift One has commenced and actual cave
performance data is available) it may be considered appropriate to implement extensions to Lift
One and/or Lift Two as well as Lift Three which could extend the mine life beyond the current 24
years with minimal capital investment. Factors including an assessment as to the likelihood of the
remaining portions of the orebody to cave, associated geotechnical issues, dilution, grade versus
life trade-off (particularly in the case of Lift One extension versus Lift Two start-up) would need to
be considered at that point.
7
See Carrapateena Mineral Resource compliance statement on page 2
Issue Date: 15 August 2014 Page 21 of 50You can also read
