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 points 1 : 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 • announced 4 , 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
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