SYDNEY Aug 18 Oz Minerals Ltd said on
Monday a copper and gold mine it wants to develop in Australia
could generate A$22.1 billion ($20.58 billion) in revenue over
more than 20 years but will require a partner to proceed.
The company's projections, based on a target of 114,000
tonnes of copper and 117,000 tonnes of gold a year coming out of
the company's Carrapateena project, drove Oz Minerals shares 3
percent higher to A$4.40.
Copper mining is one of few sectors investors appear willing
to risk capital in developing as commodities markets in general
cool in step with slowing growth in China.
Morgan Stanley forecasts a supply surplus of copper
concentrate will shrink to around 87,000 tonnes by 2018 from
580,000 this year.
BHP Billiton , the world's biggest
diversified mining house, includes copper as one of its "pillars
of growth" and owns a majority stake in the world's biggest
copper mine in Chile.
Rio Tinto is investing heavily in Mongolian
copper mining through its 51 percent stake in Canada's Turquoise
Hill Resources, while China's MMG Ltd and its
partners have paid $7 billion for the Las Bambas copper project
Oz Minerals, capitalised at A$1.34 billion, has been looking
for partners to help shoulder the A$2.985 billion it forecasts
will cost to get the mine up and running later this decade. The
deposit is located 100 kms (62 miles) from the BHP-owned Olympic
Dam mine, another giant copper mine.
"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," said Oz Minerals Managing
Director Terry Burgess.
OZ Minerals has put a net present value on the project of
A$1.15 billion based on a pre-feasibility study, higher than
previous estimates by analysts of around A$500 million.
"It doesn't have a great return, it only has an internal
rate of return at 13 percent, with a very very big price tag of
A$3 billion so I think they'll be quite challenged to find
anybody that's prepared to buy into the project at that kind of
the price," said Brenton Saunders, a portfolio manager with BT
"So to come out and say it's now worth A$1.1 billion is
quite a big difference so I guess the market is reacting to
that," Saunders said.
It is unlikely that OZ Minerals will have the financial
capacity to bear all of the cost and project risk.
A sell-down of its interest through a joint venture could
form part of the funding mix, the company said.
(1 US dollar = 1.0738 Australian dollar)
(Reporting by James Regan and Thuy Ong; Editing by Muralikumar