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The Tjati decline at Carrapateena was opened last year, signifying the start of construction
organisation more efficient,” he said. “If
you can get real-time coverage of equip-
ment performance you can then predict
and optimise mine planning and the en-
tire circuit.”
The resource sector has been slower
than many others to adopt “big data” and
Oz has taken its lead from outside the
industry.
“There are a lot of mining companies
beginning to do interesting things but we
learn mostly from other sectors which
are already doing it, rather than other
miners.”
Oz’s commitment to Carrapateena and
its expansion of Prominent Hill – under-
ground rates are set to increase from 2.5
mtpa to 3.5-4 mtpa in coming years – re-
flects the company’s bullish outlook for
copper. The company has received criti-
cism in the past for remaining steadfastly
committed to the red metal but Cole be-
lieves the rest of the world is starting to
catch up with Oz’s stance.
“I think people’s sentiment is getting
more bullish, especially for base metals.
The irony is that the supply/demand dy-
namic hasn’t changed since we first iden-
tified the opportunity four or five years
ago we are just getting closer to the pe-
riod when copper supply can’t keep up
with demand.”
That sentiment explains why Oz has
thrown its weight behind the Nebo-Babel
nickel-copper project in the remote West
Musgrave province of Western Australia.
A former BHP Ltd asset, Nebo-Babel is
held in JV between Oz and junior explor-
er Cassini Resources Ltd.
“It is a great project and the updated
scoping study confirmed the potential it
has got,” Cole said.
The study, released on November 14,
identified the potential to build a 10 mtpa,
eight-year operation at Nebo-Babel, pro-
ducing 20-25,000 tpa nickel, 25-30,000
tpa copper and 700-1,000 tpa cobalt for
a capex of $730-800 million.
Oz has chosen to manage the PFS
and will earn 51% of the asset by spend-
ing $20 million over the next 18 months.
“It needs to be 10-12 mtpa to underpin
the capex needed and but there are still a
lot of resource not in the study. But we’re
looking at a base case of a 20-year mine
life,” Cole said. “There is a lot of work to
be done but the next few years will show
there is a lot more upside to come.”
Cole said the company was keen on
Andrew Cole
finding more projects with similar dynam-
ics to West Musgrave.
“Most value is created when you take
a project through from an idea to an op-
eration rather than just transferring value
around the industry,” he said. “So, we are
looking for more projects like that one
where we can take it through develop-
ment.”
In late December, Oz entered into an
earn-in agreement with Red Metal Ltd
over the junior’s Punt Hill IOCG project,
50km south of Carrapateena.
“Similar deals can work with Oz fund-
ing and leading the project but the junior
retaining some ownership as we take it
through construction and development.
We are looking for more of them.”
And, despite the slowdown of the
State’s resources sector, SA will remain
Oz’s major focus in that pursuit.
“SA’s copper grades are among the
highest in the world,” Cole said. “Com-
pared to porphyries in Latin America, the
quality of resource is excellent but the
challenge in SA is the cover.”
With a state election looming, could
sovereign risk become an issue for Oz?
“All sides of SA politics are pro-re-
sources and they all say the same things
so we don’t expect sovereign risk to
change,” Cole said. “Resources is very
important to the State and everyone in it.
“When we speak to foreign sharehold-
ers, sovereign risk doesn’t even come
up in discussions. That speaks well for
South Australia.”
– Dominic Piper
AUSTRALIA’S PAYDIRT FEBRUARY 2018 PAGE 15